[Federal Register: August 19, 2008 (Volume 73, Number 161)]
[Notices]
[Page 48419-48420]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19au08-80]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58347; File No. SR-OCC-2008-09]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of a Proposed Rule Change Relating to Eligible Margin
Assets
August 12, 2008.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on May 15, 2008, The Options
Clearing Corporation (``OCC'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change described in Items
I, II, and III below, which items have been prepared primarily by OCC.
The Commission is publishing this notice to solicit comments 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 Substance
of the Proposed Rule Change
The proposed rule change would eliminate foreign currencies and
letters of credit denominated in a foreign currency as eligible margin
assets.
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
The primary purpose of this rule change is to eliminate, as
eligible forms of margin assets, foreign currency and letters of credit
denominated in a foreign currency.
Background
The Philadelphia Stock Exchange, Inc. (``Phlx'') has delisted all
physical delivery foreign currency and cross-rate foreign currency
options (collectively, ``currency options'') and has advised OCC that
it does not presently plan to list contracts requiring foreign currency
delivery. To support premium and exercise settlement for such currency
options, OCC has maintained in various countries bank accounts that
also have been used from time to time to hold margin deposits in
foreign currencies. With the delisting of physical delivery currency
options, these accounts are no longer needed for operational reasons.
Few clearing members have deposited foreign currencies as margin with
OCC and only then in de minimis amounts, and no such deposits are
currently held by OCC. In light of the limited and infrequent use of
this margin asset class by clearing members, OCC has determined to
close its foreign currency accounts for cost saving purposes. Closing
these accounts means that OCC will no longer have the operational
capability to accept foreign currency for margin purposes, and
accordingly, OCC proposes to modify its rules to delete this asset
class. Letters of credit denominated in a foreign currency have never
been posted with OCC by clearing members, and their acceptance will be
eliminated as well.
Rule Changes
To eliminate these forms of margin assets OCC would amend Rule 604.
Specifically, references to deposits of foreign currencies would be
deleted from paragraph (a), which relates to cash margin deposits.
References to letters of credit denominated in a foreign currency would
be deleted from paragraph (c). Other technical, conforming changes
would be made to paragraph (c) to reflect such deletion. Because
amended paragraph (c) would specify that letters of credit are to be
denominated in U.S. dollars, specific references to U.S. dollar
denominated letters of credit would be removed from Interpretations and
Policies .03 and .08 under Rule 604. Interpretation and Policy .09
would be deleted in its entirety as it solely relates to deposits of
letters of credit denominated in a foreign currency.
For rule transparency purposes, OCC also proposes to insert a
notice at the beginning of the By-Law articles and Rule chapters that
relate to physical delivery currency options (i.e., Articles XV and XXI
and Chapters XVI and XXII) to inform readers that such provisions are
inoperative until further notice by OCC.
OCC believes that the proposed change is consistent with the Act
because it removes the eligibility of asset classes for margin purposes
that either are not currently used or have never been used by clearing
members in order to reduce OCC's operating costs. 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.
[[Page 48420]]
(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
Within thirty-five 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 such 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 rule-comments@sec.gov. Please include
File Number SR-OCC-2008-09 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-OCC-2008-09. 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 and on OCC's Web
site at http://www.theocc.com/publications/rules/proposed_changes/sr_
occ_08_09.pdf. 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-
2008-09 and should be submitted on or before September 9, 2008.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\3\
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\3\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-19116 Filed 8-18-08; 8:45 am]
BILLING CODE 8010-01-P