[Federal Register Volume 67, Number 164 (Friday, August 23, 2002)]
[Notices]
[Pages 54689-54690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21519]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46377; File No. SR-OCC-2002-15]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of a Proposed Rule Change Relating to Dating 
Assignments

August 19, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on July 3, 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 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 would amend OCC Rule 803 to provide that 
assignments of exercise notices will be dated and effective on the same 
date that the applicable exercise notice was accepted 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 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

    The purpose of this rule change is to modify Rule 803 to provide 
that assignments will be dated and effective on the same date that the 
related exercise notice was accepted by OCC. Rule 803(b) currently 
provides that assignments are dated and effective as of the business 
day following the exercise date. This reflects the mechanics of OCC's 
processing. OCC assigns exercises on an overnight basis, but assigned 
clearing members do not receive notice of assignment until the morning 
of the day after exercise. OCC's practice has been to date assignments 
as of the day the assigned clearing members receive the notice of 
assignment. However, the trade (i.e., the purchase or sale of stock) 
resulting from the exercise is treated as having occurred on the 
exercise date not the assignment date. Thus, settlement takes place on 
the third business day following the exercise date.\3\
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    \3\ OCC Rule 902.
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    This has the potential to cause confusion for call writers. OCC has 
learned that some, if not all, clearing members use the same assignment 
date

[[Page 54690]]

as OCC. As a result, when a holder exercises a call on the day before 
an ex-dividend date in order to capture the dividend, the writer who is 
assigned the exercise may see an assignment date the same as the ex-
dividend date. The writer's broker may then have to explain that the 
writer is required to give up the dividend to the exercising holder 
because the exercise occurred before the ex-dividend date even though 
the assignment did not. While the language of this filing reflects 
OCC's current business of clearing and settling exchange traded 
options, the filing and the change to OCC's by-laws and rules extend to 
matching trade information from national securities exchanges, national 
securities associations, futures merchants, security futures markets, 
and international markets for which OCC clears and settles 
transactions. \4\ Dating assignments on the same date as the related 
exercise will lessen the potential for this kind of confusion.
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    \4\ OCC Rules 912 and 913(e).
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    Other, nonsubstantive changes are proposed for Rule 803 for the 
purposes of updating obsolete language. In addition, a conforming 
change is made to Rule 402, which pertains to supplemental reports of 
matched trades.
    OCC believes that the proposed rule change is consistent with 
section 17A of the Act because it eliminates a potential source for 
investor confusion.

(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

    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 the 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 will also be available for 
inspection and copying at the principal office of OCC. All submissions 
should refer to the File No. SR-OCC-2002-15 and should be submitted by 
September 13, 2002.

    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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-21519 Filed 8-22-02; 8:45 am]
BILLING CODE 8010-01-P