[Federal Register: December 4, 2002 (Volume 67, Number 233)]
[Notices]
[Page 72261-72262]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04de02-107]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-46914; File No. SR-OCC-2002-22]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Order Granting Accelerated Approval of a Proposed
Rule Change to Clear and Settle Options on Nonequity Fund Shares
November 26, 2002.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), as amended,\1\ notice is hereby given that on September 27,
2002, The Options Clearing Corporation (``OCC'') filed with the
Securities and Exchange Commission (``Commission'') and on October 18,
2002, amended 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 and order to solicit comments from interested
persons and to grant accelerated approval of the proposed rule change.
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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 will amend OCC's by-laws and rules to
accommodate the clearance and settlement of options on nonequity fund
shares (i.e., shares representing interests in entities holding
portfolios or baskets of nonequity securities).
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)
[[Page 72262]]
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 immediate purpose of the proposed rule change amends article I,
VI and XII of OCC's by-laws and chapters VI and XVIII of its rules to
accommodate the introduction of options on ``iShares.'' iShares
represent interests in an investment company holding portfolios of
government securities, corporate debt securities, or government and
corporate debt securities. OCC currently issues and clears options on
interests in various entities holding portfolios of equity securities
(including iShares' equity-based funds). OCC's Rules define such
options and their underlying interests as ``stock fund options'' and
``stock fund shares,'' respectively. To accommodate options on iShares
representing interests in an entity holding portfolios of debt
securities and to accommodate the possibility that exchanges may in the
future list options on interests in other entities holding non-equity
securities (or a combination of equity and non-equity), the proposed
rule change will replace the terms ``stock fund options'' and ``stock
fund shares'' with the terms ``fund options'' and ``fund shares'' and
will eliminate any reference to ``stock'' or ``equity'' within the
definitions.\3\
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\3\ Because the term ``fund share'' is now being defined to
include a broad class of securities, OCC will separately amend
Filing No. SR-OCC-2002-04, which proposes to expand the forms of
margin collateral accepted by OCC to include money market fund
shares, to eliminate the few instances in which the same term is
used to refer narrowly to money market fund shares.
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OCC will interpret the term ``fund shares'' broadly, as it did the
term ``stock fund shares,'' to include not only interests in registered
investment companies but also interests in unregistered trusts (e.g.,
HOLDRs) and in other investment vehicles holding portfolios of
securities. Accordingly, to reflect this broad interpretation the
proposed rule change will substitute the term ``trusts'' for ``unit
investment trusts'' in the definition of ``fund share.'' Conforming
changes will be made throughout OCC's By-laws and Rules to incorporate
the new definitions.
OCC believes that the proposed rule change is consistent with the
requirements of section 17A of the Act,\4\ as amended, and the rules
and regulations thereunder applicable to OCC because it promotes the
prompt and accurate clearance and settlement of securities
transactions, fosters cooperation and coordination with persons engaged
in the clearance and settlement of securities transactions, removes
impediments to and perfects the mechanism of a national system for the
prompt and accurate clearance and settlement of securities
transactions, and, in general, protects investors and the public
interest.
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\4\ 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, 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
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
Section 17A(b)(3)(F) of the Act and the rules and regulations
thereunder, requires that the rules of a clearing agency be designed to
promote the prompt and accurate clearance and settlement of securities
transactions.\5\ The Commission finds that the proposed rule change is
consistent with this obligation because by allowing OCC to clear and
settle options on nonequity fund shares, market participants trading
these products will obtain the efficiencies and safeguards provided by
OCC, a registered clearing agency.
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\5\ 15 U.S.C. 78q-1(b)(3)(F).
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OCC has requested that the Commission find good cause for approving
the proposed rule change prior to the thirtieth day after publication
of the notice of filing. Both the American Stock Exchange (``Amex'')
and the Chicago Board Options Exchange (``CBOE'') have informed OCC
that they intend to begin trading options on iShares debt-based funds
upon the Commission's approval of this proposed rule change and of a
related supplement to the Options Disclosure Document. Accordingly, the
Commission finds that there is good cause to approve the rule change
prior to the thirtieth day after publication of the notice of filing
because by so approving OCC will be able to immediately commence
clearing and settling nonequity fund options when Amex and CBOE
commence trading them.
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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
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 Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such filing also will be available for
inspection and copying at the principal office of OCC. All submissions
should refer to File No. SR-OCC-2002-22 and should be submitted by
December 26, 2002.
It is therefore ordered, pursuant to section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-OCC-2002-22) be, and hereby
is, approved on an accelerated basis.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-30674 Filed 12-3-02; 8:45 am]
BILLING CODE 8010-01-P