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. 


ebenthall on PRODPC60 with NOTICES
48420 Federal Register / Vol. 73, No. 161 / Tuesday, August 19, 2008 / Notices 

3 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78s(b)((3)(A)(i). 

3 17 CFR 240.19b–4(f)(1). 

4 In June 2007 and August 2007, the Commission 

approved changes to OCC’s Rules designed to 

accommodate credit default options and credit 

default basket options, respectively. Securities 

Exchange Act Release Nos. 55872 (June 6, 2007), 72 

FR 32693 (June 13, 2007) [SR–OCC–2007–01] and 

56288 (Aug. 20, 2007), 72 FR 49034 (Aug. 27, 2007) 

[SR–OCC–2007–06]. In November 2007, the 

Commission approved additional changes to OCC’s 

Rules designed to accommodate binary options, 

including fixed return options and binary options 

on broad-based indexes. Securities Exchange Act 

Release No. 56875 (Nov. 30, 2007), 72 FR 69274 

(Dec.7, 2007) [SR–OCC–2007–08]. 

(C) Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were not and are 

not intended to be solicited with respect 

to the proposed rule change, and none 

have been received. 

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 the self-regulatory 

organization 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, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml) or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–OCC–2008–09 on the 

subject line. 

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–OCC–2008–09. 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 OCC and on 

OCC’s Web site at http:// 

www.theocc.com/publications/rules/ 

proposed_changes/sr_occ_08_09.pdf. 

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–OCC–2008–09 and should 

be submitted on or before September 9, 

2008. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.3

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–19116 Filed 8–18–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58349; File No. SR–OCC–

2008–15] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change Relating to 

Binary Options 

August 12, 2008. 

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

Securities Exchange Act of 1934,1 notice 

is hereby given that on July 23, 2008, 

The Options Clearing Corporation 

(‘‘OCC’’) filed with the Securities and 

Exchange Commission the proposed 

rule change as described in Items I, II 

and III below, which Items have been 

prepared primarily by OCC. OCC filed 

the proposed rule change pursuant to 

Section 19(b)(3)(A)(i) of the Act 2 and 

19b–4(f)(1) thereunder 3 so that the 

proposal was effective upon filing with 

the Commission. 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 the Substance 

of the Proposed Rule Change 

The proposed rule change would 

clarify how a listing exchange may 

define the exercise settlement amount 

for binary options and that escrow 

deposits are not permitted in lieu of 

margin with respect to binary options 

on any underlying interest. 

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 purpose of the proposed rule 

change is to clarify, in two respects, the 

application of OCC’s By-Laws and Rules 

to certain binary options. OCC currently 

clears the following types of binary 

options: credit default options, credit 

default basket options, and ‘‘other 

binary options.’’ 4 ‘‘Other binary 

options’’ include ‘‘fixed return options’’

traded on the American Stock Exchange 

LLC \ (‘‘Amex’’) and binary options on 

broad-based indexes traded on the 

Chicago Board Options Exchange, 

Incorporated (‘‘CBOE’’). ‘‘Other binary 

options’’ are European-style options that 

will be automatically exercised if the 

value of the underlying interest at 

expiration when measured against its 

exercise price is determined to meet the 

criteria for automatic exercise as 

specified in the rules of the listing 

exchange. All binary options, when 

automatically exercised, have a fixed 

exercise settlement amount that does 

not vary depending upon how much the 


ebenthall on PRODPC60 with NOTICES