
[Federal Register: February 10, 2010 (Volume 75, Number 27)]
[Notices]               
[Page 6750-6751]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10fe10-135]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61485; File No. SR-OCC-2010-01]

 
Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Options for Which the Premium and Exercise Price Are 
Expressed as a Multiple of the Per-Share Amount

February 3, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ notice is hereby given that on January 14, 2010, The Options 
Clearing Corporation (``OCC'') filed with the Securities and Exchange 
Commission the proposed rule change as 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) of the 
Act \2\ and Rule 19b-4(f)(4) thereunder \3\ so that the proposal was 
effective upon filing with the Commission. 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).
    \2\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \3\ 17 CFR 240.19b-4(f)(4).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The proposed rule change would revise OCC's By-Laws and Rules to 
accommodate options for which the premium and exercise price are 
expressed on other than a per-unit basis.

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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of this rule change is to revise OCC By-Law, Article 
I.A.5 (definition of ``Aggregate Exercise Price'') and OCC Rule 
805(d)(2) to accommodate options for which the premium and exercise 
price are expressed as other than a per-unit basis. NYSE Amex LLC 
(``NYSE Amex'') is proposing to trade physically-settled options on 
exchange-traded funds (``ETFs'') with a unit of trading of 1,000 shares 
(``Grand Options'') rather than the standard unit of trading of 100 
shares.
    When NYSE Amex previously introduced ETF options with units of 
trading of 1,000 shares, NYSE Amex followed the usual convention of 
quoting premiums and exercise prices as per-share amounts. The extended 
premium and aggregate exercise price were then calculated in the usual 
way by multiplying the per-share amount by the unit of trading (i.e. 
1,000). In NYSE Amex's experience, this approach caused investor 
confusion because investors in some cases failed to realize that they 
were trading large-sized options until premiums equal to ten times the 
expected amount were debited from their accounts. To address this, NYSE 
Amex intends to modify the standard method of stating premiums and 
exercise prices for Grand Options by multiplying the per-share amount 
by 10. Extended premiums and exercise prices for such contracts would 
then be calculated by multiplying by 100 rather than the actual unit of 
trading of 1,000. NYSE Amex believes that, by increasing the size of 
the stated premiums and exercise prices by a factor of 10, the larger 
size of these options will be more apparent to investors.
    To accommodate options for which the premium and exercise price are 
expressed as a multiple of the per-share amount, OCC proposes to make 
minor technical amendments to a few definitions in its By-Laws and to 
its rule governing expiration date exercise procedures. The changes 
being proposed can be viewed at http://www.optionsclearing.com/
components/docs/legal/rules_and_bylaws/sr_occ_10_01.pdf.
    OCC believes that the proposed changes to OCC's By-Laws and Rules 
are consistent with the purposes and requirements of Section 17A of the 
Act \4\ because the changes promote the prompt and accurate clearance 
and settlement of Grand Options, protect investors by reducing the 
likelihood of investor confusion, and permit Grand Options to be 
traded, cleared, and settled in the same basic manner as other 
currently available options and be subject to the same rules and 
procedures that have been successfully used by OCC to clear and settle 
other options. Furthermore, OCC states that the proposed rule change is 
not inconsistent with OCC's existing rules, including those proposed to 
be amended.
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    \4\ 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 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

    OCC has not solicited or received written comments relating to the 
proposed rule change. OCC will notify the Commission of any written 
comments it receives.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(i) of the Act \5\ and Rule 19b-4(f)(4) \6\ thereunder 
because the proposed rule change effects a change in an existing 
service of a registered clearing agency that (i) does not adversely 
affect the safeguarding of securities or funds in the custody or 
control of the clearing agency or for

[[Page 6751]]

which it is responsible and (ii) does not significantly affect the 
respective rights or obligations of the clearing agency or persons 
using the service. At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate such rule 
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.
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    \5\ 15 U.S.C. 78s(b)(3)(A)(i).
    \6\ 17 C.F.R. 240.19b(f)(1).
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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:

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 No. SR-OCC-2010-01 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-OCC-2010-01. 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 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 Room, 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 filing also will be available for 
inspection and copying at OCC's principal office and on OCC's Web site 
at http://www.optionsclearing.com/components/docs/legal/rules_and_
bylaws/sr_occ_10_01.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 submission should refer to 
File No. SR-OCC-2010-01 and should be submitted on or before March 3, 
2010.

    For the Commission by the Division of Trading and Markets, 
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. 2010-2860 Filed 2-9-10; 8:45 am]
BILLING CODE 8011-01-P

