[Federal Register Volume 76, Number 13 (Thursday, January 20, 2011)]
[Notices]
[Page 3684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-1080]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63711; File No. SR-ODD-2011-01]
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 Credit Default Options in, and Making Certain Technical
Amendments to, the June 2007 Supplement to the Options Disclosure
Document
January 12, 2011.
On October 25, 2010, 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 amend and
restate the June 2007 Supplement to its options disclosure document
(``ODD'') to reflect certain changes to disclosure regarding credit
default options.\2\ The supplement also proposes certain technical
amendments.\3\ On December 21, 2010, the OCC submitted to the
Commission five definitive copies of the January 2011 Supplement.\4\
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\1\ 17 CFR 240.9b-1.
\2\ See letter from Jean M. Cawley, Senior Vice President and
Deputy General Counsel, OCC, to Sharon Lawson, Senior Special
Counsel, Division of Trading and Markets (``Division''), Commission,
dated October 22, 2010.
\3\ See id.
\4\ See letter from Jean M. Cawley, Senior Vice President and
Deputy General Counsel, OCC, to Sharon Lawson, Senior Special
Counsel, Division, Commission, dated December 20, 2010.
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The ODD currently contains general disclosures on the
characteristics and risks of trading standardized options. The June
2007 Supplement amended the ODD to provide disclosure regarding credit
default options in response to the Commission's approval of Chicago
Board Options Exchange's (``CBOE'') proposal to list and trade credit
default options.\5\ In November 2010, the Commission approved a
proposed rule change that, among other things, permits the CBOE to list
credit default options that contemplate only a single credit event.\6\
The current proposed January 2011 Supplement amends the June 2007
Supplement disclosure to accommodate the listing of credit default
options that contemplate only a single credit event, as now permitted
under CBOE rules.\7\ In addition, the supplement proposes certain
technical amendments, as described below, to the June 2007 Supplement.
The January 2011 Supplement also restates the June 2007 Supplement, as
amended, in its entirety.
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\5\ See Securities Exchange Act Release No. 55871 (June 6,
2007), 72 FR 32372 (June 12, 2007) (SR-CBOE-2006-84) (order
approving CBOE's proposed rules to list and trade credit default
options); and Securities Exchange Act Release No. 56275 (August 17,
2007), 72 FR 47097 (August 22, 2007) (SR-CBOE-2007-26) (order
approving CBOE's proposed rules to list and trade credit default
basket options).
\6\ See Securities Exchange Act Release No. 63352 (November 19,
2010), 75 FR 73155 (November 29, 2010) (SR-CBOE-2010-046) (order
approving proposed rule change to amend certain rules pertaining to
credit options).
\7\ The proposed January 2011 Supplement amends and restates the
June 2007 Supplement to the February 1994 version of the booklet
entitled ``Characteristics and Risks of Standardized Options.''
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Specifically, the proposed supplement to the June 2007 Supplement
deletes the summary of the disclosure regarding the characteristics and
risks of credit default options because this summary had previously
been added to the ODD by the May 2010 Supplement. In addition, the
proposed supplement amends the June 2007 Supplement to clarify that a
listing options market has the ability to specify only a single credit
event for automatic exercise of a series of credit default options, in
addition to multiple credit events which were already disclosed in the
June 2007 Supplement. Further, the OCC is proposing to make technical
changes to the June 2007 Supplement by replacing the term ``booklet''
with ``Booklet,'' and to clarify the place in the ODD where the section
entitled ``Credit Default Options and Credit Default Basket Options''
is inserted. The proposed supplement is intended to be read in
conjunction with the more general ODD, which discusses the
characteristics and risks of options generally.\8\
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\8\ 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 changes regarding credit default options are made in
the future. Any future changes to the rules of the options markets
concerning credit default options 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 \9\ 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.\10\ 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 ODD, is furnished to customers. The
Commission has reviewed the proposed supplement and amendment and
finds, having due regard to the adequacy of the information disclosed
and the public interest and protection of investors, that they may be
furnished to customers as of the date of this order.
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\9\ 17 CFR 240.9b-1(b)(2)(i).
\10\ 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,\11\
that definitive copies of the January 2011 Supplement and amendment to
the ODD (SR-ODD-2011-01), reflecting changes to disclosure regarding
credit default options and technical changes to the ODD, may be
furnished to customers as of the date of this order.
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\11\ 17 CFR 240.9b-1.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(39).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1080 Filed 1-19-11; 8:45 am]
BILLING CODE 8011-01-P