[Federal Register Volume 61, Number 178 (Thursday, September 12, 1996)] [Notices] [Pages 48193-48194] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-23345] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-37655; File No. SR-OCC-96-08] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Proposed Rule Change Regarding the Exercise of Certain Foreign Currency Options September 6, 1996. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ notice is hereby given that on July 18, 1996, 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 from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1) (1988). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change will permit the exercise of certain foreign currency options on the business day immediately preceding the expiration date of such options. 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 and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summarizes, sent forth in sections (A), (B), and (C) below, of the most significant aspects of such statements.\2\ --------------------------------------------------------------------------- \2\ The Commission has modified the language in these sections. --------------------------------------------------------------------------- (A) Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Under the proposed rule change, OCC will amend its results to permit the exercise of American-style \3\ foreign currency and cross- rate foreign currency options (``currency options'') on the business day immediately preceding their expiration date. Currently, OCC Rule 801(c) prohibits the exercise of option contracts on the business day immediately preceding their expiration unless such options are American-style flexibly structured options. At the time this restriction was incorporated into OCC's rules, all option contracts expired on Saturday. The restriction ensured that there was adequate time for all unmatched transactions to be resolved and for OCC to receive and process exercise notices for the preliminary and final exercise by exception (``ex-by-ex'') processing cycles that were then in effect. Subsequently, OCC has replaced the preliminary and final processing cycles for currency options with a single ex-by-ex processing procedure. --------------------------------------------------------------------------- \3\ The term ``American'' or ``American-style'' option contract means the option contract may be exercised at any time from its commencement time until its expiration. In contrast, a European style option may only be exercised on its expiration. --------------------------------------------------------------------------- With the conversion to Friday night as the expiration date for all standardized currency options,\4\ Rule 801(c) has [[Page 48194]] operated to preclude the exercise of currency options on Thursday. OCC clearing members have requested that OCC lift the restriction with respect to currency options since their non-U.S. customers have expressed a desire to submit exercises on Thursday due to time zone differences with the United States. OCC believes that the protections afforded by the Rule 801(c) exercise restriction are no longer necessary for currency options because of the single cycle expiration processing procedures that are in effect and because currency options expire on Friday instead of Saturday. --------------------------------------------------------------------------- \4\ For a complete description of the conversion of the expiration date for all standardized currency options from Saturday to Friday, refer to Securities Exchange Act Release Nos. 32458 (June 11, 1993), 58 FR 3384 [File No SR-OCC-93-09] (notice of filing and order granting accelerated approval on a temporary basis of a proposed rule change that changed the expiration day for American- style foreign currency options from Saturday to Friday) and 32630 (July 14, 1993), 58 FR 38800 [File No. SR-OCC-93-15] (order granting permanent approval on an accelerated basis of a proposed rule change that changed the expiration day for American-style foreign currency options and cross-rate foreign currency options from Saturday to Friday). --------------------------------------------------------------------------- OCC believes the proposed rule change is consistent with the requirements of Section 17A of the Act \5\ because it promotes the prompt and accurate clearance and settlement of securities transactions. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78q-1 (1988). --------------------------------------------------------------------------- (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 OCC 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 submission should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street NW., Washington, DC 20549. Copies of the submissions, 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 such filings will also be available for inspection and copying at the principal office of OCC. All submissions should refer to the file number SR-OCC-96-08 and should be submitted by October 3, 1996. For the Commission by the Division of Market Regulation, pursuant to delegated authority.\6\ --------------------------------------------------------------------------- \6\ 17 CFR 200.30-3(a)(12) (1996). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 96-23345 Filed 9-11-96; 8:45 am] BILLING CODE 8010-01-M