[Federal Register Volume 63, Number 249 (Tuesday, December 29, 1998)]
[Notices]
[Pages 71664-71665]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34357]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40815; File No. SR-OCC-98-16]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Index Options Escrow Deposits
December 21, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 23, 1998, The
Options Clearing Corporation (``OCC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
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 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
Substance of the Proposed Rule Change
The proposed rule change would eliminate the reference to List of
Marginable OTC Securities (``OTC List'') in OCC Rule 1801 and in OCC's
agreement with each of its approved escrow deposit banks.
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. 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.\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 proposed rule change would eliminate the reference to the OTC
List in OCC Rule 1801.\3\ Rule 1801 permits escrow deposits to be made
with respect to short positions in put and call stock index options.
For short put stock index options, an escrow deposit may only include
cash and short-term U.S. Government securities. For short stock index
call options, an escrow deposit may consist of any combination of cash,
short-term U.S. Government securities, and common stocks listed on a
national securities exchange or included in the current OTC List
published by the Board of Governors of the Federal Reserve System
(``Federal Reserve Board'').\4\ This criterion is also incorporated in
OCC's agreement with each of its approved escrow deposit banks.
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\3\ The text of the proposed amendment to OCC Rule 1801 is set
forth in OCC's filing, which is available for inspection and copying
at the Commission's Public Reference Room and through OCC.
\4\ The OTC List is composed of stocks traded over-the-counter
(``OTC'') in the United States that qualify as margin securities
under Regulation T. Accordingly, broker-dealers are permitted to
extend margin credit against such OTC stocks.
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Effective January 1, 1999, the Federal Reserve Board will cease
publication of the OTC List and will remove the definition of OTC stock
from Regulation T. Broker-dealers instead will be permitted to extend
margin credit against all equity securities listed on the Nasdaq Stock
Market. In light of the foregoing, OCC is proposing to eliminate the
reference to the OTC List contained in Rule 1801 and to allow any
common stock listed on the Nasdaq Stock Market to be included in escrow
deposits with respect to short positions in index call options.
Upon the approval of the proposed rule change, OCC intends to send
a notice to each of its custodian banks to advise them that,
notwithstanding the reference to the OTC List in the Amended and
Restated On-Line Escrow Deposit Agreement, all common stocks listed on
the Nasdaq Stock Market will be permitted to be included in escrow
deposits in respect to short index calls.
OCC believes that the proposed rule change is consistent with the
purposes and requirement of Section 17A of the Act \5\ because it would
conform OCC's escrow deposit rules to a change being made by the
Federal Reserve Board.
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\5\ 15 U.S.C. 78q-1.
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[[Page 71665]]
(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
Written comments were not and are not intended to be solicited with
respect to the proposed rule change, and none were received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(iii) of the Act \6\ and pursuant to Rule 19b-4(e)(4) \7\
thereunder because the proposal effects a change in an existing service
of OCC that does not adversely affect the safeguarding of securities of
funds in the custody or control of OCC or for which it is responsible
and does not significantly affect the respective rights or obligations
of the clearing agency or persons using the service. At any time within
sixty days of the filing of the proposed rule change, the Commission
may summarily abrogate 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.
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\6\ 15 U.S.C. 78s(b)(3)(A)(iii).
\7\ 17 CFR 240.19b-4(e)(4).
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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. 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-98-16 and should be submitted by
January 19, 1999.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-34357 Filed 12-28-98; 8:45 am]
BILLING CODE 8010-01-M
