[Federal Register Volume 68, Number 17 (Monday, January 27, 2003)]
[Notices]
[Pages 3923-3924]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1711]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47194; File No. SR-OCC-2002-26]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Relating to the Treatment of Multiple Accounts of the Same Type

January 15, 2003.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 17, 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 amends OCC's by-laws and rules to make 
explicit OCC's existing interpretations as to the treatment of multiple 
accounts of the same type whether maintained under one or more clearing 
numbers in the event of the liquidation of the clearing member's 
accounts 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 proposed rule change sets forth certain interpretations as to 
the treatment of multiple accounts of the same type whether maintained 
under one or more clearing member numbers in OCC's system in the event 
of a liquidation of the clearing member's accounts by OCC pursuant to 
chapter XI of OCC's rules, ``Suspension of a Clearing Member.'' These 
interpretations merely make more explicit OCC's existing 
interpretations and practices and do not represent any substantive 
change. OCC is formalizing them because it has become increasingly 
common for clearing members to maintain accounts under more than one 
clearing member number in OCC's clearing system.
    OCC ordinarily assigns each clearing member a number which serves 
to identify the clearing member in OCC's system. Some clearing members 
have more than one clearing member number as a result of having 
acquired other clearing members or having requested separate numbers to 
identify particular divisions or sets of accounts for internal 
purposes. In other cases, OCC may assign additional clearing member 
numbers to a clearing member in order to permit the clearing member to 
maintain additional accounts that cannot be accommodated under the same 
number within OCC's system. For example, clearing members may be 
assigned an additional clearing member number in order to establish a 
JBO Account in addition to an existing combined market-maker account 
because OCC's current clearing system cannot accommodate both accounts 
under a single number.
    The need for multiple clearing member numbers will be reduced when 
ENCORE, OCC's new clearing system currently under development, becomes 
fully operational. Even then, however, there may be reasons for a 
single clearing member to maintain more than one clearing member 
number.
    OCC believes that this rule change is advisable in order to clarify 
that OCC's suspension and liquidation rules look only to the clearing 
member as a legal entity and disregard any separation of the clearing 
member's business into divisions or separate sets of accounts. (Of 
course, absent a contrary agreement or a situation where piercing the 
corporate veil is appropriate under applicable principles of corporate 
law, affiliated clearing members that are separate legal entities would 
retain their separate identity in a liquidation.)
    OCC is also modifying the wording of the lead-in language of 
article VI, section 3 of its by-laws, ``Maintenance of Accounts,'' by 
changing the word ``shall'' to ``may.'' This change is appropriate to 
make clear that clearing members are not required to maintain every 
different type of account that is permitted under section 3. This 
change in wording also represents a clarification rather than a 
substantive change. Indeed, many clearing members at present maintain 
fewer than all of the permitted types of accounts because some account 
types are not needed for their particular business activities.
    OCC believes that the proposed rule change is consistent with the 
requirements of section 17A of the Act and the rules and regulations 
thereunder because it promotes the prompt and accurate clearance and 
settlement of securities transactions by clarifying the application of 
OCC's liquidation rules to clearing members that maintain multiple 
clearing member numbers.

(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.

[[Page 3924]]

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 \3\ and rule 19b-4(f)(1)\4\ 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 60 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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    \3\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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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, NW., Washington, DC 20549-0609. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-OCC-2002-26. This file number should be included on the 
subject line if e-mail is used. To help us process and review comments 
more efficiently, comments should be sent in hardcopy or by e-mail but 
not by both methods. 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-2002-26 and should be submitted by February 18, 2003.

    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. 03-1711 Filed 1-24-03; 8:45 am]
BILLING CODE 8010-01-P