

[Federal Register: January 11, 2007 (Volume 72, Number 7)]
[Notices]               
[Page 1358]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ja07-73]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55035; File No. SR-ODD-2006-01]

 
Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Granting Approval of Accelerated Delivery of Supplement to the 
Options Disclosure Document Reflecting Certain Changes to Disclosure 
Regarding U.S. Dollar-Denominated Foreign Currency Options

December 29, 2006.
    On December 8, 2006, The Options Clearing Corporation (``OCC'') 
submitted to the Securities and Exchange Commission (``Commission''), 
pursuant to Rule 9b-1 under the Securities Exchange Act of 1934 
(``Act''),\1\ five preliminary copies of a supplement to its options 
disclosure document (``ODD'') reflecting certain changes to disclosure 
regarding U.S. dollar-denominated foreign currency options 
(``FCOs'').\2\ On December 29, 2006, the OCC submitted to the 
Commission five definitive copies of the supplement.\3\
---------------------------------------------------------------------------

    \1\ 17 CFR 240.9b-1.
    \2\ See letter from William H. Navin, Executive Vice President, 
General Counsel, and Secretary, OCC, to Elizabeth King, Associate 
Director, and Sharon Lawson, Senior Special Counsel, Division of 
Market Regulation, Commission, dated December 7, 2006.
    \3\ See letter from Jean M. Cawley, First Vice President and 
Deputy General Counsel, OCC, to Elizabeth King, Associate Director, 
and Sharon Lawson, Senior Special Counsel, Division of Market 
Regulation, Commission, dated December 29, 2006.
---------------------------------------------------------------------------

    The ODD currently contains general disclosures on the 
characteristics and risks of trading standardized options. Recently, an 
options exchange amended its rules to permit the listing and trading of 
FCOs on the British pound and the Euro.\4\ The proposed supplement to 
the ODD accommodates this change by providing additional disclosure 
regarding FCOs.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 34-54989 (December 
21, 2006), 71 FR 78506 (December 29, 2006) (approving File No. SR-
Phlx-2006-34).
---------------------------------------------------------------------------

    Specifically, the proposed supplement to the ODD updates disclosure 
regarding the calculation of exercise prices and premiums for FCOs. The 
proposed supplement also enhances disclosure regarding cash-settlement 
of FCOs, including the calculation of cash settlement amounts and 
exercise settlement values. Finally, the proposed supplement updates 
disclosure in the ODD regarding the expiration of FCOs.\5\ The proposed 
supplement is intended to be read in conjunction with the more general 
ODD, which, as described above, discusses the characteristics and risks 
of options generally.
---------------------------------------------------------------------------

    \5\ The Commission notes that the options markets must continue 
to ensure that the ODD is in compliance with the requirements of 
Rule 9b-1(b)(2)(i) under the Act, 17 CFR 240.9b-1(b)(2)(i), 
including when future changes regarding FCOs are made. Any future 
changes to the rules of the options markets concerning FCOs would 
need to be submitted to the Commission under Section 19(b) of the 
Act. 15 U.S.C. 78s(b).
---------------------------------------------------------------------------

    Rule 9b-1(b)(2)(i) under the Act \6\ provides that an options 
market must file five copies of an amendment or supplement to the ODD 
with the Commission at least 30 days prior to the date definitive 
copies are furnished to customers, unless the Commission determines 
otherwise, having due regard to the adequacy of information disclosed 
and the public interest and protection of investors.\7\ In addition, 
five copies of the definitive ODD, as amended or supplemented, must be 
filed with the Commission not later than the date the amendment or 
supplement, or the amended options disclosure document, is furnished to 
customers. The Commission has reviewed the proposed supplement and 
finds, having due regard to the adequacy of information disclosed and 
the public interest and protection of investors, that the proposed 
supplement may be furnished to customers as of the date of this order.
---------------------------------------------------------------------------

    \6\ 17 CFR 240.9b-1(b)(2)(i).
    \7\ This provision permits the Commission to shorten or lengthen 
the period of time which must elapse before definitive copies may be 
furnished to customers.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Rule 9b-1 under the Act,\8\ 
that definitive copies of the proposed supplement to the ODD (SR-ODD-
2006-01), reflecting changes to disclosure regarding U.S. dollar-
denominated foreign currency options, may be furnished to customers as 
of the date of this order.
---------------------------------------------------------------------------

    \8\ 17 CFR 240.9b-1.
    \9\ 17 CFR 200.30-3(a)(39).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-231 Filed 1-10-07; 8:45 am]

BILLING CODE 8011-01-P
