75 FR 220 pgs. 70060-70061 - Self-Regulatory Organizations; The Options Clearing Corporation; Order Granting Approval of a Proposed Rule Change Relating to Cash-Settled Foreign Currency Options With One-Cent Exercise Prices
Type: NOTICEVolume: 75Number: 220Pages: 70060 - 70061
Docket number: [Release No. 34-63278; File No. SR-OCC-2010-05]
FR document: [FR Doc. 2010-28746 Filed 11-15-10; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63278; File No. SR-OCC-2010-05]
Self-Regulatory Organizations; The Options Clearing Corporation; Order Granting Approval of a Proposed Rule Change Relating to Cash-Settled Foreign Currency Options With One-Cent Exercise Prices
November 8, 2010.
I. Introduction
On March 16, 2010, The Options Clearing Corporation ("OCC") filed with the Securities and Exchange Commission ("Commission") a proposed rule change pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 ("Act")1and Rule 19b-4 thereunder2to clarify 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. The proposed rule change was published for comment in the Federal Register on April 7, 2010.3No comment letters were received on the proposal. This order approves the proposal.
Footnotes:
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
3 Securities Exchange Act Release No. 61820 (Apr. 1, 2010), 75 FR 17805.
II. Description of the Proposal
OCC will 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.4
Footnotes:
4 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 .
In its capacity as a "derivatives clearing organization" registered as such with the Commodities Futures Trading Commission, OCC also filed 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.
III. Discussion
Section 17A(b)(3)(F) of the Act5requires, among other things, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions and derivative transactions. OCC's clarification of its By-Laws with respect to cash-settled foreign currency options with nominal exercise prices should help reduce the likelihood of confusion as to OCC's treatment of such products, and accordingly should help to promote the prompt and accurate clearance and settlement of securities transactions.
Footnotes:
5 15 U.S.C. 78q-1(b)(3)(F).
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 Act6and the rules and regulations thereunder.
Footnotes:
6 15 U.S.C. 78q-1.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,7that the proposed rule change (File No. SR-OCC-2010-05) be and hereby is approved.8
Footnotes:
7 15 U.S.C. 78s(b)(2).
8 In approving the proposed rule change, the Commission considered the proposal's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f).
For the Commission by the Division of Trading and Markets, pursuant to delegated authority.9
Footnotes:
9 17 CFR 200.30-3(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28746 Filed 11-15-10; 8:45 am]
BILLING CODE 8011-01-P