[Federal Register Volume 70, Number 137 (Tuesday, July 19, 2005)]
[Notices]
[Pages 41469-41471]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3811]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52010; File No. SR-OCC-2005-06]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change To Amend By-Laws and Rules To Accommodate Short-Term 
Options Proposed for Trading by the Chicago Board Options Exchange, 
Inc., the American Stock Exchange, LLC, the International Securities 
Exchange, Inc., and the Pacific Exchange, Inc.

July 12, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 10, 2005, The Options 
Clearing Corporation (``OCC'') filed with the Securities and Exchange 
Commission (``Commission'') and on June 13, 2005, amended the proposed 
rule change 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 from interested parties 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

    The purpose of this proposed rule change is to amend OCC's By-Laws 
and Rules to accommodate short-term options proposed for trading by the 
American Stock Exchange, LLC, (``Amex''), the Chicago Board Options 
Exchange, Inc. (``CBOE''), the International Securities Exchange, Inc. 
(``ISE''), and the Pacific Exchange, Inc. (``PCX'') (collectively 
referred to as ``Exchanges'').

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

[[Page 41470]]

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 amend OCC's By-Laws 
and Rules to accommodate short-term options proposed for trading by the 
Exchanges. On February 9, 2005, the Commission published notice of 
CBOE's proposal to amend its rules to permit the listing of options 
series that expire one week after being opened for trading.\3\ The 
Amex, ISE, and PCX also have submitted proposals to amend their rules 
to permit the listing of short-term options.\4\ Under this proposal, a 
short-term option series could be opened in any class of options that 
otherwise satisfies the applicable listing criteria of any participant 
exchange having rules for the trading of short-term options. Short-term 
option series could be American style or European style. Short-term 
option series typically would open on Friday and expire the following 
Friday. If Friday were not a business day, the short-term option series 
would be opened or would expire on the first business day immediately 
prior to that Friday.
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    \3\ Securities Exchange Act Release No. 51172 (February 9, 
2005), 70 FR 7979 (February 16, 2005) [File No. SR-CBOE-2004-63].
    \4\ File Nos. SR-Amex-2005-035, SR-PCX-2005-32, SR-ISE-2005-17.
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    Under the Exchanges' proposals, short-term option series with an 
underlying on which monthly contracts are A.M.-settled will be A.M.-
settled, and short-term option series with an underlying on which 
monthly contracts are P.M.-settled will be P.M.-settled.\5\ No short-
term option series on an option class will expire in the same week in 
which monthly option series of the same class expire.
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    \5\ S&P 100 Index Options (``OEX'') and iShares S&P 100 Index 
Fund (``OEF'') currently are the only P.M.-settled monthly options 
series.
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    Under the Exchanges' proposals, short term options would be traded 
initially under a one-year pilot program. Under the terms of the pilot 
program, the Exchanges will select up to five option classes on which 
short-term option series may be opened on any short-term option opening 
date. The Exchanges also will be permitted to list those short-term 
option series on any option class that is selected by other securities 
exchanges that use a similar pilot program under their respective 
rules. Limiting the number of new options series created under this 
pilot program should help prevent a significant impact on system 
capacities of the Exchanges and of the Options Price Reporting 
Authority.
    OCC believes the proposed rule change is consistent with the 
requirements of Section 17A of the Act \6\ and the rules and 
regulations thereunder applicable to OCC because it is designed to 
promote the prompt and accurate clearance and settlement of securities 
transactions, foster cooperation and coordination with persons engaged 
in the clearance and settlement of securities transactions, remove 
impediments to and perfect the mechanism of a national system for the 
prompt and accurate clearance and settlement of securities 
transactions, and, in general, protect investors and the public 
interest. The proposed rule achieves these objectives by applying to 
short-term options the same By-Laws and Rules that are applicable to 
other classes of options.
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    \6\ 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 will have any 
impact or 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 changes and none have been received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder and particularly with the requirements of Section 
17A(b)(3)(F).\7\ Section 17A(b)(3)(F) requires that the rules of a 
clearing agency remove impediments to and perfect the mechanism of a 
national system for the prompt and accurate clearance and settlement of 
securities transactions and protect investors and the public interest. 
The Commission finds that the approval of OCC's rule change is 
consistent with this section because it will allow OCC to apply the 
same By-Laws and Rules to short-term options as it does other options 
classes.
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    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    OCC has requested that the Commission approve the proposed rule 
prior to the thirtieth day after publication of the notice of the 
amended filing. The Commission finds good cause for approving the 
proposed rule change prior to the thirtieth day after the publication 
of notice because such approval will allow the Exchanges proposing to 
trade short-term options to commence doing so without any unnecessary 
delay.

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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml) or
     Send an e-mail to [email protected]. Please include 
File Number SR-OCC-2005-06 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-OCC-2005-06. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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, 100 F Street, 
NE., Washington, DC 20549. Copies of such filings also will be 
available for inspection and copying at the principal office of OCC and 
on OCC's Web site, http://

[[Page 41471]]

www.optionsclearing.com. All comments received will be posted without 
change; the Commission does not edit personal identifying information 
from submissions. You should submit only information that you wish to 
make available publicly. All submissions should refer to File Number 
SR-OCC-2005-06 and should be submitted on or before August 9, 2005.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-OCC-2005-06) be and 
hereby is approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3811 Filed 7-18-05; 8:45 am]
BILLING CODE 8010-01-P