[Federal Register Volume 60, Number 22 (Thursday, February 2, 1995)]
[Notices]
[Pages 6583-6584]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2551]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35265; File No. SR-OCC-94-11]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of Proposed Rule Change Relating to Implementation of 
a Three-Day Settlement Standard for Options Exercises

January 23, 1995.
    Pursuant to Section 19(b) (1) of the Securities Exchange Act of 
1934, (``Act''),\1\ notice is hereby given that The Options Clearing 
Corporation (``OCC'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change on December 30, 1994, as 
described in Items I, II, and III below, which item have been prepared 
primarily by OCC. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.

    \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 purpose of the proposed rule change is to amend OCC's Rules to 
make them consistent with a three business day settlement time frame.

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 three statements may be examined at the places specified 
in Item IV below. The 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 the proposed rule change is to amend OCC's Rules, 
both with respect to settlements of options exercises and with respect 
to the stock loan program, to make them consistent with Rule 15c6-1 
under the Act. Rule 15c6-1 establishes three business days after the 
trade date (``T+3''), instead of five business days, as the standard
 
[[Page 6584]]

settlement time frame for most broker-dealer trades.\2\ OCC requests 
that the proposed rule change become effective on the date Rule 15c6-1 
becomes effective.\3\

    \2\Securities Exchange Act Release No. 33023 (October 6, 1993), 
58 FR 52891.
    \3\Rule 15c6-1 will become effective on June 7, 1995. Securities 
Exchange Act Release No. 34952 (November 9, 1994), 59 FR 59137.
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    OCC Rule 902 currently requires that the assigned clearing member 
of an exercised call option contract or the exercising clearing member 
of an exercised put option contract deliver the underlying securities 
on the fifth business day following the day on which the exercise 
notice was given to OCC. ``Fifth'' will be changed to ``third.'' Rule 
2207 currently dictates the settlement date for a stock loan to be the 
date that is five business days after the date on which the lending 
clearing member initiates the termination by notifying OCC. Five 
business days will be changed to three business days. Rule 2208(b) 
provides that if the lending clearing member initiates the termination 
of a stock loan and does not receive the loaned stock in its securities 
depository account on the date that is five business days after the 
date on which the lending clearing member initiated the termination, 
the lending clearing member may execute a buy-in at such time or at any 
time thereafter. Five business days will be changed to three business 
days.
    OCC has agreed to an implementation plan proposed by the National 
Securities Clearing Corporation (``NSCC'') for transition to a T+3 
settlement cycle. The schedule is as follows.

------------------------------------------------------------------------
       Trade date             Settlement cycle         Settlement date  
------------------------------------------------------------------------
June 2 Friday...........  5 day...................  June 9 Friday.      
June 5 Monday...........  4 day...................  June 9 Friday.      
June 6 Tuesday..........  4 day...................  June 12 Monday.     
June 7 Wednesday........  3 day...................  June 12 Monday.     
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OCC will add interpretations to Rules 902 and 2207 which will state 
that OCC will cause settlements of options exercises and assignments 
and stock loans to be conducted on a schedule which is consistent with 
any schedule for transition from a five day settlement cycle to a three 
day settlement cycle for regular-way stock trades.\4\

    \4\Rule 902, Interpretations and Policies .01 and Rule 2207, 
Interpretation and Policies .02.
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    The proposed rule change is consistent with the purposes and 
requirements of Section 17A of the Act, as amended, because it will 
bring OCC's rules into conformity with Rule 15c6-1 and will promote the 
development of uniform standards and procedures for clearance and 
settlement.
B. Self-Regulatory Organization's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would 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 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 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. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, 450 Fifth Street, NW., Washington, 
DC 20549. Copies of the filing will also be available for inspection 
and copying at the principal office of OCC. All submissions should 
refer to File No. SR-OCC-94-11 and should be submitted by February 23, 
1995.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2551 Filed 2-1-95; 8:45 am]
BILLING CODE 8010-01-M