
[Federal Register Volume 75, Number 220 (Tuesday, November 16, 2010)]
[Notices]
[Pages 70060-70061]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28746]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63278; File No. SR-OCC-2010-05]


 Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Granting Approval of a Proposed Rule Change Relating to Cash-
Settled Foreign Currency Options With One-Cent Exercise Prices

November 8, 2010.

I. Introduction

    On March 16, 2010, The Options Clearing Corporation (``OCC'') filed 
with the Securities and Exchange Commission (``Commission'') a proposed 
rule change pursuant to Section 19(b)(1) of the Securities Exchange Act 
of 1934 (``Act'') \1\ and Rule 19b-4 thereunder \2\ to clarify that 
cash-settled foreign currency options traded on national securities 
exchanges will be treated and cleared as securities options 
notwithstanding that they may have a nominal exercise price such as one 
cent. The proposed rule change was published for comment in the Federal 
Register on April 7, 2010.\3\ No comment letters were received on the 
proposal. This order approves the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 61820 (Apr. 1, 2010), 75 
FR 17805.
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II. Description of the Proposal

    OCC will add a sentence to the Introduction to Article XXII of its 
By-Laws to make clear that cash-settled foreign currency options traded 
on national securities exchanges will be treated and cleared as 
securities options notwithstanding that they may have a nominal 
exercise price such as one cent.\4\
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    \4\ The exact language of the proposal can be seen at http://www.theocc.com/component/docs/legal/rules_and_bylaws/sr_OCC_10_05.pdf.

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[[Page 70061]]

    In its capacity as a ``derivatives clearing organization'' 
registered as such with the Commodities Futures Trading Commission, OCC 
also filed this proposed rule change with the CFTC for prior approval 
pursuant to provisions of the Commodity Exchange Act (``CEA'') in order 
to foreclose any potential argument that the clearing by OCC of such 
options as securities options constitutes a violation of the CEA. The 
products involved here are essentially the same as cash-settled foreign 
currency options that OCC currently clears except for the low strike 
price.

III. Discussion

    Section 17A(b)(3)(F) of the Act \5\ 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 and 
derivative transactions. OCC's clarification of its By-Laws with 
respect to cash-settled foreign currency options with nominal exercise 
prices should help reduce the likelihood of confusion as to OCC's 
treatment of such products, and accordingly should help to promote the 
prompt and accurate clearance and settlement of 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 \6\ and the rules and regulations 
thereunder.
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    \6\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (File No. SR-OCC-2010-05) be and 
hereby is approved.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ 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).

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28746 Filed 11-15-10; 8:45 am]
BILLING CODE 8011-01-P


