63228 Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 

6 15 U.S.C. 78s(b)(3)(A). 

7 17 CFR 19b–4(f)(2). 

8The text of the proposed rule change is available 

on Exchange’s Web site at http:// 

www.directedge.com, on the Commission’s Web site 

at http://www.sec.gov, at EDGX, and at the 

Commission’s Public Reference Room. 

9 17 CFR 200.30–3(a)(12). 

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

2Securities Exchange Act Release No. 62801 

(August 31, 2010), 75 FR 54410. 

Exchange notes that it operates in a 

highly competitive market in which 

market participants can readily direct 

order flow to competing venues if they 

deem fee levels at a particular venue to 

be excessive. The proposed rule change 

reflects a competitive pricing structure 

designed to incent market participants 

to direct their order flow to the 

Exchange. Finally, the Exchange 

believes that the proposed rates are 

equitable in that they apply uniformly 

to all Members. In addition, the rebates 

provided result, in part, from lower 

administrative costs associated with 

higher volume. The Exchange believes 

the fees and credits remain competitive 

with those charged by other venues and 

therefore continue to be reasonable and 

equitably allocated to those members 

that opt to direct orders to the Exchange 

rather than competing venues. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

members or other interested parties. 

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) of 

the Act 6 and Rule 19b–4(f)(2) 7

thereunder. At any time within 60 days 

of the filing of such proposed rule 

change, the Commission summarily may 

temporarily suspend 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. 

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–EDGX–2010–13 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–EDGX–2010–13. 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,8 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 Web site viewing and 

printing 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 the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. 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–EDGX– 

2010–13 and should be submitted on or 

before November 4, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25744 Filed 10–13–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63066; File No. SR–OCC– 

2010–13] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Order 

Approving Proposed Rule Change To 

Allow for Adjustments to the 

Settlement Price of ExchangeDesignated Security Futures for All 

Cash Dividends or Distributions Paid 

by the Issuer of the Underlying 

Security 

October 8, 2010. 

I. Introduction 

On August 19, 2010, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–OCC–2010–13 pursuant 

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

Exchange Act of 1934 (‘‘Act’’).1 On 

August 25, 2010, OCC amended the 

proposed rule change. Notice of the 

proposal was published in the Federal 

Register on September 7, 2010.2 The 

Commission received no comment 

letters in response to the proposed rule 

change. For the reasons discussed 

below, the Commission is approving the 

proposed rule change. 

II. Description 

The primary purpose of this proposed 

rule change is to revise OCC’s By-Laws 

to allow OCC to make adjustments to 

the settlement price of exchangedesignated security futures for all cash 

dividends or distributions paid by the 

issuer of the underlying security. Under 

its current rules, OCC makes such 

adjustments only for ‘‘non-ordinary’’ 

dividends. However, OneChicago, LLC 

(‘‘OneChicago’’) has informed OCC that 

it believes there is a demand for security 

futures that would be adjusted in 

response to all cash dividends or 

distributions. Accordingly, OCC is 

amending Section 3 of Article XII of its 

By-Laws to permit exchanges to 

designate certain security futures that 

will be adjusted for ordinary as well as 

‘‘non-ordinary’’ cash dividends and 

distributions. Exchanges can continue to 

trade security futures that will be 

adjusted only in the event of a ‘‘nonordinary’’ dividend or distribution. 

For security futures subject to 

adjustment for all cash dividends or 

distributions, it will be the exchange’s 

responsibility to inform OCC of the 

issuance of a cash dividend or 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 198 / Thursday, October 14, 2010 / Notices 63229 

3The standard method for adjusting futures 

contracts in response to cash distributions is to 

decrease the prior day’s settlement price by the 

amount of the dividend. This adjustment is 

effective at the opening of business on the exdistribution date and parallels the adjustment made 

to the price of the underlying stock by the securities 

exchanges on the ex-distribution date. It is intended 

to ensure that no futures mark-to-the-market 

attributable to the adjustment made to the stock 

price for the dividend will occur. 

4OCC also proposes to add Interpretation and 

Policy .10 to Article XII, Section 3 to provide that 

officially reported settlement prices will not be 

adjusted (other than as provided for in the By-Laws 

and Rules) except in extraordinary circumstances. 

The Interpretation further provides that in no event 

will a completed settlement be adjusted due to 

errors discovered thereafter. This latter provision is 

intended to preserve the finality of money 

settlements should it later be determined that an 

officially reported settlement price was erroneous. 

The new Interpretation is based on existing 

provisions of OCC’s By-Laws. See, e.g., Article XIV, 

Section 6, Interpretation and Policy .01; Article 

XVI, Section 4, Interpretation and Policy .01; and 

Article XVII, Section 4, Interpretation and Policy 

.01. 

5Amendment No. 1 will be executed after the 

effectiveness of this filing. 

6 15 U.S.C. 78q–1(b)(3)(F). 

7 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

distribution and of the appropriate 

adjustment amount. Provided that such 

information (including any corrections 

thereto) is reported to OCC before an 

OCC-designated cut-off time prior to the 

ex-date, OCC will make the appropriate 

adjustment to the settlement price of the 

security futures contract. Such 

adjustments will be effective before the 

opening of business on the ex-date.3 If 

the exchange fails to report dividend or 

distribution information to OCC on a 

timely basis or reports incorrect 

dividend or distribution information to 

OCC, then the exchange will be able to 

report such information or corrected 

information to OCC on the ex-date, and 

OCC will effect the adjustment as soon 

as practicable thereafter.4 In the event 

the exchange already opened trading in 

the security futures contracts affected 

thereby, the exchange will provide OCC 

with direction on whether such trades 

should be cleared or disregarded as 

provided for in Article VI, Section 7 of 

OCC’s By-Laws. Pursuant thereto, 

disregarded transactions will be deemed 

null and void and given no effect. These 

procedures are intended not only to 

preserve OCC’s ability to initiate and 

conduct nightly processing on a timely 

basis but also to provide the exchange 

with the opportunity to report to OCC 

dividend or distribution information 

that was not available to it before OCC’s 

processing cut-offs or to correct 

erroneously reported information so that 

there is an appropriate adjustment to the 

settlement price for the affected 

contracts. 

In connection with OneChicago’s 

proposal, OneChicago and OCC also 

have agreed to amend the Security 

Futures Agreement for Clearing and 

Settlement Services, dated April 1, 

2002, (‘‘Clearing Agreement’’) by 

entering into Amendment No. 1 

thereto.5 Amendment No. 1 would 

amend Section 5 of the Clearing 

Agreement to permit OneChicago to 

designate those security futures 

contracts for which adjustments will be 

made in response to all cash dividends 

or distributions of the underlying 

securities and to set forth OneChicago’s 

obligation to furnish OCC with notice of 

all relevant information regarding such 

dividends or distributions so that OCC 

can adjust the settlement price of the 

affected security future as described 

above. Amended Section 5 further 

extends the current indemnification 

provided by OneChicago to OCC to 

cover losses resulting from OCC’s 

adjustment of the settlement prices of 

security futures in accordance with 

dividend or distribution information 

supplied by OneChicago or OCC’s 

failing to adjust in the event 

OneChicago did not supply OCC with 

information regarding such an 

adjustment. 

III. Discussion 

Section 19(b) of the Act directs the 

Commission to approve a proposed rule 

change of a self-regulatory organization 

if it finds that such proposed rule 

change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

such organization. Section 17A(b)(3)(F) 

of the Act requires that the rules of a 

clearing agency be designed to promote 

the prompt and accurate clearance and 

settlement of security transactions and 

generally to protect investors and the 

public interest.6 The Commission 

believes that OCC’s rule change is 

consistent with this Section because the 

rule change should better enable OCC to 

promptly and accurately clear and settle 

security futures contracts for which an 

exchange has designated that the 

settlement prices will be adjusted to 

reflect the issuance of all cash dividends 

or distributions on the underlying 

security. 

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. In 

approving the proposed rule change, the 

Commission considered the proposal’s 

impact on efficiency, competition, and 

capital formation. 

It is therefore ordered, pursuant to 

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

proposed rule change (File No. SR– 

OCC–2010–13) be and hereby is 

approved. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25864 Filed 10–13–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63063; File No. SR– 

NASDAQ–2010–126] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change to Make a 

Conforming Change to NASDAQ Rules 

October 7, 2010. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on October 

1, 2010, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’ or the ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. 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 

NASDAQ proposes to make a 

conforming change to Rule 4758 to 

reflect prior effectiveness of filings 

allowing routing of orders to a facility 

of an exchange that is an affiliate of 

NASDAQ. NASDAQ proposes to 

implement the rule change concurrent 

with the launch of cash equity trading 

on NASDAQ OMX PSX, which is 

currently scheduled to occur on October 

8, 2010. The text of the proposed rule 

change is available at http:// 

nasdaq.cchwallstreet.com/, at 

NASDAQ’s principal office, and at the 

Commission’s Public Reference Room. 


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