[Federal Register Volume 62, Number 186 (Thursday, September 25, 1997)]
[Notices]
[Pages 50418-50419]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25375]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39088; International Series Release No. 1102; File No. 
SR-OCC-97-10]


Self-Regulatory Organizations, the Options Clearing Corporation; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change Seeking Approval to Issue, Clear, and Settle Flexibly 
Structured Options on the Mexican Peso

September 17, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 24, 1997, The Options 
Clearing Corp. (``OCC'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which items have been prepared primarily by OCC. 
The Commission is publishing this notice and order to solicit comments 
from interested persons and to grant accelerated approval, conditioned 
as described below, of the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
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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 allow OCC to issue, clear, and settle 
option transactions where the Mexican peso is either the trading 
currency or the underlying currency.

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

    Under the proposed rule change, OCC will issue, clear, and settle 
flexibly structured option contracts where the Mexican peso is either 
the trading currency or the underlying currency. The Philadelphia Stock 
Exchange (``PHLX'') has proposed to list and trade such foreign 
currency options through its customized options facility.\3\ The PHLX 
rule filing proposes to enable its members to trade customized 
contracts between the peso and United States dollar. The PHLX rule 
filing further proposed to offer cross-rate contracts for the Mexican 
peso against the Canadian dollar.
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    \3\ For a discussion of the PHLX proposal, refer to Securities 
Exchange Act Release No. 38867 (May 22, 1997), 62 FR 29385 [File No. 
SR-PHLX-97-22] (notice of proposed rule change to list and trade 
options on the Mexican peso). The PHLX proposal has not received 
final approval from the Commission.
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    Currently, OCC has approval to list and clear flexibly structured 
option contracts on any combination of the following currencies: (1) 
Australian dollars, (2) British pounds, (3) Canadian dollars, (4) 
German deutsche marks, (5) European Economic Community currency units, 
(6) French francs, (7) Italian lire, (8) Japanese yen, (9) Spanish 
pesetas, (10) Swiss francs, and (11) United States dollars. OCC is now 
proposing to add the Mexican peso to that list of approved currencies.
    Options on the peso will be cleared and settled in accordance with 
the clearance and settlement mechanisms already in place for flexibly 
structured foreign currency options and for cross-rate foreign currency 
options. In addition, options on the peso will be

[[Page 50419]]

margined like OCC's existing foreign currency and cross-rate foreign 
currency option contracts. Accordingly, OCC has determined that no 
changes to its by-laws or rules are necessary to accommodate these new 
contracts.
    OCC believes the proposed rule change is consistent with the 
requirements of Section 17A(b)(3)(F) of the Act \4\ and the rules and 
regulations thereunder because it promotes efficiencies in the 
clearance and settlement of securities transactions.
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    \4\ 15 U.S.C. 78q-1(b)(3)(F).
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(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

    Written comments were not and are not intended to be solicited 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

    Section 17A(b)(3)(F) of the Act \5\ requires that the rules of a 
clearing agency be designed to assure the safeguarding of securities 
and funds which are in the custody and control of the clearing agency 
or for which it is responsible. OCC's proposal will allow the clearance 
and settlement of flexibly structured option contracts where the peso 
is either the trading currency or the underlying currency by using 
existing OCC systems, rules, and procedures already in place for 
flexibly structured foreign currency options and for cross-rate foreign 
currency options. Due to the similarity of these option contracts to 
the option contracts currently cleared and settled in OCC's existing 
system, OCC should be able to implement the clearance and settlement of 
such options safely and in a manner consistent with its obligations 
under Section 17A. Thus, the Commission is approving OCC's proposal, 
subject to the Commission's approval of the proposed rule change 
contained in File No. SR-PHLX-97-22.\6\
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    \5\ Id.
    \6\ Supra note 3.
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the publication of notice of 
the filing. Approving prior to the thirtieth day after publication of 
notice will allow OCC to issue, clear, and settle flexibly structured 
options and cross-rate foreign currency options on the Mexican peso as 
soon as the Commission approves PHLX's trading of such options.

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 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-97-10 and should be 
submitted by October 16, 1997.
    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-OCC-97-10) be and 
hereby is approved, subject to the Commission's final approval of the 
proposed rule change contained in File No. SR-PHLX-97-22.
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    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-25375 Filed 9-24-97; 8:45 am]
BILLING CODE 8010-01-M