[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]


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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 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.
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    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.
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    \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.
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    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)       
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                                                                                            FR date and citation
                  Exchange                                  Type of contract                                    
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                                                  * * * * * * *                                                 
Singapore International Monetary Exchange     Option Contracts on the Long-Term Japanese    1994; ____ FR ____  
 Limited.                                      Government Bond Futures Contract.                                
                                                                                                                
                                                                                                                
                                                  * * * * * * *                                                 
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    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