48418 Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices 

15 17 CFR 200.30–3(a)(12). 

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

2Securities Exchange Act Release No. 57963 

(June 13, 2008), 73 FR 34969. 

3Article V, Section 1 of OCC’s By-laws, including 

the Interpretations and Policies thereunder, sets 

forth the requirements for membership. 

Interpretation and Policy.04 permits an applicant 

for clearing membership (‘‘managed clearing 

member’’) to meet specified membership 

requirements by entering into an FMA with another 

clearing member (‘‘managing clearing member’’) 

pursuant to which the managing clearing member 

would perform certain of the applicant’s obligations 

as a clearing member (‘‘managed services’’). An 

operationally capable clearing member also may 

elect to outsource certain of its obligations as a 

clearing member, and thereby, become a managed 

clearing member. OCC Rule 309(f). 

4OCC would use the expedited review process for 

FMA terminations only in cases that present no 

significant or novel issues. Requests involving 

complex issues would be presented to the 

Committee at its next regularly scheduled meeting. 

5 Interpretation & Policy.01 to Rule 309. See also 

Securities Exchange Act Release No. 57535 (March 

20, 2008), 73 FR 16086 (March 26, 2008) [SR–OCC–

2008–01]. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2008–73. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). 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 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of such filing also will be 

available for inspection and copying at 

the principal office of the NYSE. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2008–73 and should 

be submitted on or before September 9, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19130 Filed 8–18–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58346; File No. SR–OCC–

2008–08] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Order 

Granting Approval of a Proposed Rule 

Change Relating to its Facilities 

Management Agreements 

August 12, 2008. 

I. Introduction 

On January 9, 2008, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–OCC–2008–08 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 June 19, 2008.2 No 

comment letters were received. This 

order approves the proposed rule 

change. 

II. Description 

The purpose of the proposed rule 

change is to provide an expedited 

process for reviewing a managed 

clearing member’s request to operate 

without a facilities management 

agreement (‘‘FMA’’).3 Under OCC Rule 

309(e), a managed clearing member that 

desires to terminate an FMA must 

withdraw from membership on the 

business day before the proposed 

termination unless the Membership/ 

Risk Committee (‘‘Committee’’) has 

determined in accordance with Article 

V, Section 1 of OCC’s By-laws either 

that the managed clearing member has 

the operational capability, experience, 

and competence to perform the 

managed services required of a clearing 

member or that the managed clearing 

member has entered into another 

acceptable FMA that will be effective on 

or before such proposed termination. 

From March, 2006 to February, 2008, 

the Committee reviewed three requests 

to terminate FMAs, all of which were 

approved. In each case, the managed 

clearing member was required to defer 

terminating its FMA until the next 

regularly scheduled Committee meeting. 

To provide for a more timely review of 

certain FMA terminations, OCC is 

adopting a new Interpretation and 

Policy.02 under Rule 309. Under the 

new policy, a managed clearing member 

desiring to terminate its FMA will be 

permitted to request an expedited 

review. If OCC consents to an expedited 

review,4 the Chairman, the Management 

Vice Chairman, or the President will be 

authorized to determine whether, as 

specified in Rule 309(e), a managed 

clearing member had the operational 

capability, experience, and competency 

to perform the managed services 

required of a clearing member, and to 

approve or disapprove the termination. 

At the next regularly scheduled 

Committee meeting, the Committee will 

independently review de novo whether 

the managed clearing member has met 

the requirements of Rule 309(e) and 

determine whether or not to approve the 

FMA’s termination. Notwithstanding 

that, if the Committee modifies or 

reverses the action taken by the 

Chairman, the Management Vice 

Chairman, or the President, any actions 

taken by OCC or the clearing member 

prior to the modification or reversal 

would not be invalidated, and no rights 

of any person arising out of such actions 

would be affected. In the unlikely event 

that the Committee disapproved of a 

termination previously approved by 

OCC, the clearing member would be 

given a reasonable time either to 

establish another FMA or to withdraw 

from membership. 

This proposal is comparable to a 

process recently approved by the 

Commission which permits the 

expedited review of requests by 

operationally capable clearing members 

that desire to outsource certain of their 

clearing member obligations by entering 

into FMAs.5 OCC believes that the 

rationale for giving senior management 

the authority to approve FMAs on an 

interim basis applies equally to FMA 

terminations. OCC believes the proposal 

strikes a reasonable balance between 

meeting the business requirements of 

clearing members and continuing to 


ebenthall on PRODPC60 with NOTICES
Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices 48419 

6 15 U.S.C. 78q–1(b)(3)(F). 

7 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). 

8 17 CFR 200.30–3(a)(12). 

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

2The Commission has modified the text of the 

summaries prepared by OCC. 

ensure appropriate review of their 

operational capabilities. 

III. Discussion 

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

requires, among other things, that the 

rules of a clearing agency be designed to 

assure the safeguarding of securities and 

funds which are in its custody or 

control or for which it is responsible.6

The Commission finds the proposed 

rule change to be consistent with this 

requirement because the senior 

management has the experience and 

familiarity with clearing members to 

make such decisions and senior 

management’s decision to approve the 

termination of FMAs prior to a 

scheduled Committee meeting are 

subject to the Committee’s subsequent 

review at its next regularly scheduled 

meeting. Moreover, proposals for 

expedited review of an FMA 

termination would only occur where, in 

management’s judgment, no significant 

or novel issues are raised by the 

termination. 

IV. 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–2008–08) be and hereby is 

approved.7

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19115 Filed 8–18–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58347; File No. SR–OCC–

2008–09] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing of a Proposed Rule Change 

Relating to Eligible Margin Assets 

August 12, 2008. 

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

Securities Exchange Act of 1934 

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

May 15, 2008, The Options Clearing 

Corporation (‘‘OCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change 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 from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The proposed rule change would 

eliminate foreign currencies and letters 

of credit denominated in a foreign 

currency as eligible margin assets. 

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 these statements.2

(A) Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

The primary purpose of this rule 

change is to eliminate, as eligible forms 

of margin assets, foreign currency and 

letters of credit denominated in a 

foreign currency. 

Background 

The Philadelphia Stock Exchange, 

Inc. (‘‘Phlx’’) has delisted all physical 

delivery foreign currency and cross-rate 

foreign currency options (collectively, 

‘‘currency options’’) and has advised 

OCC that it does not presently plan to 

list contracts requiring foreign currency 

delivery. To support premium and 

exercise settlement for such currency 

options, OCC has maintained in various 

countries bank accounts that also have 

been used from time to time to hold 

margin deposits in foreign currencies. 

With the delisting of physical delivery 

currency options, these accounts are no 

longer needed for operational reasons. 

Few clearing members have deposited 

foreign currencies as margin with OCC 

and only then in de minimis amounts, 

and no such deposits are currently held 

by OCC. In light of the limited and 

infrequent use of this margin asset class 

by clearing members, OCC has 

determined to close its foreign currency 

accounts for cost saving purposes. 

Closing these accounts means that OCC 

will no longer have the operational 

capability to accept foreign currency for 

margin purposes, and accordingly, OCC 

proposes to modify its rules to delete 

this asset class. Letters of credit 

denominated in a foreign currency have 

never been posted with OCC by clearing 

members, and their acceptance will be 

eliminated as well. 

Rule Changes 

To eliminate these forms of margin 

assets OCC would amend Rule 604. 

Specifically, references to deposits of 

foreign currencies would be deleted 

from paragraph (a), which relates to 

cash margin deposits. References to 

letters of credit denominated in a 

foreign currency would be deleted from 

paragraph (c). Other technical, 

conforming changes would be made to 

paragraph (c) to reflect such deletion. 

Because amended paragraph (c) would 

specify that letters of credit are to be 

denominated in U.S. dollars, specific 

references to U.S. dollar denominated 

letters of credit would be removed from 

Interpretations and Policies .03 and .08 

under Rule 604. Interpretation and 

Policy .09 would be deleted in its 

entirety as it solely relates to deposits of 

letters of credit denominated in a 

foreign currency. 

For rule transparency purposes, OCC 

also proposes to insert a notice at the 

beginning of the By-Law articles and 

Rule chapters that relate to physical 

delivery currency options (i.e., Articles 

XV and XXI and Chapters XVI and XXII) 

to inform readers that such provisions 

are inoperative until further notice by 

OCC. 

OCC believes that the proposed 

change is consistent with the Act 

because it removes the eligibility of 

asset classes for margin purposes that 

either are not currently used or have 

never been used by clearing members in 

order to reduce OCC’s operating costs. 

The proposed rule change is not 

inconsistent with the existing rules of 

OCC, including any other rules 

proposed to be amended. 

(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. 


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