[Federal Register Volume 61, Number 199 (Friday, October 11, 1996)]
[Notices]
[Pages 53477-53478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26170]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37793; File No. SR-OCC-96-13]
Self-Regulatory Organization; The Options Clearing Corporation;
Notice of Filing of Proposed Rule Change Relating to Unit Investment
Trusts as Margin Collateral
October 7, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on September 6, 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 on the proposed rule change 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 OCC to accept certain publicly
traded units of beneficial interest in unit investment trusts as a form
of margin collateral.
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. OCC has prepared summaries, set forth in sections A, B,
and C below, of the most significant aspects of such statements.\2\
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\2\ These statements have been modified by the Commission.
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A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The principal purpose of the proposed rule change is to permit
clearing members to deposit as margin with OCC publicly traded units of
beneficial interest (``trust units'') in unit investment trusts that
hold portfolios or baskets of common stocks. These classes of trust
units are traded and cleared like shares of common stock and are
typically held in book entry form at a securities depository. As a
result, OCC will be able readily to perfect a security interest in
deposited trust units and to liquidate them if necessary. Accordingly,
OCC believes it is appropriate to accept trust units as a form of
margin collateral under the conditions specified in new subparagraph
(4) to Rule 604(d).
Subparagraph (4) will permit OCC to accept trust units as a form of
margin collateral. It will provide that the term ``stock'' as used in
Rule 604(d) includes trust units in unit investment trust holding
portfolios or baskets of common stocks. In order to be eligible for
deposit, the trust units will also have to meet the requirements
applicable to stock under Rule 604(d) and be of a class approved by OCC
for deposit as margin.\3\ Pursuant to Rule 604(d)(1), trust units will
be valued on a daily basis at 60% of current market value.
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\3\ Rule 604(d) requires that to be eligible as margin deposits,
stock must have a market value greater than $10 per share and must
be traded either on a national securities exchange and have last
sale reports collected and disseminated pursuant to a consolidated
transaction reporting plan or traded in the over-the-counter market
and designated as a national market system security pursuant to the
Commission's Rule 11Aa2-1.
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Section 11 will be added to the Interpretations and Policies of
Rule 604 to vest OCC's Membership/Margin Committee (the ``Committee'')
with the authority to approve classes of trust units for deposit as
margin. At the present time, the Committee has approved Standard &
Poor's (``S&P'') depository receipts on the S&P 500 Index and S&P
MidCap 400 Index as being classes approved for deposit as margin. In
addition, the proposed rule change will replace the term ``stocks''
with the term ``securities'' in subparagraphs (2) and (3) to Rule
604(d). Subparagraphs (2) and (3) of Rule 604(d) limit the use of
customer securities as margin and prescribe the method of depositing
margin securities. The amendment will clarify that such sections apply
not only to stocks but also corporate bonds eligible as margin deposits
under Rule 604(d)(1).
The proposed rule change is consistent with Section 17A of the Act
because it expands the forms of margin collateral that may be deposited
with OCC in a prudent and safe manner
[[Page 53478]]
designed to assure the safeguarding of securities in OCC's custody and
control\4\
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\4\ 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 submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street N.W., Washington, D.C. 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, N.W., Washington,
D.C. 20549. Copies of such filing will also be available for inspection
and copying at the principal office of OCC. All submissions should
refer to the File No. SR-OCC-96-13 and should be submitted by November
1, 1996.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-26170 Filed 10-10-96; 8:45 am]
BILLING CODE 8010-01-M