[Federal Register Volume 61, Number 178 (Thursday, September 12, 1996)]
[Notices]
[Pages 48193-48194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23345]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37655; File No. SR-OCC-96-08]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of Proposed Rule Change Regarding the Exercise of
Certain Foreign Currency Options
September 6, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on July 18, 1996, 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 from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1) (1988).
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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 permit the exercise of certain
foreign currency options on the business day immediately preceding the
expiration date of such options.
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. The self-regulatory organization has prepared
summarizes, sent 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 language in these sections.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Under the proposed rule change, OCC will amend its results to
permit the exercise of American-style \3\ foreign currency and cross-
rate foreign currency options (``currency options'') on the business
day immediately preceding their expiration date. Currently, OCC Rule
801(c) prohibits the exercise of option contracts on the business day
immediately preceding their expiration unless such options are
American-style flexibly structured options. At the time this
restriction was incorporated into OCC's rules, all option contracts
expired on Saturday. The restriction ensured that there was adequate
time for all unmatched transactions to be resolved and for OCC to
receive and process exercise notices for the preliminary and final
exercise by exception (``ex-by-ex'') processing cycles that were then
in effect. Subsequently, OCC has replaced the preliminary and final
processing cycles for currency options with a single ex-by-ex
processing procedure.
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\3\ The term ``American'' or ``American-style'' option contract
means the option contract may be exercised at any time from its
commencement time until its expiration. In contrast, a European
style option may only be exercised on its expiration.
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With the conversion to Friday night as the expiration date for all
standardized currency options,\4\ Rule 801(c) has
[[Page 48194]]
operated to preclude the exercise of currency options on Thursday. OCC
clearing members have requested that OCC lift the restriction with
respect to currency options since their non-U.S. customers have
expressed a desire to submit exercises on Thursday due to time zone
differences with the United States. OCC believes that the protections
afforded by the Rule 801(c) exercise restriction are no longer
necessary for currency options because of the single cycle expiration
processing procedures that are in effect and because currency options
expire on Friday instead of Saturday.
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\4\ For a complete description of the conversion of the
expiration date for all standardized currency options from Saturday
to Friday, refer to Securities Exchange Act Release Nos. 32458 (June
11, 1993), 58 FR 3384 [File No SR-OCC-93-09] (notice of filing and
order granting accelerated approval on a temporary basis of a
proposed rule change that changed the expiration day for American-
style foreign currency options from Saturday to Friday) and 32630
(July 14, 1993), 58 FR 38800 [File No. SR-OCC-93-15] (order granting
permanent approval on an accelerated basis of a proposed rule change
that changed the expiration day for American-style foreign currency
options and cross-rate foreign currency options from Saturday to
Friday).
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OCC believes the proposed rule change is consistent with the
requirements of Section 17A of the Act \5\ because it promotes the
prompt and accurate clearance and settlement of securities
transactions.
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\5\ 15 U.S.C. 78q-1 (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
OCC does not believe that the proposed rule change will 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
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 submission
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549. Copies
of the submissions, 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, 450 Fifth Street NW., Washington,
DC 20549. Copies of such filings will also be available for inspection
and copying at the principal office of OCC. All submissions should
refer to the file number SR-OCC-96-08 and should be submitted by
October 3, 1996.
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) (1996).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-23345 Filed 9-11-96; 8:45 am]
BILLING CODE 8010-01-M
