[Federal Register Volume 78, Number 152 (Wednesday, August 7, 2013)]
[Notices]
[Pages 48214-48216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19040]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70092; File No. SR-OCC-2013-11]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
To: (i) Provide Clarification Regarding the Applicability of Certain
Provisions of OCC's By-Laws and Rules to Certain U.S. Dollar-Settled
Gold Futures Designed to Replicate Positions in the Spot Market; and
(ii) Remove Provisions Applicable Only to the Now-Discontinued U.S.
Dollar-Settled Gold Futures That Were Based on the Value of Gold in the
Spot Market With an Additional Daily Cost of Carry Feature
August 1, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on July 25, 2013, The Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change described in Items I, II and III below, which
Items have been prepared primarily by OCC. OCC filed the proposed rule
change pursuant to Section 19(b)(3)(A)(iii) \3\ of the Act and Rule
19b-4(f)(4)(ii) \4\ thereunder, so that the proposal was effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the rule change from interested parties.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(4)(ii).
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change
OCC proposes to do the following: (i) Provide clarification
regarding the applicability of certain provisions of OCC's By-Laws and
Rules to certain U.S. dollar-settled gold futures designed to replicate
positions in the spot market (``GLN 10 oz. Gold Futures'') \5\ proposed
to be traded by NASDAQ OMX Futures Exchange, Inc. (``NFX''); and (ii)
remove provisions applicable only to the now-discontinued U.S. dollar-
settled gold futures that were based on the value of gold in the spot
market with an additional daily cost of carry feature that was designed
to reflect the difference between the overnight lease rate for gold and
the overnight interest rate for the U.S. dollar, which were also traded
by NFX (``Swap Point Gold Futures'').
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\5\ ``GLN'' will be the ticker symbol for these futures
contracts.
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II. Clearing Agency'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.
(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
OCC is proposing to modify its rules to provide clarification
regarding the applicability of certain provisions of OCC's By-Laws and
Rules to the clearance and settlement of GLN 10 oz. Gold Futures, which
are proposed to be traded by NFX. A GLN 10 oz. Gold Future is a U.S.
dollar-settled futures contract that tracks spot gold prices using a
single contract month for a particular year. OCC's existing By-Laws and
Rules already adequately accommodate OCC's clearing and settlement of
GLN 10 oz. Gold Futures. However, OCC is proposing certain amendments
in order to eliminate any potential confusion regarding the
applicability of certain provisions that were specific to the now-
discontinued Swap Point Gold Futures contracts. GLN 10 oz. Gold Futures
differ from Swap Point Gold Futures, which previously were but are no
longer cleared by OCC, in that they do not include a Cost of Carry
Payment (defined below). Swap Point Gold Futures were U.S. dollar-
settled futures contracts based on the value of gold with an additional
daily cost of carry/interest payment feature that was designed to
reflect the difference between the overnight lease rate for gold and
the overnight interest rate for the U.S. dollar (the ``Cost of
[[Page 48215]]
Carry Payment''). NFX has advised OCC that it has no present intention
to clear swap point contracts in the future.
(i) OCC's Proposed By-Laws and Rules Changes
OCC proposes to delete paragraph (f) of Rule 1301, which provided
for OCC's determination of the Cost of Carry Payment to be paid or
received by buyers and sellers of outstanding spot futures contracts.
GLN 10 oz. Gold Futures do not possess this Cost of Carry Payment
feature, and therefore Rule 1301(f) is not applicable to them. Swap
Point Gold Futures--the only product previously cleared by OCC that
possessed the Cost of Carry Payment feature--are no longer cleared by
OCC, and Rule 1301(f) therefore is no longer needed, and OCC proposes
to delete the provision from its Rules. Accordingly, the defined terms
``cost of carry payment'' and ``spot future,'' which were only utilized
in the context of the cost of carry payment, are both superfluous, and
OCC proposes to delete them from Article I of the By-Laws. OCC also
proposes to delete a reference in Section 2(a) of Article XII of OCC's
By-Laws to the applicability of the cost of carry payment provisions of
Rule 1301 to buyers and sellers of spot futures.
(ii) OCC's Amendment to the Clearing Agreement and Schedule C
OCC performs the clearing function for NFX pursuant to the Clearing
Agreement. The Clearing Agreement provides that NFX will provide
settlement prices to OCC and indemnify OCC in the event that OCC uses
an incorrect settlement price provided by NFX. Additionally, it
provides that NFX will provide certain additional data necessary for
the calculating of the Cost of Carry Payment (``Swap Point Data'') and
indemnify OCC in the event OCC uses incorrect Swap Point Data provided
by NFX. As OCC will no longer be clearing Swap Point Gold Futures,
there is no need for the Clearing Agreement to address NFX's providing
Swap Point Data, or for NFX to indemnify OCC for its use of such Swap
Point Data. Therefore, OCC proposes to enter into an amendment to the
Clearing Agreement deleting these provisions. The Clearing Agreement
will continue to provide for NFX's indemnification of OCC in the event
that OCC uses an incorrect settlement price provided by NFX. A copy of
the proposed amendment to the Clearing Agreement is attached hereto as
Exhibit 3A.
Pursuant to the terms of the Clearing Agreement, OCC has agreed to
clear the specific types of contracts enumerated in the Agreement and
may agree to clear additional types through the execution by both
parties of a new ``Schedule C'' to the Agreement. A copy of the
proposed new Schedule C providing for the clearance of GLN 10 oz. Gold
Futures is attached hereto as Exhibit 3B.
(iii) Effect on Clearing Members
The proposed rule change relates to the clearing of a new product
and will affect clearing members and their customers to the extent that
they seek to trade GLN 10 oz. Gold Futures. The change will affect all
such clearing members equally and should not impose any compliance
burdens on clearing members, because GLN 10 oz. Gold Futures will be
cleared using existing systems and will be margined similarly to other
existing products.
The proposed changes to OCC's By-Laws and Rules are consistent with
the purposes and requirements of Section 17A(b)(3)(A) of the Securities
Exchange Act of 1934, as amended (the ``Exchange Act'' or ``Act'') \6\,
because they are designed to permit OCC to perform clearing services
for products that are subject to the jurisdiction of the Commodity
Futures Trading Commission (the ``CFTC'') without adversely affecting
OCC's obligations with respect to the prompt and accurate clearance and
settlement of securities transactions or the protection of securities
investors and the public interest. They accomplish this purpose by
providing clarification regarding the applicability of certain
provisions of OCC's By-Laws and Rules to GLN 10 oz. Gold Futures, and
remove provisions of OCC's By-Laws and Rules that are only applicable
to Swap Point Gold Futures, a discontinued product. The proposed rule
change is not inconsistent with any rules of OCC, including any rules
proposed to be amended.
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\6\ 15 U.S.C. 78q-1.
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(B) Clearing Agency's Statement on Burden on Competition
OCC does not believe that the proposed rule change would impose any
burden on competition that is not necessary or appropriate in
furtherance of the Act because it relates solely to a commodity futures
product subject to the exclusive jurisdiction of the Commodity Futures
Trading Commission and therefore will not have any impact, or impose
any burden, on competition in securities markets or any other market
governed by the Act.
(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others
Written comments on the proposed rule change 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
This proposed rule change is filed for immediate effectiveness
pursuant to Section 19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-
4(f)(4)(ii) \8\ thereunder. Pursuant to Rule 19b-4(f)(4)(ii),\9\ a rule
change may take effect upon filing if it primarily affects the clearing
operations of the clearing agency with respect to products that are not
securities and does not significantly affect any securities clearing
operations of the clearing agency or any rights or obligations of the
clearing agency with respect to securities clearing or persons using
such securities-clearing service. As described above, this proposed
rule change concerns futures products that are subject to the primary
jurisdiction of the CFTC and does not adversely affect OCC's
obligations with respect to the prompt and accurate clearance and
settlement of securities transactions or the protection of securities
investors and the public interest. Notwithstanding the foregoing, OCC
will delay its implementation of this rule change until it is deemed
certified under Regulation Sec. 40.6 \10\ of the CFTC.
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\7\ 15 U.S.C. 78s(b)(3)(A)(iii).
\8\ 17 CFR 240.19b-4(f)(4)(ii).
\9\ Id.
\10\ 17 CFR Part 40.
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At any time within 60 days of the filing of this proposed rule
change, the Commission summarily may temporarily suspend this 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.\11\
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\11\ 15 U.S.C. 78s(b)(3)(C).
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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. Comments may be submitted by any of
the following methods:
[[Page 48216]]
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-OCC-2013-11 on the subject line.
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-2013-11. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method of submission. 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 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 10:00 a.m. and 3:00 p.m. Copies of such filing 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/components/docs/legal/rules_and_bylaws/sr_occ_13_11.pdf.
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-2013-11 and
should be submitted on or before August 28, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated Authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-19040 Filed 8-6-13; 8:45 am]
BILLING CODE 8011-01-P