[Federal Register Volume 59, Number 138 (Wednesday, July 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-17584]


[[Page Unknown]]

[Federal Register: July 20, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34360; International Series Release No. 683; File No. 
SR-OCC-94-07]

 

Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of a Proposed Rule Change Relating to Flexibly 
Structured Cross-Rate Foreign Currency Options

July 13, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 6, 1994, 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 on 
the proposed rule change from interested persons.
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    \1\15 U.S.C. 78s (1988).
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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 enable OCC to issue, 
clear, and settle new flexibly structured cross-rate foreign currency 
option contracts.

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. 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of this filing is to enable OCC to issue, clear, and 
settle new flexibly structured cross-rate foreign currency option 
contracts proposed for trading by the Philadelphia Stock Exchange 
(``PHLX'').\2\ In OCC's original cross-rate foreign currency options 
filing, OCC sought and obtained approval to issue, clear, and settle 
the following cross-rate option contracts: (1) options on German 
Deutsche marks with exercise prices in Japanese yen (``DM/JY'' 
options); (2) options on British pounds with exercise prices in 
Japanese yen (``BP/JY options''); and (3) options on British pounds 
with exercise prices in German Deutsche marks (``BP/DM options'').\3\ 
In that filing, OCC advised the Commission that it anticipated clearing 
additional cross-rate option contracts in the future, including cross-
rate option contracts involving different combinations of currencies. 
OCC stated that it would submit a rule filing with the Commission 
before issuing any new cross-rate option products.
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    \2\For a description of the PHLX proposed rule change, refer to 
Securities Exchange Act Release No. 34308 (July 5, 1994), 59 FR 
35551, [File No. SR-PHLX-94-18] (notice of filing of proposed rule 
change).
    \3\Securities Exchange Act Release No. 29920 (November 7, 1991), 
56 FR 58105 [File No. SR-OCC-91-04] (order approving proposed rule 
change establishing cross-rate foreign currency options).
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    OCC was recently advised by the PHLX that it is proposing to trade 
new flexibly structured cross-rate options through the PHLX's 
customized option facility. Under the PHLX proposal, options may be 
traded on any combination of currencies underlying existing foreign 
currency option contracts.\4\ For example, options on British pounds 
with exercise prices in French francs (``BP/FF options'') may be 
traded.
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    \4\The following currencies underlie existing foreign currency 
options contracts: (1) Australian dollars (``AUD''), (2) British 
pounds (``BP''), (3) Canadian dollars (``CD''), (4) German Deutsche 
marks (``DM''), (5) European Economic Community currency units 
(``ECU''), (6) French francs (``FF''), (7) Japanese yen (``JY'') and 
(8) Swiss francs (``SF'').
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    Accordingly, OCC is proposing to issue, clear, and settle these new 
cross-rate option contracts. OCC has reviewed its By-Laws and Rules and 
has determined that no changes are necessary to accommodate these new 
products because they will be margined and settled like the existing 
cross-rate option contracts.
    The proposed rule change is consistent with the purposes and 
requirements of Section 17A of the Securities Exchange Act of 1934, as 
amended, because it will provide for the prompt and accurate settlement 
of transactions in new cross-rate foreign currency option contracts and 
for the safeguarding of related securities and funds. The proposed rule 
change meets such requirements by establishing a framework in which 
existing, reliable OCC systems, rules, and procedures will be extended 
to the processing of such cross-rate foreign currency options.

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 the self-regulatory organization consents, 
the Commission will:
    (A) by order approve the 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, NW., Washington, DC 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, NW., 
Washington, DC 20549. Copies of such filing will also be available for 
inspection and copying at the principal office of the above-referenced 
self-regulatory organization.
    All submissions should refer to File No. SR-OCC-94-07 and should be 
submitted by August 10, 1994.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-17584 Filed 7-19-94; 8:45 am]
BILLING CODE 8010-01-M