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Notice

Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Stockholder Approval of Certain By-Law Amendments

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Information about this document as published in the Federal Register.

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Start Preamble November 28, 2000.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that, on June 20, 2000, 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 parties.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The proposed rule change would amend Article XI, Section 1 to provide more explicit authorization for a procedure to obtain stockholder approval of certain By-Law amendments.[2]

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 section (A), (B), and (C) below, of the most significant aspects of these statements.[3]

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

The purpose of the proposed rule change is to make explicit a long-standing interpretation of OCC's By-Laws, Article XI, Section 1, which provides that certain enumerated provisions of the By-Laws “may not be amended by action of the Board of Directors without the approval of the holders of all of the outstanding Common Stock of the Corporation.” Each of OCC's stockholders is a participant exchange of OCC, and each is entitled to elect one “exchange director” to OCC's board of directors. It has been the practice of OCC and the exchanges to consider the affirmative vote of each exchange director to be the required approval of the stockholder that elected that exchange director. OCC is proposing to amend Article XI, Section 1 to provide more explicit authorization for this procedure. The proposed rule change was approved by the holders of all outstanding common stock of OCC by unanimous written consent on May 23, 2000, and by OCC's board of directors at a meeting held on May 23, 2000.

In order to eliminate any potential conflict between an exchange director's fiduciary duty as a director of OCC and his or her duty to the stockholder that elected the director, the rule change also allows an exchange director to choose not to have his or her vote in favor of a By-Laws amendment considered to be the approval of such stockholder. In the event that any exchange director exercises this right, the rule change provides that the By-Laws amendment in question will require the written approval of the stockholder represented by that exchange director. Such approval could then be given or withheld by the stockholder without the vote of the exchange director.

The proposed rule change is consistent with Delaware corporate law. Absent the current provision in Article XI, Section 1 of the By-Laws, no stockholder action would be required in order to amend any part of the By-Laws of OCC. Where the requirement of stockholder “approval” is imposed by the By-Laws, the By-Laws may specify the mechanism by which that approval is to be obtained.

The proposed rule change is also consistent with the purposes and requirements of Section 17A of the Act [4] and the rules and regulations thereunder applicable to OCC because it assures the fair representation of OCC stockholders in the administration of OCC's affairs and does not impose any burden on competition.

(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 relating to the proposed rule change have not yet been solicited or received.

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)(iii) [5] of the Act and Rule 19b-4(f)(3) [6] promulgated thereunder because the proposal is solely concerned with the administration of OCC and does not affect the protection of investors or the public interest and does not impose any burden on competition. At any time within sixty days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change 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.

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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 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 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.Start Printed Page 75992

552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of OCC. All submissions should refer to File No. SR-OCC-00-05 and should be submitted by December 26, 2000.

For the Commission by the Division of Market Regulation, pursuant to delegated authority.[7]

Start Signature

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

2.  A copy of the text of OCC's proposed rule change and the attached exhibit are available at the Commission's Public Reference Section or through OCC.

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3.  The Commission has modified the text of the summaries prepared by OCC.

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5.  15 U.S.C. 78s(b)(3)(A)(iii).

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[FR Doc. 00-30882 Filed 12-4-00; 8:45 am]

BILLING CODE 8010-01-M