[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]


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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.
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    \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 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\
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    \2\ The Commission has modified the language in these sections.
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(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.
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    \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.
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    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.
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    \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).
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    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.
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    \5\ 15 U.S.C. 78q-1 (1988).
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(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\
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    \6\ 17 CFR 200.30-3(a)(12) (1996).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-23345 Filed 9-11-96; 8:45 am]
BILLING CODE 8010-01-M