[Federal Register Volume 61, Number 237 (Monday, December 9, 1996)]
[Notices]
[Pages 64934-64935]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31149]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38013; File No. SR-OCC-96-17]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Source of Prices for Certain Government Securities

December 3, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 8, 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 on the proposed rule change.
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    \1\ 15 U.S.C. Sec. 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 amends Section 3, Article VII of OCC's By-
laws and Rule 604 of OCC's Rules by replacing the Federal Reserve Bank 
of New York (``NY FED'') and the Bank of Canada as OCC's source for 
U.S. and Canadian Government securities prices with ``a source 
designated by'' OCC.

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\ The Commission has modified the text of the summaries 
prepared by OCC.
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(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 Section 3, 
Article VIII of OCC's By-laws and OCC's Rule 604 to eliminate reference 
to the NY FED and the Bank of Canada as the required sources for U.S. 
and Canadian Government securities prices. The proposed rule change 
will allow OCC to receive prices from a source designated by OCC. 
Currently, Section 3 states that OCC will value U.S. Government 
securities deposited as contributions to the clearing fund based on bid 
prices supplied by the NY FED. Additionally, Rule 604 states that OCC 
will value U.S. Government securities pledged as margin collateral 
based on bid prices supplied by the NY FED. Section 3 and Rule 604 also 
require OCC to establish prices for Canadian Government securities 
based on prices provided by the Bank of Canada.
    On October 15, 1996, the NY FED ceased disseminating composite 
quotations for U.S. Government securities. The NY FED informed OCC that 
the function of providing prices for U.S. Government securities would 
be better performed by a commercial service. Prior to such date, OCC's 
vendor for U.S. Government securities received its prices from the NY 
FED. On October 15th, OCC's vendor started receiving U.S. Government 
securities prices from GovPX, a leading independent provider of 
financial data. GovPX is one of the most widely used sources of U.S. 
Government securities prices. Their prices are based on bid and offer 
quotations reported by five of the six interdealer brokers in U.S. 
Government securities. OCC intends to continue using Gov PX as its 
source for U.S. Government securities prices
    In addition, Rule 604 currently allows OCC such discretion in the 
case of other foreign government securities. This amendment would make 
the language of Rule 604 consistent as it pertains to the source of 
U.S., Canadian, and other countries government securities prices. 
Furthermore, the proposed rule change would give OCC the flexibility to 
use a vendor that supplies, in OCC's opinion, the most reliable prices 
for U.S. and Canadian Government securities. Finally, the proposed rule 
change would eliminate the necessity to file a proposed rule change 
each time a specific named vendor ceases to supply price quotations.
    OCC believes the proposed rule change is consistent with Section 
17A of the Act and the rules and regulations thereunder because the 
proposed rule change will promote the prompt and accurate clearance and 
settlement of securities transactions.

(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

    Comments were not and are not intended to be solicited by OCC with 
respect to the proposed rule change, and none were received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) \3\ of the Act and pursuant to Rule 19b-4(e)(3) \4\ 
promulgated thereunder because the proposal is concerned solely with 
the administration of the self-regulatory organization. At any time 
within sixty days of the filing of such rule change, the Commission may 
summarily

[[Page 64935]]

abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \3\ 15 U.S.C. Sec. 78s(b)(3)(A)(iii) (1988).
    \4\ 17 CFR 240.19b-4(e)(3) (1996).
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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. Sec. 552, will be available for inspection and copying in 
the Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of OCC. All 
submissions should refer to File No. SR-OCC-96-17 and should be 
submitted by December 30, 1996.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(12) (1996).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-31149 Filed 12-6-96; 8:45 am]
BILLING CODE 8010-01-M