[Federal Register Volume 61, Number 15 (Tuesday, January 23, 1996)]
[Rules and Regulations]
[Pages 1709-1711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-754]



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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 Nikkei 300 stock index 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), 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: February 22, 1996.

FOR FURTHER INFORMATION CONTACT:
Robert Rosenfeld, 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:

United States of America Before the Commodity Futures Trading 
Commission

Order Under Commission Rule 30.3(a) Permitting Option Contracts on the 
Nikkei 300 Stock Index 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 Absent Further Notice

    By Order issued on July 20, 1988 (Initial Order), the Commission 
authorized, pursuant to Commission rule 30.3(a),\1\ certain option 
products 

[[Page 1710]]
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), 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.

    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 
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particular option(s) to be offered or sold pursuant to this Order.

    By letter dated June 15, 1994, SIMEX through its counsel 
represented that it would be introducing an option contract based on 
the Nikkei 300 Stock Index futures contract. SIMEX has requested that 
the Commission supplement its Initial Order and subsequent Orders \2\ 
authorizing options on the Eurodollar, Japanese Yen, Deutsche Mark, 3-
Month Euroyen Interest Rate, Nikkei Stock Average and Long-Term 
Japanese Government Bond futures contracts by also authorizing SIMEX's 
option contracts on the Nikkei 300 Stock Index 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 Nikkei 300 Stock Index futures 
contract \3\ should be granted.

    \2\ See 59 FR 27233 (May 26, 1994); 57 FR 2675 (January 23, 
1992); and 55 FR 26428 (June 28, 1990).
    \3\ On February 23, 1995, the Commission's Office of the General 
Counsel issued a no-action letter permitting SIMEX futures contracts 
based on the Nikkei 300 Stock Index to be offered or sold in the 
United States.
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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 Nikkei 300 Stock Index 
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, unless prior to that date the Commission receives any 
comments which may result in a determination to delay the effective 
date of the Order pending review of such comments. Under such 
circumstances the Commission will provide notice.

Contract Specifications

Options on Nikkei 300 Stock Index Futures Contract

Underlying Interest
    One (1) SIMEX Nikkei 300 stock index futures contract.
Contract Months
    Options available on three (3) serial months and five quarterly 
months in the March, June, September and December cycle.
Trading Hours
8:00 a.m. to 10:15 a.m. (Singapore time)
11:15 a.m. to 2:15 p.m. (Singapore time)
Minimum Price Fluctuation (Tick Size and Value)
    0.1 point of Nikkei Stock Index 300 (also known as one 
tick)=1,000 per contract.
Strike Prices
    Strike prices are set in integer multiples of 5 points on the 
Nikkei Stock Index 300. 15 strike prices are set at 5 point intervals 
above and 15 strike prices at 5 point intervals below an at-the-money 
strike (i.e., a total of 31 strike prices). Additional strike prices 
will be established as the underlying Nikkei Stock Index 300 futures 
price rises or falls.
Exercise
    American style, i.e., buyers of futures options may exercise their 
options on any business day when the option is traded.
    In the absence of contrary instructions delivered to the clearing 
house, an option in the March quarterly cycle will be exercised 
automatically on the day of determination of the final settlement 
price.
    An in-the-money option that expires in a month other than those in 
the March quarterly cycle will be exercised automatically on the day of 
termination of trading.
    An option in the March quarterly cycle is in-the-money if the final 
settlement price of the underlying futures contract is above the 
exercise price in the case of a call, or is below the exercise price in 
the case of a put.
    An option that expires in a month other than those in the March 
quarterly cycle is in-the-money if the settlement price of the 
underlying futures contract at the termination of trading is above the 
exercise price in the case of a call, or is below the exercise price in 
the case of a put.
Last Trading Day
    The last trading day is the business day before the second Friday 
of the contract month.
Minimum Margin Requirements
    The SPAN margining system shall be applicable to the margining of 
options on the Nikkei 300 stock index futures contract.
Position Limits
    3,000 futures-equivalent contracts net long or net short in all 
contract months combined. Positions will be aggregated with open 
positions in the underlying Nikkei Stock Index 300 futures contract.
Trading Halts
    There will be no trading in any options contract when the SIMEX 
Nikkei Stock Index 300 futures contract is bid or offered:
    (1) At its initial daily price limit; or
    (2) At its expanded daily price limit, except that the above 
provisions shall not apply on an option's last day of trading.

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:

[[Page 1711]]


  Appendix B.--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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*                  *                  *                  *              
Singapore International       Option Contracts on   199____; ____ FR    
 Monetary Exchange Limited.    the Nikkei 300        ____               
                               Stock Index Futures                      
                               Contract.                                
                                                                        
*                  *                  *                  *              
                  *                  *                  *               
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    Issued in Washington, D.C. on January 16, 1996.
Jean A. Webb,
Secretary to the Commission.
[FR Doc. 96-754 Filed 1-22-96; 8:45 am]
BILLING CODE 6351-01-M