Document ID: SEC-2010-0517-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Options Clearing Corp.
Posted Date: 2010-04-07T04:00Z

[Federal Register: April 7, 2010 (Volume 75, Number 66)]
[Notices]               
[Page 17805-17806]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07ap10-111]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61820; File No. SR-OCC-2010-05]

 
Self-Regulatory Organizations; the Options Clearing Corporation; 
Notice of Filing of Proposed Rule Change Relating to Cash-Settled 
Foreign Currency Options With One-Cent Exercise Prices

April 1, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 16, 2010, 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. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The proposed rule change would make clear that cash-settled foreign 
currency options traded on national securities exchanges will be 
treated and cleared as securities options notwithstanding that they may 
have a nominal exercise price such as one cent.

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

    In this rule filing, OCC proposes to add a sentence to the 
Introduction to Article XXII of its By-Laws to make clear that cash-
settled foreign currency options traded on national securities 
exchanges will be treated and cleared as securities options 
notwithstanding that they may have a nominal exercise price such as one 
cent.\2\ In its capacity as a ``derivatives clearing organization'' 
registered as such with the Commodities Futures Trading Commission 
(``CFTC''), OCC is also filing this proposed rule change with the CFTC 
for prior approval pursuant to provisions of the Commodity Exchange Act 
(``CEA'') in order to foreclose any potential argument that the 
clearing by OCC of such options as securities options constitutes a 
violation of the CEA. The products involved here are essentially the 
same as cash-settled foreign currency options that OCC currently clears 
except for the low strike price.
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    \2\ The exact language of the proposal can be seen at http://
www.theocc.com/component/docs/legal/rules_and_bylaws/sr_OCC_10_
05.pdf.
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    OCC states that the proposed interpretation of OCC's By-Laws is

[[Page 17806]]

consistent with the purposes and requirements of Section 17A of the Act 
\3\ because it is designed to promote the prompt and accurate clearance 
and settlement of transactions in securities options, to foster 
cooperation and coordination with persons engaged in the clearance and 
settlement of such transactions, to remove impediments to and perfect 
the mechanism of a national system for the prompt and accurate 
clearance and settlement of such transactions, and, in general, to 
protect investors and the public interest. OCC believes that the 
proposed rule change accomplishes these purposes by reducing the 
likelihood of a dispute as to the Commission's jurisdiction over cash-
settled foreign currency options with an exercise price of one cent. 
OCC also states that the proposed rule change is not inconsistent with 
the By-Laws and Rules of OCC including those proposed to be amended.
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    \3\ 15 U.S.C. 78q-1.
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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

    OCC has not solicited or received written comments relating to the 
proposed rule change. OCC will notify the Commission of any written 
comments it receives.

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 the 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 rule-comments@sec.gov. Please include 
File No. SR-OCC-2010-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File No. SR-OCC-2010-05. 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 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 such filing also will be available for 
inspection and copying at OCC's principal office and on OCC's Web site 
at http://www.theocc.com/publications/rules/proposed_changes/
proposed_changes.jspU. 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 No. SR-
OCC-2010-05 and should be submitted on or before April 28, 2010.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7844 Filed 4-6-10; 8:45 am]
BILLING CODE 8011-01-P