[Federal Register Volume 75, Number 214 (Friday, November 5, 2010)]
[Notices]
[Pages 68390-68392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28059]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63222; File No. SR-OCC-2010-18]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Accommodate Index Futures That Are Settled in a Non-U.S. Currency
November 1, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on October 22, 2010, The
Options Clearing Corporation (``OCC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change described
in Items I and II below, which items have been prepared
[[Page 68391]]
primarily by OCC. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested parties.
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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 Substance
of the Proposed Rule Change
The purpose of the proposed rule change is to revise OCC's By-Laws
and Rules to accommodate index futures that are settled in a non-U.S.
currency. NYSE Liffe US, LLC (``NYL'') is proposing to introduce for
trading futures contracts on certain broad-based securities indexes
which are settled in Euros (``Euro-Settled Futures''). The proposed
rule amendments are drafted generically to apply to other futures
contracts that are settled in a non-U.S. currency and in a similar
manner.
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 these
statements.\2\
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\2\ The Commission has modified the text of the summaries
prepared by OCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Futures variation payments typically are settled on each business
day based on a price established on the prior business day. However,
because of time zone differences and the planned use of accounts at
North American and European clearing banks, variation settlements,
including final variation settlement, with respect to Euro-Settled
Futures will occur on the second business day following the date as of
which the settlement value is determined (i.e., a ``T+2'' basis).
Settlement times will vary depending on the clearing bank through which
settlement is effected and in any case will differ from those used for
option premiums.
To accommodate Euro-Settled Futures, which will settle only on days
in which both OCC and the relevant clearing banks are open for
business, OCC proposes to provide for a definition of ``business day''
in respect of such futures which is different from that used in OCC's
By-Laws, and to revise its rules governing variation payments and add
an interpretation and policy to those rules to accommodate the two-day
settlement cycle for Euro-Settled Futures and other futures settled in
a currency other than the U.S. dollar. In order to address the
possibility that a Clearing Member might fail to meet a settlement
obligation in a non-U.S. currency and to avoid the need for OCC to have
credit facilities in non-U.S. currencies, OCC reserves the right to
make settlement in the U.S. dollar equivalent of the non-U.S. currency
if necessary, and, in addition to taking any other actions authorized
under its By-Laws and Rules, to draft the Clearing Member's U.S. dollar
bank account for equivalent funds, which payment will be deemed to
satisfy the Clearing Member's settlement obligation. In order to
discourage Clearing Members from failing to settle in the non-U.S.
currency and thereby potentially imposing hardship on other Clearing
Members, OCC reserves the right to fine or discipline Clearing Members
that fail to settle.
In addition, OCC and NYL propose to enter into Schedule C-2 under
the Agreement for Clearing and Settlement Services, dated March 9,
2009, between OCC and NYL to accommodate the Euro-Settled Futures.
OCC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act \3\ and the rules and
regulations thereunder applicable to OCC because it provides for the
prompt and accurate clearance and settlement of securities
transactions, ensures the protection of investors and reduces
unnecessary costs and burdens on them and persons facilitating
transactions on their behalf. It does so by accommodating the two-day
settlement date for such futures necessitated by the use of European
banks and time zone differences.
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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 will have any
impact on or impose any burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
No written comments relating to the proposed rule change have been
solicited or received. OCC will notify the Commission of any written
comments received by OCC.
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)(iv) of the Act \4\ and Rule 19b-4(f)(4) \5\
thereunder because it effects a change in an existing service of OCC
that does not (i) adversely affect the safeguarding of securities or
funds in OCC's custody or control or for which OCC is responsible or
(ii) significantly affect the respective rights or obligations of OCC
or persons using the service. Euro-Settled Futures are futures within
the exclusive jurisdiction of the U.S. Commodity Futures Trading
Commission (``CFTC''), and OCC will therefore clear Euro-Settled
Futures in its capacity as a registered derivatives clearing
organization under the CFTC's regulatory jurisdiction. This rule change
will not affect the safeguarding of funds or securities in OCC's
possession because OCC will apply the same procedures and safeguards to
the clearing of these contracts that it does to the clearing of
securities options and security futures over which the Commission has
direct regulatory authority. The respective rights and obligations of
OCC and Clearing Members with respect to matters within the
Commission's jurisdiction will be unaffected.
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\4\ 15 U.S.C. 78s(b)(3)(A)(iv).
\5\ 17 CFR 240.19b-4(f)(4).
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At any time within sixty days of the filing of such rule change,
the Commission summarily may temporarily suspend 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.
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 Number SR-OCC-2010-18 on the subject line.
[[Page 68392]]
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-2010-18. 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 changes 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 Section, 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 filings also will be available for
inspection and copying at the principal office of OCC and on OCC's Web
site at http://www.theocc.com. 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-2010-18 and should be submitted on or before
November 26, 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. 2010-28059 Filed 11-4-10; 8:45 am]
BILLING CODE 8011-01-P