Document ID: SEC-2009-0712-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; the Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Cross-Margining of Security Futures on Exchange-Traded Funds Based on Broad-Based Stock Indices
Posted Date: 2009-05-29T04:00Z

[Federal Register Volume 74, Number 102 (Friday, May 29, 2009)]
[Notices]
[Pages 25786-25787]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-12514]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59945; File No. SR-OCC-2009-09]

Self-Regulatory Organizations; the Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Cross-Margining of Security Futures on Exchange-Traded 
Funds Based on Broad-Based Stock Indices

May 20, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 17, 2009, 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. OCC filed the proposed rule change pursuant to 
Section 19(b)(3)(A)(i) of the Act \2\ and Rule 19b-4(f)(1) \3\ 
thereunder 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.
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    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change would certify security futures contracts 
on two exchange-traded funds (``ETFs'') based on broad-based stock 
indices as eligible contracts for purposes of OCC-CME cross-margining.

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.\4\
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    \4\ The Commission has modified parts of these statements.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In proposed rule change File Nos. SR-OCC-2008-03 and SR-OCC-2008-
12, respectively, OCC submitted rule changes to (i) expand its cross-
margining programs with commodity clearing organizations to include as 
eligible contracts security futures on ETFs based on broad-based 
securities indices and (ii) file an Amended and Restated OCC-CME Cross-
Margining Agreement (``OCC-CME XM Agreement'') and related forms of 
clearing member and market professional's agreements.\5\ The Exhibit A 
attached to the OCC-CME XM Agreement referenced security futures on two 
such ETFs, Standard & Poor's Depository Receipts (``SPY'') and

[[Page 25787]]

Diamonds Trust (``DIA''), as eligible contracts, but the filing did not 
specifically certify them as such.
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    \5\ Securities Exchange Act Release Nos. 57543 (March 20, 2008), 
73 FR 16405 (March 27, 2008) and 58258 (July 30, 2008), 73 FR 46133 
(August 7, 2008), respectively.
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    As noted in SR-OCC-2008-03, OCC had not included security futures 
on ETFs based on broad-based stock indices as eligible contracts in the 
OCC-CME cross-margining program because it was awaiting the issuance of 
an order by the Commodity Futures Trading Commission (``CFTC'') 
providing relief from certain provisions of Section 4d(a) of the 
Commodity Exchange Act. The CFTC staff recently contacted OCC and CME 
to request that each organization separately file with the CFTC rule 
changes certifying futures on SPY and DIA as eligible cross-margining 
contracts in connection with the issuance of the order.\6\ Although OCC 
functions as an SEC-registered clearing agency in connection with the 
OCC-CME cross-margin program, the CFTC made the request of OCC in its 
capacity as a CFTC-registered derivatives clearing organization. In 
response, OCC is submitting this filing to certify that futures on SPY 
and DIA will be eligible contracts for the OCC-CME cross-margining 
program upon issuance of the CFTC order and has attached as Exhibit 5A 
to the filing of proposed rule change a current Exhibit A to the OCC-
CME XM Agreement.
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    \6\ Changes to Exhibit A are not required to be filed with the 
Commission. See Securities Exchange Act Release No. 57118 (January 
9, 2008) 73 FR 2970 (January 16, 2008) (File No. SR-OCC-2007-19).
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    The proposed change is consistent with Section 17A of the Act 
because it enhances the utility of an existing cross-margining program 
by permitting the inclusion of contracts that did not exist at the time 
the program was originally implemented. Cross-margining reduces 
systemic risk while providing lower margin costs to participants. 
Therefore, expanding the positions that may be included in cross-
margining is beneficial to the clearing system and its participants. 
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.

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

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(i) of the Act \7\ and Rule 19b-4(f)(1) \8\ 
thereunder because the proposal constitutes an interpretation with 
respect to the meaning, administration, or enforcement of an existing 
rule of OCC. At any time within sixty days of the filing of such rule 
change, the Commission may summarily abrogate 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(i).
    \8\ 17 CFR 240.19b-4(f)(1).
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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 Number SR-OCC-2009-09 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-OCC-2009-09. 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. 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-2009-09 and should be 
submitted on or before June 19, 2009.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-12514 Filed 5-28-09; 8:45 am]
BILLING CODE 8010-01-P