[Federal Register Volume 75, Number 187 (Tuesday, September 28, 2010)]
[Notices]
[Pages 59779-59780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24199]
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SECURITIES AND EXCHANGE COMMISION
[Release No. 34-62942; File No. SR-OCC-2010-16]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of Proposed Rule Change Relating to Weekly Options And
Monthly Options
September 20, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on September 15, 2010, The
Options Clearing Corporation (``OCC'') filed with the Securities and
Exchange Commission the proposed rule change as described in Items I
and II 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 accommodate options that expire on
(a) any Friday of a calendar month other than the third Friday of a
calendar month (``Weekly Options'') or (b) on the last trading day of a
calendar month (``Monthly Options'').
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
The purpose of this proposed rule change is to accommodate Weekly
Options and Monthly Options. The Chicago Board Options Exchange, Inc.
(``CBOE''), is proposing to trade Weekly Options and Monthly Options on
broad-based indexes (``Weekly Index Options'' and ``Monthly Index
Options,'' respectively).\2\ Series of Weekly Index Options will expire
on a Friday of a calendar month other than the third Friday and Monthly
Index Options will expire on the last trading day of a calendar month.
If the last trading day of the month is a Friday, CBOE would opt to
list Monthly Index Options over Weekly Index Options. Weekly Index
Options and Monthly Index Options would be European-style, P.M.-settled
contracts. CBOE proposes for these contracts to be subject to
``automatic exercise procedures,'' meaning that these contracts would
automatically be exercised at expiration without the opportunity for
the clearing member to submit contrary exercise instructions if
immediately prior to expiration the contract's settlement amount or
exceeds a certain predetermined amount.
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\2\ Securities Exchange Act Release No. 62658 (Aug. 5, 2010), 75
FR 49010 (Aug. 12, 2010).
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Weekly Options and Monthly Options can be cleared and settled by
OCC with relatively minor revisions to current By-laws and Rules to
provide for options that expire on a monthly or weekly schedule as
proposed by CBOE.\3\ Therefore, OCC proposes amending Article I,
Section 1 of its by-laws to include definitions covering Weekly
[[Page 59780]]
and Monthly Options. Changes to Rule 801, which relates to the
submission of exercise notices, would be made to permit a Weekly or
Monthly Option to be exercised on the business day before the
expiration date and to include Weekly Index Options and Monthly Index
Options in the listing of options series subject to automatic exercise.
Changes to Interpretation and Policy .03 to Rule 805, which relates to
expiration date exercise processing, would be made to permit OCC to
specify time frames for submitting exercise instructions and furnishing
reports with respect to Weekly and Monthly Options on equity interests
that are different than those time frames effect for conventional
options.\4\ A conforming change to Rule 1804, which supplements Rule
805, also would be made to add Weekly Index Options and Monthly Index
Options to the list of options series subject to automatic exercise.
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\3\ OCC's By-laws and Rules already accommodate equity and index
options that expire on a day other than a Saturday following the
third Friday of the month. For example, they accommodate quarterly
options, which expire on the last business day of a calendar
quarter, and short term options, which expire a week after their
introduction for trading. Quarterly index options and short term
index options are also subject to automatic exercise procedures.
\4\ Interpretation .03 would also be amended to clarify that it
covers equity options with non-conventional expiration dates as
opposed to index options with nonconventional expiration dates,
which are subject to automatic exercise as described in Rule 1804.
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OCC states that the proposed changes to OCC's By-Laws and Rules are
consistent with the purposes and requirements of Section 17A of the Act
\5\ because they are designed to permit OCC to perform clearing
services for products that are subject to the jurisdiction of the SEC
without adversely affecting OCC's obligations with respect to the
prompt and accurate clearance and settlement of securities transactions
or the protection of investors and the public interest. They accomplish
this purpose by applying substantially the same rules and procedures to
transactions in Monthly Index Options and Weekly Index Options as OCC
applies to transactions in other options with a nonconventional expiry
date, including Quarterly Index Options. The proposed rule change is
not inconsistent with any rules of OCC, including any rules proposed to
be amended.
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\5\ 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 45 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 or disapprove 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 [email protected]. Please include
File No. SR-OCC-2010-16 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-2010-16. 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 submission should refer to File No. SR-
OCC-2010-16 and should be submitted on or before October 19, 2010
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-24199 Filed 9-27-10; 8:45 am]
BILLING CODE 8010-01-P