[Federal Register Volume 67, Number 156 (Tuesday, August 13, 2002)]
[Notices]
[Pages 52766-52767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20405]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46319; File No. SR-OCC-2002-12]


Self-Regulatory Organizations; the Options Clearing Corporation; 
Notice of Filing of Proposed Rule Change Relating to Accelerating the 
Maturity Date for Certain Adjusted Security Futures Contracts

August 6, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on June 25, 2002, 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 parties.
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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 would amend OCC Rule 1304 to permit OCC to 
accelerate the maturity date of security futures contracts that have 
been adjusted to call only for the delivery of a fixed amount of cash.

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 these 
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 permit OCC to 
accelerate the maturity date of security futures contracts that have 
been adjusted to call only for delivery of a fixed amount of cash. If 
the issuer of an underlying security were party to a cash merger in 
which its stock was converted into a right to receive cash only, 
futures on that stock would ordinarily be adjusted to call for delivery 
of the cash. Under the proposed rule change, OCC would have authority 
to accelerate the maturity dates of the adjusted futures to fall on or 
shortly after the effective date of the merger. The final settlement 
price for all accelerated futures, regardless of maturity date, would 
be fixed at the amount of cash into which the underlying security has 
been converted.
    The proposed rule change parallels OCC Rule 807, which applies to 
European-style FLEX equity options. Acceleration of the expiration date 
for European-style options that have been adjusted to call for delivery 
of cash results in the acceleration of the options' ability to be 
exercised and therefore in the acceleration of payment of the exercise 
settlement amount to the holder if the option is in the money. Futures 
contracts, by contrast, are marked to market daily and settlement of an 
accelerated contract will occur through a final mark-to-market payment 
based on the amount of cash into which the underlying security has been 
converted. Like Rule 807, the proposed rule change would relieve market 
participants of the burden of continuing to maintain and account for 
open interest in contracts that no longer are subject to increases or 
decreases in value.
    The proposed rule change is consistent with the requirements of 
section 17A of the Act \3\ and the rules and regulations thereunder 
applicable to OCC because it promotes the prompt and accurate clearance 
and settlement of securities transactions, fosters cooperation and 
coordination with persons engaged in the clearance and settlement of 
securities transactions, removes impediments to and perfects the 
mechanism of a national system for the prompt and accurate clearance 
and settlement of securities transactions, and in general, protects 
investors and the public interest.
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    \3\ 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. OCC 
will notify the

[[Page 52767]]

Commission of any written comments received by OCC.

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 the self-regulatory organization 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, 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 also will be available for 
inspection and copying at the principal office of OCC. All submissions 
should refer to File No. SR-OCC-2002-12 and should be submitted by 
September 3, 2002.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-20405 Filed 8-12-02; 8:45 am]
BILLING CODE 8010-01-P