[Federal Register Volume 62, Number 35 (Friday, February 21, 1997)]
[Notices]
[Pages 8070-8071]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4234]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38284; File No. SR-OCC-96-15)
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of a Proposed Rule Change Relating to Revisions to the
Standards for Letters of Credit Deposited as Margin
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 4, 1996, The
Options Clearing Corporation (``OCC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change (File No.
SR-OCC-96-15) 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 purpose of the proposed rule change is to request the
Commission's permanent approval for OCC's modifications to its
standards for letters of credit deposited with OCC as a form of
margin.\2\
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\2\ For a complete description of these modifications to the
standards for letters of credit, refer to Securities Exchange Act
Release No. 29641 (August 30, 1991), 56 FR 46027 [File No. SR-OCC-
91-13] (order temporarily approving proposed rule change through
February 28, 1992).
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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 such statements.\3\
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\3\ 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 Purposed Rule Change
In previous filings, OCC has proposed and the Commission has
approved on a temporary basis OCC's modifications to its rules
governing letters of credit deposited with OCC as a form of margin.\4\
This filing proposes to make permanent the Commission's temporary
approval of OCC's modifications to its Rule 604, which sets forth the
standards for letters of credit deposited with OCC as a form of margin.
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\4\ Securities Exchange Act Release Nos. 29641 (August 30,
1991), 56 FR 46027 [File No. SR-OCC-91-13] (order temporarily
approving proposed rule change through February 28, 1992); 30424
(February 28, 1992), 57 FR 8106 [File No. SR-OCC-92-06] (order
temporarily approving proposed rule change through May 31, 1992);
30763 (June 1, 1992), 57 FR 24284 [File No. SR-OCC-92-11] (order
temporarily approving proposed rule change through August 31, 1992);
31126 (September 1, 1992), 57 FR 40925 [File No. SR-OCC-92-19]
(order temporarily approving proposed rule change through December
31, 1992); 31614 (December 17, 1992), 57 FR 61142 [File No. SR-OCC-
92-37] (order temporarily approving proposed rule change through
June 30, 1993); 32532 (June 28, 1993), 58 FR 36232 [File No. SR-OCC-
93-14] (order temporarily approving proposed rule change through
June 30, 1994); 34206 (June 13, 1994), 59 FR 31661 [File No. SR-OCC-
94-06] (order temporarily approving proposed rule change through
June 30, 1995); 36138 (August 23, 1995), 60 FR 44926 [File No. SR-
OCC-95-9] (order temporarily approving proposed rule change through
June 28, 1996); and 37618 (August 29, 1996), 61 FR 46889 [File No.
SR-OCC-96-07] (order temporarily approving proposed rule change
through June 30, 1997).
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The modifications for which OCC has temporary approval are as
follows. First, in order to conform to the Uniform Commercial Code and
to avoid any
[[Page 8071]]
ambiguity as to the latest time for honoring demands upon letters of
credit, letters of credit must state expressly that payment must be
made prior to the close of business on the third banking day following
demand. Second, letters of credit must be irrevocable. Third, letters
of credit must expire on a quarterly basis. Fourth, OCC included
language in its Rule 604 to make explicit OCC's authority to draw upon
letters of credit at any time, whether or not the clearing member that
deposited the letter of credit has been suspended or is in default, if
OCC determines that such draws are advisable to protect OCC, other
clearing members, or the general public.
According to OCC, since its original filing, OCC has received no
adverse comments or complaints from any of its clearing members, the
banks, or other interested parties with respect to the modifications to
Rule 604 or the implementation of the revised letter of credit
standards. As a result, OCC now requests that the Commission
permanently approve its revisions.
OCC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act \5\ because the proposed rule
change promotes the protection of investors by enhancing OCC's ability
to safeguard the securities and funds in its possession or subject to
its control.
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\5\ 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 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
Comments were not and are not intended to be solicited by OCC 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
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 OCC 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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 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. Sec. 552, will be available for inspection and copying in
the Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such filing will also be available
for inspection and copying at the principal office of OCC. All
submissions should refer to the file number SR-OCC-96-15 and should be
submitted by March 14, 1997.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(1)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4234 Filed 2-20-97; 8:45 am]
BILLING CODE 8010-01-M
