[Federal Register Volume 59, Number 101 (Thursday, May 26, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-12752] [[Page Unknown]] [Federal Register: May 26, 1994] ======================================================================= ----------------------------------------------------------------------- COMMODITY FUTURES TRADING COMMISSION 17 CFR Part 30 Foreign Option Transactions AGENCY: Commodity Futures Trading Commission. ACTION: Order. ----------------------------------------------------------------------- SUMMARY: The Commodity Futures Trading Commission (Commission) is authorizing option contracts on the Long-Term Japanese Government Bond futures contract traded on the Singapore International Monetary Exchange Limited (SIMEX) to be offered or sold to persons located in the United States. This Order is issued pursuant to: (1) Commission rule 30.3(a), 17 CFR 30.3(a) (1993), which makes it unlawful for any person to engage in the offer or sale of a foreign option product until the Commission, by order, authorizes such foreign option to be offered or sold in the United States; and (2) The Commission's Order issued on July 20, 1988, 53 FR 28826 (July 29, 1988), authorizing certain option products traded on SIMEX to be offered or sold in the United States. EFFECTIVE DATE: June 27, 1994. FOR FURTHER INFORMATION CONTACT: Jane C. Kang, Esq., Division of Trading and Markets, Commodity Futures Trading Commission, 2033 K Street, NW., Washington, DC 20581. Telephone: (202) 254-8955. SUPPLEMENTARY INFORMATION: The Commission has issued the following Order: Order Under Commission Rule 30.3(a) Permitting Option Contracts on the Long-Term Japanese Government Bond Futures Contract Traded on the Singapore International Monetary Exchange Limited To Be Offered or Sold in the United States Thirty Days After Publication of This Notice in the Federal Register By Order issued on July 20, 1988 (Initial Order), the Commission authorized, pursuant to Commission rule 30.3(a),1 certain option products traded on the Singapore International Monetary Exchange Limited (SIMEX) to be offered or sold in the United States. 53 FR 28826 (July 29, 1988). Among other conditions, the Initial Order specified that: \1\Commission rule 30.3(a), 17 CFR 30.3(a) (1993), makes it unlawful for any person to engage in the offer or sale of a foreign option product until the Commission, by order, authorizes such foreign option to be offered or sold in the United States. --------------------------------------------------------------------------- Except as otherwise permitted under the Commodity Exchange Act and regulations thereunder, * * * no offer or sale of any SIMEX option product in the United States shall be made until thirty days after publication in the Federal Register of notice specifying the particular option(s) to be offered or sold pursuant to this Order. By letter dated April 28, 1994, SIMEX through its counsel represented that it would be introducing an option contract based on the Long-Term Japanese Government Bond futures contract. SIMEX has requested that the Commission supplement its Initial Order and subsequent Orders2 authorizing options on the Eurodollar, Japanese Yen, Deutsche Mark, 3-Month Euroyen Interest Rate and Nikkei Stock Average futures contracts by also authorizing SIMEX's option contracts on the Long-Term Japanese Government Bond futures contract to be offered or sold to persons in the United States. Upon due consideration, and for the reasons previously discussed in the Initial Order, the Commission believes that the request for authorization to offer or sell option contracts on the Long-Term Japanese Government Bond futures contract3 should be granted. --------------------------------------------------------------------------- \2\See 55 FR 26428 (June 28, 1990) and 57 FR 2675 (January 23, 1992). \3\See section 2(a)(1) of the Commodity Exchange Act, section 3(a)12 of the Securities Exchange Act of 1934 (34 Act) and rule 3a12-8 promulgated thereunder. On July 11, 1986, the Securities and Exchange Commission designated the government debt securities of the Government of Japan as exempted securities for purposes of the 34 Act's application to the marketing in the United States of futures contracts of those securities. --------------------------------------------------------------------------- Accordingly, pursuant to Commission rule 30.3(a) and the Commission's Initial Order issued on July 20, 1988, and subject to the terms and conditions specified therein, the Commission hereby authorizes SIMEX's option contracts on the Long-Term Japanese Government Bond futures contract to be offered or sold to persons located in the United States thirty days after publication of this Order in the Federal Register. Contract Specifications, Options on Long-Term Japanese Government Bond Futures Underlying Interest One (1) Long-Term Japanese Government Bond (JGB) Futures contract representing 50,000,000 face value notional long term 10-year JGB with 6% coupon. Description A buyer of one option on long term JGB Futures may exercise the option to assume a position in one long term JGB Futures contract (long position if the option is a call and short position if the option is a put) of a specified contract month at a specified strike price. The seller of one option on long term JGB Futures has the obligation of assuming, if the option is exercised by the buyer, a position in one long term JGB Futures contract (short position if the option is a call and long position if the option is a put) of a specified contract month at a specified strike price. Price Quotation Quoted in multiples of one hundredth (1/100) points. Each one hundredth point per 100 points represents Y 5,000. For example, a quote of 0.46 represents a total option premium of Y 230,000 (i.e., 46 basis points x Y 5,000). Minimum Price Increment (Tick Size and Value) 0.01 point (also known as one tick) = Y 5,000 per contract (same as for underlying futures). Strike Prices Strike prices are set at maximum 0.50 point intervals. Sixteen (16) strike prices, eight above and eight below the previous day's settlement price for the underlying JGB futures contract (for example, if a specific JGB futures settlement price is 100.80, option strike prices may be set at 97.00, 97.50, 98.00, 98.50, 99.00, 99.50, 100.00, 100.50, 101.00, 101.50, 102.00, 102.50, 103.00, 103.50, 104.00 and 104.50), will be available from the first day of trading. Thereafter, the Exchange shall, if necessary, list additional options at such new exercise prices as may be necessary to ensure that the next eight exercise prices above and below the previous day's settlement price are listed for trading. Contract Months Options available on the two nearest serial months and two nearest quarterly months chosen from March, June, September and December. For example, on 21 April 1994, the available contract months will be May, June, July and September. Trading Hours 7:45 a.m. to 10:30 a.m. 11:30 a.m. to 5 p.m. Trading Hours on the Last Trading Day 7:45 a.m. to 10:30 a.m. 11:30 a.m. to 2 p.m. Last Trading Day Options trading shall terminate on the last Tokyo Stock Exchange business day of the month preceding the contract month. Exercise American style, i.e., buyers of futures options may exercise their options on any business day up to and including the expiration date (prior to the daily cut-off time). The Clearing House assigns exercise notices to sellers of options according to a random selection process. In-the-money options are automatically exercised by the Clearing House at expiry (unless otherwise instructed). The settlement price of the Tokyo Stock Exchange long term JGB futures contract having the same contract month as the underlying SIMEX JGB futures contract will be used as a reference to determine which options may be exercised automatically at expiry. Expiration The last trading day. Minimum Margin Requirements The minimum margin is subject to periodic changes. Buyers of Options
Premium must be paid in full when the option is bought. Uncovered Writers of Options The SPAN margining system shall be applicable to the margining of the JGB Options contract. The short option minimum charge is 15,000 (2%) of the existing maintenance margin for the underlying JGB futures contract. Position Limits The maximum number of options and underlying futures contract net on the same side of the market in all contract months combined which a person may own or control shall be 1,000 futures-equivalent contracts. For the purpose of calculating this limit, positions in the options contracts are aggregated with positions in the underlying futures contract. For aggregation purposes, the futures-equivalent of an option is one multiplied by the previous Business Day's SIMEX risk factor for the option series. SIMEX may from time to time provide exemptions to the foregoing position limits. Reporting Levels 100 options or 100 futures equivalent contracts for positions involving the option and the underlying futures contract. Ticker Symbol CJB and PJB. Clearing Corporation SIMEX Clearing House. List of Subjects in 17 CFR part 30 Commodity futures, Commodity options, Foreign transactions. Accordingly, 17 CFR part 30 is amended as set forth below: PART 30--FOREIGN FUTURES AND FOREIGN OPTION TRANSACTIONS 1. The authority citation for part 30 continues to read as follows: Authority: Secs. 2(a)(1)(A), 4, 4c, and 8a of the Commodity Exchange Act, 7 U.S.C. 2, 6, 6c and 12a. 2. Appendix B to part 30 is amended by adding the following entry after the existing entries for the ``Singapore International Monetary Exchange Limited'' to read as follows: Appendix B.--Option Contracts Permitted To Be Offered or Sold in the U.S. Pursuant to Sec. 30.3(a) ---------------------------------------------------------------------------------------------------------------- FR date and citation Exchange Type of contract ---------------------------------------------------------------------------------------------------------------- * * * * * * * Singapore International Monetary Exchange Option Contracts on the Long-Term Japanese 1994; ____ FR ____ Limited. Government Bond Futures Contract. * * * * * * * ---------------------------------------------------------------------------------------------------------------- Issued in Washington, DC on May 20, 1994. Jean A. Webb, Secretary to the Commission. [FR Doc. 94-12752 Filed 5-25-94; 8:45 am] BILLING CODE 6351-01-P
