65770 Federal Register / Vol. 66, No. 245 / Thursday, December 20, 2001 / Notices

7Similarly, the integration plan attempts to

insulate GSSC and EMCC from the risks of

MBSCC’s business. Securities Exchange Act Release

Nos. 45155 (Dec. 14, 2001) (SR–GSCC–2001–14);

45154 (Dec. 14, 2001) (SR–EMCC–2001–04). See

also Securities Exchange Act Release Nos. 42013

(Oct. 15, 1999), 64 FR 57168 (Oct. 22, 1999)(SR–

DTC–99–11) and 42014 (Oct. 15, 1999), 64 FR

57171 (Oct. 22, 1999) (SR–NSCC–99–07) (DTC and

NSCC have adopted rules similar to this proposed

rule as part of their 1999 integration with DTCC.)

8 15 U.S.C. 78q–1.

9 17 CFR 200.30–3(a)(12).

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

2The Commission has modified parts of these

statements.

An important aspect of the integration

plan is to insulate MBSCC, its

participants, its limited purpose

participants, its Electronic Profile

Network users, and its participants fund

from the risks and obligations that may

arise from the activities of the other

Synergy Companies.7 The proposed rule

change will specifically add a new Rule

15 to Section V of MBSCC’s rules that

states that MBSCC will not be liable for

the obligations of any other entity or

member of any other entity and that

such other entity or member of such

other entity shall not be liable for any

obligations of MBSCC.

MBSCC believes that the proposed

rule change is consistent with the

requirements of section 17A of the Act 8

and the rules and regulations

thereunder applicable to MBSCC

because it promotes the safeguarding of

securities and funds in MBSCC’s

custody or control or for which it is

responsible.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

MBSCC does not believe that the

proposed rule change will have any

impact or 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.

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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549–0609. 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, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at MBSCC’s

principal office. All submissions should

refer to File No. SR–MBSCC–2001–04

and should be submitted by January 4,

2002.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.9

Jonathan G. Katz,

Secretary.

[FR Doc. 01–31360 Filed 12–19–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–45152; File No. SR–OCC–

2001–16]

Self-Regulatory Organizations; The

Options Clearing Corporation; Notice

of Filing of a Proposed Rule Change

Relating to Clearing Certain

Commodity Futures and Options

Thereon

December 12, 2001.

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

Securities Exchange Act of 1934

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

October 24, 2001, The Options Clearing

Corporation (‘‘OCC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change 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 proposed rule change amends

OCC’s by-laws and rules to provide for

the clearance and settlement of

transactions in commodity futures on

broad-based stock indexes and options

on such futures, both of which are

subject to the exclusive jurisdiction of

the Commodity Futures Trading

Commission (‘‘CFTC’’).

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.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Introduction

The proposed rules would provide for

the clearance and settlement of futures

on broad-based stock indexes and

options on such futures under the same

basic rules and procedures currently

applicable to the clearance and

settlement of other OCC-cleared

contracts, including options and

security futures. Because such contracts

are within the exclusive jurisdiction of

the CFTC, OCC submitted to the CFTC

on October 9, 2001, an application for

registration as a derivatives clearing

organization (‘‘DCO’’) under section

5b(c) of the Commodity Exchange Act

(‘‘CEA’’) and part 39 of the CFTC’s

regulations. The CFTC granted OCC’s

application for registration on December

10, 2001.

Commodity futures would be cleared

pursuant to the same basic OCC rules

and procedures recently approved by

the Commission for the clearance of

Federal Register / Vol. 66, No. 245 / Thursday, December 20, 2001 / Notices 65771

3See Securities Exchange Act Release Nos. 44434,

(June 15, 2001), 66 FR 33283 (File No. SR–OCC–

2001–05) and 44727, (August 20, 2001), 66 FR

45351 (File No. SR–OCC–2001–07).

4Although the present rule filing provides only

for the clearing of futures on broad-based indexes

and options thereon, the terms commodity future

and futures option are defined more broadly to

facilitate the clearance by OCC of transactions in

commodity futures and futures options on other

underlying interests in the event that OCC

undertakes to clear additional CFTC-regulated

products in the future. Of course, OCC would need

to further amend its rules to set forth the particular

terms of any such additional products and would

need to file a proposed rule change pursuant to

Section 19(b) to do so.

5Securities Exchange Act Release No. 44727,

(August 20, 2001), 66 FR 45351 (File No. SR–OCC–

2001–07).

security futures.3 There is not

significant difference between the

mechanics of the clearance and

settlement of a future on a narrow-based

stock index (a security future) and a

future on a broad-based stock index.

Accordingly, many of the changes

proposed in this filing merely expand

the provisions applicable to security

futures to include commodity futures.

Likewise, futures options are

substantially similar in most respects to

other options cleared by OCC. Thus, for

example, procedures governing

premium payments and exercise are the

same. Accordingly, OCC is proposing to

permit futures options to be governed by

many of the same by-laws and rules

applicable to other options. Where

special provisions for futures options

are needed, they are contained primarily

in Article XII of the by-laws and Chapter

XIII of the Rules, which would be

amended to apply to commodity futures

and futures options as well as security

futures.

2. New and Amended Definitions

OCC proposes to define several

additional terms applicable to

commodity futures and futures options

and to include those terms in Article I

of the by-laws because they are used

throughout the by-laws and rules. New

futures terms would be adopted and

defined to correspond as closely as

possible to the terminology used in the

existing futures markets while also

being consistent with terminology in

OCC’s rules. Various existing security

futures definitions are proposed to be

amended to apply to commodity futures

as well as security futures. The new

definitions are mostly self-explanatory,

but the following are a few terms that

are of particular significance.

The term ‘‘commodity future’’ would

be added to distinguish these produces

from security futures and would be

defined as a futures contract within the

exclusive jurisdiction of the CFTC and

traded on a futures market. The term

‘‘future’’ would be added to encompass

both security futures and commodity

futures where, as is most often the case,

no distinction is needed. A ‘‘futures

market’’ would be defined to mean a

contract market registered as such under

the CEA. OCC does not currently

propose to clear commodity futures

products traded on markets other than

registered contract markets. The

definition of an ‘‘option’’ would be

amended to include a ‘‘futures option’’

which would be defined as an option

traded on a futures market to buy or sell

a commodity futures contract. The term

‘‘cleared contract’’ would be added to

embrace all contracts cleared by OCC

including securities options, security

futures, and other cleared securities

subject to the jurisdiction of the

Commission as well as commodity

futures and futures options that are not

securities.4 Proposed changes of the

definitions of ‘‘commencement time’’

and ‘‘series marker’’ are discussed

below.

3. Clearing Member Qualifications

Section 1 of Article V of OCC’s bylaws is proposed to be amended to

permit futures commission merchants

(‘‘FCMs’’) that are not notice-registered

as broker-dealers under section

15(b)(11)(A) of the Act to become

clearing members. Interpretation and

Policy .06 under section 1 was added in

SR–OCC–2001–07 to provide that OCC

may give expedited review and may

waive certain non-financial criteria

where appropriate in order to admit

affiliates of existing clearing members

for the purpose of clearing security

futures.5 OCC proposes in this rule

change to extend the same consideration

to such affiliates that become clearing

members for the purpose of clearing

commodity futures and futures options.

As stated in SR–OCC–2001–07, OCC

believes that it is appropriate to give

special consideration to such affiliates

to the extent that their affiliation with

an existing clearing member provides

access to competent and experienced

personnel able to assist the affiliate, if

necessary, in meeting OCC’s operational

requirements.

OCC’s financial requirements would

remain substantially the same for all

clearing members whether regulated

primarily or exclusively as brokerdealers or as FCMs. In the case of a

clearing member regulated primarily or

exclusively as an FCM, OCC would

permit such FCM to compute its net

capital in accordance with the CFTC’s

regulations. OCC Rules 301(c), 303(c),

and 307 are proposed to be modified to

provide appropriate references to CFTC

regulations governing FCM financial

requirements in order, as nearly as

practicable, to provide requirements

that are parallel to those applicable to

clearing members regulated primarily as

broker-dealers.

4. Accounts

Article VI, section 3 is proposed to be

amended to clarify that commodity

futures and futures options positions of

futures customers may not be carried in

the firm account. Additionally,

Interpretation and Policy .01 would be

added to require a clearing member

carrying a customer account pursuant to

Article VI, section 3(e) (i.e., an account

holding positions of securities

customers) to be fully registered as a

broker-dealer and to require a clearing

member carrying a segregated futures

account under Article VI, section 3(f)

(i.e., an account holding positions of

futures customers) to be fully registered

as an FCM. Whether a person is a

futures customer or a securities

customer would be determined by (i)

agreement between the intermediary

carrying the customer’s account and the

customer, subject to the provisions of

the Act, the CEA, and regulations under

either or both of those statutes as

applicable to the particular intermediary

(broker-dealer, FCM, or dual registrant),

(ii) the types of cleared contracts

involved (securities, security futures, or

commodity futures products), and (iii)

the identity of the person whose

account is carried (including the nature

of any affiliation such person has with

the intermediary). Article VI, Section

3(a) would be modified to provide that

positions in commodity futures and

futures options of persons who are not

futures customers (and whose accounts

are therefore proprietary within the

meaning of CFTC Regulation 1.3(y)) may

be carried in the firm account regardless

of that person’s status under the

Commission’s hypothecation rules or

Rule 15c3–3.

5. Amendments to Article XII of the ByLaws

Article XII sets out the basic

provisions for security futures,

including both physically-settled and

cash-settled security futures. The article

is proposed to be amended to apply to

commodity futures and futures options

as well. The major change would be the

addition of subparagraph (b) to section

2, which would provide for the

settlement of exercised futures options.

When a futures option is exercised, OCC

would (i) in the case of a call, open in

the account from which the call was

exercised the number of long futures

65772 Federal Register / Vol. 66, No. 245 / Thursday, December 20, 2001 / Notices

6See Securities Exchange Act Release No. 44184,

(April 16, 2001), 66 FR 20342 (File No. SR–OCC–

99–12), approving changes filed in SR–OCC–99–12.

7Securities Exchange Act Release No. 44743,

(August 24, 2001), 66 FR 45904 (File No. S7–15–

01). 8 17 CFR 1.38(b).

contracts equal to the unit of trading for

the option and (ii) in the case of a put,

open in the account from which the put

was exercised the number of short

futures contracts and open in the

account to which the exercise was

assigned the number of long futures

contracts equal to the unit of trading for

the contract. Futures contracts that are

opened in settlement of the exercise of

a futures option contract would be

deemed to have been opened on the day

of exercise, and the exercise price for

the futures option would be the contract

price for the futures contract. After the

futures contract is opened, the buyer

and seller would have the same rights

and obligations as the holders of other

futures contracts.

6. Adjustments

As with security futures, OCC will

determine adjustments to commodity

futures that are required to reflect

certain events affecting the underlying

index. Futures on broad-based stock

indexes would be subject to the same

adjustment provisions in Article XII,

sections 3 and 4 of the by-laws that are

applicable to narrow-based stock index

futures. These adjustment provisions are

patterned after similar provisions in

section 3 of Article XVII applicable to

index options. Paragraph (b) of Article

XII, section 3 would be modified in this

filing, and a new paragraph (c) would be

added to update the provisions to

conform to changes in the adjustment

provisions applicable to index options

that were approved by the Commission

earlier this year.6 New paragraph (d) of

Article XII, section 3 would be added in

order to provide for appropriate

adjustments to outstanding futures

options when the underlying index

future is adjusted. In that case, the

futures option would be adjusted to

provide for delivery of the adjusted

future. Where appropriate, the exercise

prices and the number of outstanding

options might be adjusted. Section 6 of

Article XII, which provides that the

final settlement price for any security

futures contract at maturity is

determined by a method approved by

the market listing the future would be

made applicable to both security futures

and commodity futures. Interpretation

and Policy .01 would be added to make

clear that any such method of

determining final settlement prices must

be consisted with applicable

regulations. This interpretation is

proposed in light of the rules proposed

by the Commission and the CFTC,7

which propose to requires that final

settlement prices for security futures

ordinarily must be based on opening

prices and imposes other limits not

specifically set forth in Article XII,

section 6 of OCC’s by-laws as approved

by the Commission in SR–OCC–2001–

07.

7. Trade Reporting and Matching

Trade reporting and matching would

occur for commodity futures in the same

manner as for security futures and for

futures options in generally the same

manner as for other options. As in the

case of security futures, however, OCC

would not require transactions in

commodity futures and futures options

to be identified as opening or closing. If

a market elected to submit trade

information without identification as to

whether the transaction is opening or

closing, OCC would treat all

transactions as opening transactions.

Each clearing member would then

submit gross position adjustment

information at the end of the day to

reduce its positions to reflect the actual

open interest in accounts carried by the

clearing member. These procedures are

consistent with current practice on

many futures exchanges. As in the case

of security futures, commodity futures

and futures options might include, if a

futures market so elected, a series

marker to prevent contracts traded on

that market from being treated as

fungible with otherwise identical

futures contracts traded on other

markets cleared by OCC. The definition

of a series marker in Article I of the bylaws would be amended to make clear

that a series marker can be shared by

mutual consent among more than one

exchange or market. As a result,

contracts might be fungible when traded

on any market within the group but not

fungible with contracts traded on

markets outside the group. This is

intended as a clarification of, rather

than a change in, the existing rule.

Rule 401 would also be amended to

provide that block trades and other noncompetitively executed transactions, in

addition to exchange-for-physicals,

would be identified in the matched

trade report. These provisions would

apply to futures options as well as

commodity futures and security futures.

As defined in Article I, section 1, the

commencement time for such trades

would not occur until OCC has received

the premium or initial variation

payment on the transaction. This

provision would allow OCC to reject the

trade if the clearing member fails to

make such payment. These trades are

proposed to be treated differently from

other trades because when a transaction

is effected at a price other than the

current market price, OCC’s loss may be

greater in the event of a clearing

member default. In addition, the

regulations of the CFTC require the

identification of non-competitive

trades.8

8. Margins

OCC Rule 602, which is applicable to

narrow-based index futures, index

options, and other non-equity options,

would be amended to include

commodity futures and futures options

in the calculation of the margin required

for each account of a clearing member.

Margin would be calculated for these

new products in exactly the same way

as for other futures and options subject

to OCC rule 602.

9. Clearing Fund Contributions

Broad-based index futures and futures

options thereon would be covered by

the same clearing fund that stands

behind all options and security futures

cleared by OCC. Clearing activity in

commodity futures and futures options

would be taken into consideration in

calculating the amount of a clearing

member’s contribution in the same way

that activity in other contracts is

considered. OCC rule 1001 would

provide that affiliates of existing

clearing members that become clearing

members of OCC solely for the purpose

of clearing transactions in broad-based

index futures of futures options need

not put up an additional $150,000

minimum clearing fund contribution.

This would merely expand the existing

provision applicable to clearing member

affiliates that become clearing members

for purposes of clearing security futures.

10. Discipline

OCC rule 1202, regarding appeal from

OCC-imposed discipline, would be

amended to provide that if an OCC

disciplinary proceeding relates solely to

the clearing member’s activities as an

FCM, OCC must notify the clearing

member in writing that it may have a

right to appeal under section 8c of the

CEA. The intent of this proposed rule

change would be to subject clearing

member disciplinary proceedings that

relate to violations of customer

segregated funds rules and other

violations of the CEA or regulations

thereunder to CFTC review.

Federal Register / Vol. 66, No. 245 / Thursday, December 20, 2001 / Notices 65773

9Securities Exchange Act Release No. 44727,

(August 20, 2001), 66 FR 45351 (File No. SR–OCC–

2001–07). 10 17 CFR 200.30–3(a)(12).

11. Amendments to Chapter XIII

OCC proposed and the Commission

approved a new Chapter XIII of its rules

to govern security futures.9 With the

current filing, OCC is simply proposing

to amend Chapter XIII to apply to

commodity futures and futures options

as well.

The proposed rule change is

consistent with the purposes and

requirements of section 17A of the Act

because it fosters cooperation and

coordination with persons engaged in

the clearance and settlement of

securities transactions, removes

impediments to and perfects the

mechanism of a national system for the

prompt and accurate clearance and

settlement of securities transactions,

and, in general, protects investors and

the public interest. By clearing

commodity futures and futures options

under the same basic rules applicable to

SEC-regulated products, OCC believes

that its commodity clearing activities

will be consistent with the prompt and

accurate settlement of securities

transactions.

(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

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 reason for so finding or (ii)

as to which the self-regulatory

organization 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.

VI. 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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street NW.,

Washington, DC 20549–0609. 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.,

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 No. SR–OCC–2001–16

and should be submitted by January 4,

2002.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–31294 Filed 12–19–01; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

Reporting and Recordkeeping

Requirements Under OMB Review

AGENCY: Small Business Administration.

ACTION: Notice of reporting requirements

submitted for OMB review.

SUMMARY: Under the provisions of the

Paperwork Reduction Act (44 U.S.C.

Chapter 35), agencies are required to

submit proposed reporting and

recordkeeping requirements to OMB for

review and approval, and to publish a

notice in the Federal Register notifying

the public that the agency has made

such a submission.

DATES: Submit comments on or before

January 22, 2002. If you intend to

comment but cannot prepare comments

promptly, please advise the OMB

Reviewer and the Agency Clearance

Officer before the deadline.

COPIES: Request for clearance (OMB 83–

1), supporting statement, and other

documents submitted to OMB for

review may be obtained from the

Agency Clearance Officer.

ADDRESSES: Address all comments

concerning this notice to: Agency

Clearance Officer, Jacqueline White,

Small Business Administration, 409 3rd

Street, SW., 5th Floor, Washington, DC

20416; and OMB Reviewer, Office of

Information and Regulatory Affairs,

Office of Management and Budget, New

Executive Office Building, Washington,

DC 20503.

FOR FURTHER INFORMATION CONTACT:

Jacqueline White, Agency Clearance

Officer, (202) 205–7044.

SUPPLEMENTARY INFORMATION:

Title: Settlement sheet.

No: 1050.

Frequency: On occasion.

Description of Respondents: SBA

Borrower’s to complete loan

authorizations.

Responses: 39,988.

Annual Burden: 29,991.

Jacqueline White,

Chief, Administrative Information Branch.

[FR Doc. 01–31362 Filed 12–19–01; 8:45 am]

BILLING CODE 8025–01–P

OFFICE OF THE UNITED STATES

TRADE REPRESENTATIVE

Determinations Under the African

Growth and Opportunity Act

AGENCY: Office of the United States

Trade Representative.

ACTION: Notice.

SUMMARY: The United States Trade

Representative has determined that

Zambia has adopted an effective visa

system and related procedures to

prevent unlawful transshipment and the

use of counterfeit documents in

connection with shipments of textile

and apparel articles and has

implemented and follows, or is making

substantial progress toward

implementing and following, the

customs procedures required by the

African Growth and Opportunity Act.

Therefore, imports of eligible products

from Zambia qualify for the textile and

apparel benefits provided under the

AGOA.

EFFECTIVE DATE: December 17, 2001.

FOR FURTHER INFORMATION CONTACT:

Chris Moore, Director for African

Affairs, Office of the United States

Trade Representative, (202) 395–9514.

SUPPLEMENTARY INFORMATION: The

African Growth and Opportunity Act

(Title I of the Trade and Development

Act of 2000, Pub. L. 106–200) (AGOA)

provides preferential tariff treatment for

imports of certain textile and apparel

products of beneficiary sub-Saharan