

[Federal Register: March 29, 2007 (Volume 72, Number 60)]
[Notices]               
[Page 14844-14845]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29mr07-130]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55504; File No. SR-OCC-2006-15]

 
Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing of a Proposed Rule Change Relating to the Approval of 
Fund Shares Deposited as Margin

March 21, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on August 31, 2006, The 
Options Clearing Corporation (``OCC'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
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 on the proposed rule change from interested persons.
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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 proposed rule change would eliminate the requirement that the 
Membership/Risk Committee approve classes of fund shares (e.g., ETFs) 
for deposit as margin.

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 such 
statements.\2\
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    \2\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The proposed rule change would delete Interpretation and Policy .11 
to Rule 604, Forms of Margin, which requires that OCC's Membership/Risk 
Committee approve classes of fund shares for deposit as margin. 
Committee approval was deemed to be a prudent safeguard when OCC began 
accepting fund shares for deposit in 1996 because fund shares had only 
been trading since 1993, and OCC was not as familiar with them as it is 
today. In 1997, OCC began clearing options on fund shares. Since then, 
fund shares have become a widely used investment tool, and OCC has 
developed a broad understanding of the fund share marketplace. In light 
of these developments, OCC believes that fund shares should be accepted 
as margin under the same conditions that apply to the deposit of other 
equity securities without the need for Committee approval.
    The proposed change is consistent with Section 17A of the Act 
because it eliminates an unwarranted approval process for the 
acceptance of fund shares as a form of margin asset while employing the 
same safeguards that apply to the deposit of other equity securities as 
margin in order to assure the safeguarding of securities which are in 
OCC's custody or control. The proposed rule change is not inconsistent 
with the existing rules of OCC, including any other rules proposed to 
be amended.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would 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 change, and none have been received.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 rule-comments@sec.gov. Please include 

File Number SR-OCC-2006-15 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-OCC-2006-15. 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


[[Page 14845]]

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 filing also will be available for inspection and copying at the 
principal office of OCC and on OCC's Web site at http://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-2006-15 and should be submitted on or before April 19, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\3\
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    \3\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5753 Filed 3-28-07; 8:45 am]

BILLING CODE 8010-01-P
