[Federal Register Volume 63, Number 210 (Friday, October 30, 1998)]
[Notices]
[Pages 58438-58439]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29118]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40595; File No. SR-0CC-98-08]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change Regarding Stock Fund Options

October 23, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on July 22, 1998, 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 to solicit comments from 
interested persons and to grant accelerated approval 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

    Under the proposed rule change, OCC will amend its rules and by-
laws which govern options on publicly traded interests in unit 
investment trusts, investment companies, or similar entities holding 
portfolios or baskets of common stocks.

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 modify OCC's rules 
and by-laws governing the issuance, clearance, and settlement of 
options on publicly traded interests in unit investment trusts, 
investment companies, or similar entities holding portfolios or baskets 
of common stocks.\3\ Specifically, the proposed rule change will 
introduce a defined term ``stock fund shares'' to cover such publicly 
traded interests and a defined term ``stock fund option'' to cover the 
options thereon and will substitute these defined terms where 
appropriate in the by-laws and rules. For example, the proposed rule 
change will abbreviate Interpretation and Policy .01 under Section 9 of 
Article VI of the by-laws through the use of the newly defined term 
stock fund option.
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    \3\ The Commission approved OCC's issuance, clearance, and 
settlement of such options in Securities Exchange Act Release No. 
40132 (June 25, 1998), 63 FR 36467 [File No. SR-OCC-97-02].
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    In addition, the proposed rule change will provide for adjustments 
to the terms of stock fund options for distributions of capital gains 
with respect to the underlying stock fund shares. The proposed rule 
change will add Interpretation and Policy .08 to Section 11 of Article 
VI of the by-laws to reflect that the terms of stock fund options will 
be adjusted for all capital gains distributions, regardless of size, by 
the issuer of the underlying stock fund shares.
    OCC believes that the proposed rule change is consistent with 
Section 17A of the Act \4\ because the proposed changes will promote 
the prompt and accurate clearance and settlement of transactions in 
stock fund options.
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    \4\ 15 U.S.C. 78q-1.
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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 have been 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 promote the prompt and accurate 
clearance and settlement of securities transactions. The Commission 
believes that the proposed rule change is consistent with this 
obligation because the amendments should make it clear that stock fund 
options are stock option contracts for all purposes under OCC's rules 
and by-laws. Furthermore, the rule change should promote the prompt and 
accurate clearance and settlement of stock fund options by providing 
for adjustments to the terms of stock fund options for capital gains 
distributions with respect to the underlying stock fund shares.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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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. Pursuant to File No. OCC-97-02, OCC amended its rules to 
provide for the clearance and settlement of stock fund options as 
proposed for trading by the American Stock Exchange (``AMEX'').\6\ The 
changes proposed in this rule filing will make technical changes that 
will facilitate the clearance and settlement of AMEX's product which is 
scheduled to begin trading in November, 1998.
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    \6\ Supra, note 3.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. 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

[[Page 58439]]

refer to File No. SR-OCC-98-08 and should be submitted by November 20, 
1998.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-OCC-98-08) be and 
hereby is approved.

    \7\ 15 U.S.C. 78s(b)(2).
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    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. 98-29118 Filed 10-29-98; 8:45 am]
BILLING CODE 8010-01-M