[Federal Register Volume 67, Number 55 (Thursday, March 21, 2002)]
[Notices]
[Pages 13202-13203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6826]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45557; File No. SR-OCC-2001-17]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Establishing Financial Reporting Standards for Clearing Futures 
Commission Merchants That Are Not Fully Registered With the Commission 
as Broker-Dealers

March 14, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 9, 2001, 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).
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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 OCC Rule 306 to facilitate 
financial reporting by clearing members that are FCMs not fully 
registered with the Commission as broker-dealers.

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 Commissiion has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    As a result of the Commodity Futures Modernization Act, entities 
registered with the Commodity Futures Trading Commission (``CFTC'') as 
futures commission merchants (``FCMs'') are allowed to trade in 
security futures upon notice registration with the Commission.\3\ These 
entities are not subject to the full panoply of Commission regulation, 
and in particular, they are not required to file reports of financial 
condition under Rule 17a-5. As a result of amendments to OCC's Rules 
that were approved by the Commission in File No. SR-OCC-2001-07 
(adopting rules for the clearance and settlement of security futures), 
such entities are now allowed to become clearing members of OCC.\4\ OCC 
has also filed an application with the Commission and the CFTC seeking 
authority to clear futures on broad-based indexes and options 
thereon.\5\ These products are regulated exclusively by the CFTC, and 
OCC's proposed rules would permit it to admit clearing members that are 
regulated exclusively by the CFTC and not registered as broker-dealers 
at all.
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    \3\ Section 15(b)(11)(A) of the Securities Exchange Act of 1934.
    \4\ Securities Exchange Act Release No. 44727, (August 20, 
2001), 66 FR 45351.
    \5\ The CFTC granted OCC's application for registration as a 
derivatives clearing organization on December 12, 2001. The 
Commission has published notice of OCC's filing. Securities Exchange 
Act Release No. 45152, (December 12, 2001), 66 FR 65770.
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    The purpose of this rule change is to facilitate financial 
reporting by clearing members that are FCMs not fully registered with 
the Commission as broker-dealers while providing OCC with the same 
level of financial oversight that OCC has with respect to other 
clearing members. Such FCMs will be permitted to file their monthly 
financial reports with OCC using the CFTC's Form 1-FR-FCM. However, 
notwithstanding the provisions of CFTC Regulation 1.10(b) generally 
requiring such reports to be filed with the CFTC on a quarterly basis, 
OCC will require such reports to be filed with OCC monthly. OCC 
believes that monthly reporting is conducive to the protection of OCC, 
its clearing members, and the public.
    OCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act and the regulations thereunder 
because it protects investors and the public interest by ensuring the 
availability of adequate financial information to OCC regarding 
clearing members.

(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.

[[Page 13203]]

(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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(i) of the Act \6\ and Rule 19b-4(f)(1)\7\ thereunder 
because it constitutes a stated policy, practice or interpretation with 
respect to the meaning, enforcement or administration of an existing 
rule. At any time within sixty days of the filing of the proposed rule 
change, the Commission may summarily 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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    \6\ 15 U.S.C. 78s(b)(3)(A)(i).
    \7\ 17 CFR 240.19b-4(f)(1).
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VI. 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 NW., Washington, DC 20549-0609. 
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 NW., 
Washington, DC 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-2001-17 and should be submitted by 
April 11, 2002.

    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. 02-6826 Filed 3-20-02; 8:45 am]
BILLING CODE 8010-01-U