

[Federal Register: February 1, 2007 (Volume 72, Number 21)]
[Notices]               
[Page 4762-4763]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01fe07-105]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55151; File No. SR-OCC-2006-16]

 
Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Granting Approval of a Proposed Rule Change Relating to the 
Definition of Fund Share

January 23, 2007.

I. Introduction

    On September 21, 2006, The Options Clearing Corporation (``OCC'') 
filed with the Securities and Exchange Commission (``Commission'') 
proposed rule change SR-OCC-2006-16 pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'').\1\ Notice

[[Page 4763]]

of the proposal was published in the Federal Register on November 28, 
2006.\2\ No comment letters were received. For the reasons discussed 
below, the Commission is granting approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 54786, (November 20, 
2006), 71 FR 68872.
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II. Description

    OCC issues and clears options on ``fund shares'' that are defined 
in Article I of OCC's By-Laws as a publicly traded interest in a trust, 
investment company, or other entity holding portfolios or baskets of 
securities.\3\ The rule change amends the definition of ``fund share'' 
in order to accommodate requests from OCC participant exchanges that 
OCC clear and settle options on exchange traded fund (``ETF'') shares 
that represent interests in an entity holding euros and investing the 
euros in time deposits.\4\ Specifically, the rule change amends the 
definition to include interests in entities holding portfolios or 
baskets of currencies, including single currencies. The definition 
would also be revised to make it clear that (i) it includes entities 
with actively managed portfolios and (ii) it applies only to entities 
principally engaged in holding portfolios or baskets of securities or 
currencies and not to entities that do so as an incident to some other 
business.
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    \3\ Securities Exchange Act Release No. 46914 (November 26, 
2002), 67 FR 72261 (December 4, 2002) [File No. SR-OCC-2002-22].
    \4\ Securities and Exchange Act Release Nos. 54087 (June 30, 
2006), 71 FR 38918 (July 10, 2006) [File No. SR-ISE-2005-60] and 
54983 (December 20, 2006), 71 FR 78476 (December 29, 2006) [File No. 
SR-AMEX-2006-87] (Orders approving a proposed rule change to allow 
listing and trading of fund shares that hold specified non-U.S. 
currency options, futures or options on futures on such currency, or 
any other derivatives based on such currency).
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    If approved by the Commission, the proposed rule change would not 
be implemented until definitive copies of an appropriate supplement to 
the options disclosure document, Characteristics and Risks of 
Standardized Options, are available for distribution.

III. Discussion

    Section 17A(b)(3)(F) of the Act requires, among other things, that 
the rules of a clearing agency be designed to promote the prompt and 
accurate clearance and settlement of securities transactions.\5\ The 
purpose of the proposed rule change is to amend OCC's By-Laws and Rules 
so that OCC may clear and settle options on ETF shares that represent 
interest in an entity that holds currencies, including single 
currencies. Accordingly, the proposed rule change should promote the 
prompt and accurate clearance and settlement of such securities 
transactions.
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    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 17A of the Act and the rules and regulations 
thereunder.\6\
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    \6\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (File No. SR-OCC-2006-16) be and hereby 
is approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-1585 Filed 1-31-07; 8:45 am]

BILLING CODE 8011-01-P
