[Federal Register Volume 75, Number 214 (Friday, November 5, 2010)]
[Notices]
[Pages 68390-68392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28059]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63222; File No. SR-OCC-2010-18]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Accommodate Index Futures That Are Settled in a Non-U.S. Currency

November 1, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 22, 2010, The 
Options Clearing Corporation (``OCC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change described 
in Items I and II below, which items have been prepared

[[Page 68391]]

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 purpose of the proposed rule change is to revise OCC's By-Laws 
and Rules to accommodate index futures that are settled in a non-U.S. 
currency. NYSE Liffe US, LLC (``NYL'') is proposing to introduce for 
trading futures contracts on certain broad-based securities indexes 
which are settled in Euros (``Euro-Settled Futures''). The proposed 
rule amendments are drafted generically to apply to other futures 
contracts that are settled in a non-U.S. currency and in a similar 
manner.

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

    Futures variation payments typically are settled on each business 
day based on a price established on the prior business day. However, 
because of time zone differences and the planned use of accounts at 
North American and European clearing banks, variation settlements, 
including final variation settlement, with respect to Euro-Settled 
Futures will occur on the second business day following the date as of 
which the settlement value is determined (i.e., a ``T+2'' basis). 
Settlement times will vary depending on the clearing bank through which 
settlement is effected and in any case will differ from those used for 
option premiums.
    To accommodate Euro-Settled Futures, which will settle only on days 
in which both OCC and the relevant clearing banks are open for 
business, OCC proposes to provide for a definition of ``business day'' 
in respect of such futures which is different from that used in OCC's 
By-Laws, and to revise its rules governing variation payments and add 
an interpretation and policy to those rules to accommodate the two-day 
settlement cycle for Euro-Settled Futures and other futures settled in 
a currency other than the U.S. dollar. In order to address the 
possibility that a Clearing Member might fail to meet a settlement 
obligation in a non-U.S. currency and to avoid the need for OCC to have 
credit facilities in non-U.S. currencies, OCC reserves the right to 
make settlement in the U.S. dollar equivalent of the non-U.S. currency 
if necessary, and, in addition to taking any other actions authorized 
under its By-Laws and Rules, to draft the Clearing Member's U.S. dollar 
bank account for equivalent funds, which payment will be deemed to 
satisfy the Clearing Member's settlement obligation. In order to 
discourage Clearing Members from failing to settle in the non-U.S. 
currency and thereby potentially imposing hardship on other Clearing 
Members, OCC reserves the right to fine or discipline Clearing Members 
that fail to settle.
    In addition, OCC and NYL propose to enter into Schedule C-2 under 
the Agreement for Clearing and Settlement Services, dated March 9, 
2009, between OCC and NYL to accommodate the Euro-Settled Futures.
    OCC believes that 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 provides for the 
prompt and accurate clearance and settlement of securities 
transactions, ensures the protection of investors and reduces 
unnecessary costs and burdens on them and persons facilitating 
transactions on their behalf. It does so by accommodating the two-day 
settlement date for such futures necessitated by the use of European 
banks and time zone differences.
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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 will have any 
impact on 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

    No written comments relating to the proposed rule change have been 
solicited or received. OCC will notify the Commission of any written 
comments received by OCC.

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

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(iv) of the Act \4\ and Rule 19b-4(f)(4) \5\ 
thereunder because it effects a change in an existing service of OCC 
that does not (i) adversely affect the safeguarding of securities or 
funds in OCC's custody or control or for which OCC is responsible or 
(ii) significantly affect the respective rights or obligations of OCC 
or persons using the service. Euro-Settled Futures are futures within 
the exclusive jurisdiction of the U.S. Commodity Futures Trading 
Commission (``CFTC''), and OCC will therefore clear Euro-Settled 
Futures in its capacity as a registered derivatives clearing 
organization under the CFTC's regulatory jurisdiction. This rule change 
will not affect the safeguarding of funds or securities in OCC's 
possession because OCC will apply the same procedures and safeguards to 
the clearing of these contracts that it does to the clearing of 
securities options and security futures over which the Commission has 
direct regulatory authority. The respective rights and obligations of 
OCC and Clearing Members with respect to matters within the 
Commission's jurisdiction will be unaffected.
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    \4\ 15 U.S.C. 78s(b)(3)(A)(iv).
    \5\ 17 CFR 240.19b-4(f)(4).
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    At any time within sixty days of the filing of such rule change, 
the Commission summarily may temporarily suspend 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.

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-2010-18 on the subject line.

[[Page 68392]]

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-OCC-2010-18. 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 changes 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 Web site viewing and 
printing in the Commission's Public Reference Section, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filings also will be available for 
inspection and copying at the principal office of OCC and on OCC's Web 
site at http://www.theocc.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-2010-18 and should be submitted on or before 
November 26, 2010.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28059 Filed 11-4-10; 8:45 am]
BILLING CODE 8011-01-P