[Federal Register Volume 59, Number 9 (Thursday, January 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-710]


[[Page Unknown]]

[Federal Register: January 13, 1994]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 30

 

Foreign Option Transactions

AGENCY: Commodity Futures Trading Commission.

ACTION: Order.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'') is 
authorizing Overnight Option contracts on the 10-Year Australian 
Treasury Bond, 3-Year Australian Treasury Bond and the All-Ordinaries 
Share Price Index futures contracts traded on the Sydney Futures 
Exchange Limited (``SFE'') to be offered or sold to persons located in 
the United States. This Order is issued pursuant to: Commission rule 17 
CFR 30.3(a), 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 the Commission's Order issued on July 20, 1988, (53 
FR 28832, (July 29, 1988), authorizing certain option products traded 
on SFE to be offered or sold in the United States.

EFFECTIVE DATE: January 13, 1994.

FOR FURTHER INFORMATION CONTACT: Robert H. Rosenfeld, Esq., Division of 
Trading and Markets, Commodity Futures Trading Commission, 2033 K 
Street, NW, Washington, DC 20581, 202-254-8955.

.SUPPLEMENTARY INFORMATION: The Commission has issued the following 
Order:
    Order Under Commission Rule Sec. 30.3(a) Permitting Overnight 
Option Contracts on the 10-Year Australian Treasury Bond, 3-Year 
Australian Treasury Bond and All-Ordinaries Share Price Index Futures 
Contracts Traded on the Sydney Futures Exchange Limited to be Offered 
or Sold in the United States.
    By Order issued on July 20, 1988 (``Initial Order''), the 
Commission authorized, pursuant to Commission rule Sec. 30.3(a),1 
certain option products traded on the Sydney Futures Exchange Limited 
(``SFE'') to be offered or sold in the United States. 53 FR 28832 (July 
29, 1988). Among other conditions, the Initial Order specified that:

    \1\Commission rule Sec. 30.3(a) 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.
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    Except as otherwise permitted under the Commodity Exchange Act 
and regulations thereunder, * * * no offer or sale of any SFE 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 November 24, 1993, the SFE requested that the 
Commission supplement its previous orders authorizing certain SFE 
options to be offered or sold to persons in the United States,2 by 
also authorizing SFE Overnight Options on 10-Year Australian Treasury 
Bond, 3-Year Australian Treasury Bond and the All Ordinaries Share 
Price Index futures contracts, which are traded on the Sydney Futures 
Exchange Computerized Overnight Market (``SYCOM''), SFE's overnight 
electronic trading system, to be offered or sold to persons located in 
the United States.
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    \2\See 53 FR 28832 (July 29, 1988) (options on 90-day Bank 
Accepted Bills, 10-Year Treasury Bonds and Australian Dollars 
futures contracts); 53 FR 30673 (August 15, 1988) (options on 3-Year 
Treasury Bond futures contracts); and 56 FR 51650 (October 15, 1991) 
(options on All-Ordinaries Share Price Index futures contracts).
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    Overnight Options are described by the SFE as short term options 
which provide investors with a means of hedging overnight risk 
exposure. The primary difference between Overnight Options and other 
existing SFE options is that Overnight Options have a lifespan that is 
valid only for the duration of a single SYCOM trading session 
(currently 4:40 p.m. to 4 a.m.). Moreover, Overnight Options are 
European style options (i.e., exercise possible only at expiration) and 
are traded exclusively on SYCOM. Finally, the strike prices used for 
Overnight Options differ from the strike price intervals set for 
existing SFE options.
    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 SFE's Overnight Options on the 10-Year Treasury Bond, 3-Year 
Treasury Bond and All Ordinaries Share Price Index futures contracts to 
be offered or sold to persons located in the United States effective as 
of the date of publication of this Order in the Federal Register.3
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    \3\As noted above, the Commission previously authorized, subject 
to a 30-day waiting period, the offer or sale of SFE option 
contracts on 3- and 10-year Australian Treasury Bond and All 
Ordinaries Share Price Index futures contracts. See n.2. The current 
request of the SFE would essentially trade similar option contracts, 
differing primarily only as to duration of contract, exercise and 
strike price. Under such circumstances, the Commission believes that 
a 30-day waiting period is not necessary.

                        Contract Specifications                         
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                                                      Options on all-   
    Options on 10-year        Options on 3-year       ordinaries share  
   Treasury bond futures    Treasury bond futures   price index futures 
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Trading unit:                                                           
    One Sydney Futures      One SFE three year     A$25 times the index.
     Exchange (SFE) ten      treasury bond                              
     year treasury bond      futures contract of                        
     futures contract of     A$100,000 notional                         
     A$100,000 notional      value.                                     
     value.                                                             
Trading hours:                                                          
    Coincide with Sydney    Same.................  Same.                
     Futures Exchange                                                   
     Computerized                                                       
     Overnight Market                                                   
     (SYCOM) trading                                                    
     session (presently                                                 
     4:40 p.m. to 4:00                                                  
     a.m.).                                                             
Contract months:                                                        
    March, June,            Same.................  Same.                
     September, December                                                
     (at present only                                                   
     futures front month                                                
     is traded).                                                        
Strike price interval:                                                  
    0.01% at-the-money      Same.................  5 pts, AIM, 6+, 6-.  
     (latest futures                                                    
     settlement price) and                                              
     four above and four                                                
     below.                                                             
Minimum price fluctuation:                                              
    0.005% of notional      0.01% (approx.         0.1 All-Ordinaries   
     value (approx.          A$28.00).              Index points (A$25).
     A$37.00).                                                          
Expiration:                                                             
    Conclusion of each      Same.................  Same.                
     SYCOM trading session.                                             
Style:                                                                  
    European (exercise      Same.................  Same.                
     only at expiration).                                               
Trading medium:                                                         
    SYCOM.................  Same.................  Same.                
Premiums:                                                               
    Multiples of 0.005%     Same.................  0.1 index points.    
     per annum.                                                         
Settlement:                                                             
    The arithmetical mean   Same except rounded    The arithmetical mean
     of bid and ask          to nearest multiple    of bid and ask      
     quotations in the       of 0.01%.              quotations in the   
     underlying futures                             underlying futures  
     contract taken at the                          contract taken at   
     times of 8:32 a.m.,                            the time of 9:55    
     8:34 a.m., 8:36 a.m.,                          a.m., 9:56 a.m.,    
     8:38 a.m. and 8:40                             9:57 a.m., 9:58     
     a.m., rounded to the                           a.m., 9:59 a.m.,    
     nearest multiple of                            10:00 a.m., 10:01   
     0.005%. This price is                          a.m., 10:02 a.m.,   
     then used to                                   10:03 a.m., 10:04   
     determine which                                a.m. and 10:05 a.m.,
     strikes are                                    rounded to the      
     automatically                                  nearest multiple of 
     exercised.                                     0.1 point. This     
                                                    price is then used  
                                                    to determine which  
                                                    strikes are         
                                                    automatically       
                                                    exercised.          
------------------------------------------------------------------------

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 ``Sydney Futures Exchange'' to read as 
follows: 

 Appendix B to Part 30.--Option Contracts Permitted To Be Offered or Sold in the U.S. Pursuant to Sec. 30.3(a)  
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            Exchange                            Type of contract                     FR date and citation       
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                                                      *****                                                     
Sydney Futures Exchange..........  Overnight Options on 10-Year Treasury       January 13, 1994; 59 FR ________.
                                    Bond, 3-Year Treasury Bond and the All-                                     
                                    Ordinaries Share Price Index futures                                        
                                    contracts.                                                                  
                                                                                                                
                                                     *****                                                      
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    Issued in Washington, DC on January 6, 1994.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 94-710 Filed 1-12-94; 8:45 am]
BILLING CODE 6351-01-P