Document ID: SEC-2007-0527-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Options Clearing Corp.
Posted Date: 2007-04-10T04:00Z

[Federal Register: April 10, 2007 (Volume 72, Number 68)]
[Notices]               
[Page 17978]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ap07-128]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55582; File No. SR-ODD-2007-01]

 
Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Granting Approval of Accelerated Delivery of Supplement to the 
Options Disclosure Document Reflecting Certain Changes to Disclosure 
Regarding Rate-Modified Cash-Settled Foreign Currency Options

April 4, 2007.
    On March 13, 2007, The Options Clearing Corporation (``OCC'') 
submitted to the Securities and Exchange Commission (``Commission''), 
pursuant to Rule 9b-1 under the Securities Exchange Act of 1934 
(``Act''),\1\ five preliminary copies of a supplement to its options 
disclosure document (``ODD'') reflecting certain changes to disclosure 
regarding rate-modified cash-settled foreign currency options (``Rate-
Modified FCOs'').\2\ On April 3, 2007, the OCC submitted to the 
Commission five definitive copies of the supplement.\3\
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    \1\ 17 CFR 240.9b-1.
    \2\ See letter from Jean M. Cawley, First Vice President and 
Deputy General Counsel, OCC, to Sharon Lawson, Senior Special 
Counsel, Division of Market Regulation (``Division''), Commission, 
dated March 5, 2007.
    \3\ See letter from Jean M. Cawley, First Vice President and 
Deputy General Counsel, OCC, to Sharon Lawson, Senior Special 
Counsel, Division, Commission, dated April 3, 2007.
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    The ODD currently provides general disclosures on the 
characteristics and risks of trading standardize options. Recently, an 
options exchange amended its rules to permit the listing and trading of 
Rate-Modified FCOs.\4\ The proposed supplement, which supersedes and 
replaces the January 2007 Supplement to the ODD,\5\ provides disclosure 
on the characteristics of non-rate modified cash-settled foreign 
currency options (``Non-Rate Modified FCOs'') and adds new disclosure 
on the characteristics of Rate-Modified FCOs.
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    \4\ See Securities Exchange Act Release No. 55575 (April 3, 
2007) (approving File No. SR-ISE-2006-59).
    \5\ See Securities Exchange Act Release No. 55035 (December 29, 
2006), 72 FR 1358 (January 11, 2007) (SR-ODD-2006-01) (``January 
2007 Supplement'').
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    In addition to providing new disclosure on the characteristics of 
Rate-Modified FCOs, the proposed supplement to the ODD also reorganizes 
the January 2007 Supplement to distinguish disclosures regarding Non-
Rate Modified FCOs from Rate-Modified FCOs, as well as providing a 
separate heading for certain disclosures pertaining to all dollar-
denominated cash-settled foreign currency options. Further, the 
proposed supplement adds new clarification regarding exercise 
settlement values of Rate-Modified FCOs. The proposed supplement is 
intended to be read in conjunction with the more general ODD, which, as 
described above, discusses the characteristics and risks of options 
generally.\6\
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    \6\ The Commission notes that the options markets must continue 
to ensure that the ODD is in compliance with the requirements of 
Rule 9b-1(b)(2)(i) under the Act, 17 CFR 240.9b-1(b)(2)(i), 
including when future changes are made regarding Non-Rate Modified 
FCOs and Rate-Modified FCOs. Any future changes to the rules of the 
options markets would need to be submitted to the Commission under 
Section 19(b) of the Act. 15 U.S.C. 78s(b).
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    Rule 9b-1(b)(2)(i) under the Act \7\ provides that an options 
market must file five copies of an amendment or supplement to the ODD 
with the Commission at least 30 days prior to the date definitive 
copies are furnished to customers, unless the Commission determines 
otherwise, having due regard to the adequacy of information disclosed 
and the public interest and protection of investors.\8\ In addition, 
five copies of the definitive ODD, as amended or supplemented, must be 
filed with the Commission not later than the date the amendment or 
supplement, or the amended options disclosure document, is furnished to 
customers. The Commission has reviewed the proposed supplement and 
finds, having due regard to the adequacy of information disclosed and 
the public interest and protection of investors, that the proposed 
supplement may be furnished to customers as of the date of this order.
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    \7\ 17 CFR 240.9b-1(b)(2)(i).
    \8\ This provision permits the Commission to shorten or lengthen 
the period of time which must elapse before definitive copies may be 
furnished to customers.
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    It is therefore ordered, pursuant to Rule 9b-1 under the Act,\9\ 
that definitive copies of the proposed supplement to the ODD (SR-ODD-
2007-01), reflecting disclosure regarding Non-Rate Modified FCOs and 
adding disclosure regarding Rate-Modified FCOs, may be furnished to 
customers as of the date of this order.
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    \9\ 17 CFR 240.9b-1.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(39).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-6709 Filed 4-9-07; 8:45 am]

BILLING CODE 8010-01-P