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Notice

Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Correspondent Clearing Corporations

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Information about this document as published in the Federal Register.

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Start Preamble November 6, 2001.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that on October 22, 2001, 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 OCC's by-laws and rules to eliminate the theoretical ability of clearing members to choose a correspondent clearing corporation.

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 these statements.[2]

(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 amend OCC by-laws and rules to eliminate the theoretical ability of a clearing member to choose a correspondent clearing corporation to act on the clearing member's behalf for purposes of effecting settlements of exercised stock options, BOUNDs, and matured physically settled security futures (collectively, “physical delivery contracts”). The current by-laws describe a correspondent clearing corporation as a clearing corporation, as defined under the Act, which by agreement with OCC provides facilities for settling physical delivery contracts. The correspondent clearing corporation selected by a clearing member to effect settlement on its behalf is referred to as a designated clearing corporation.

Presently, National Securities Clearing Corporation (“NSCC”) is the only entity that qualifies as a correspondent clearing corporation, which therefore negates the need for OCC's rules to allow for clearing member choice. OCC does not anticipate that any other entity will qualify as a correspondent clearing corporation in the foreseeable future.[3] Accordingly, OCC desires to update its by-laws and rules to reflect the current reality that only NSCC qualifies as a correspondent clearing corporation. This change should not have any adverse impact of the membership.

The proposed rule change is consistent with the requirements of Section 17A of the Act because it keeps current OCC by-law and rule provisions that address linked or coordinated facilities for clearance and settlement of transactions in securities, securities options, and securities futures.

(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

The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act and Rule 19b-4(f)(4) thereunder because it effects a change in an existing service of OCC that does not adversely affect the safeguarding of securities or funds in the custody or control of OCC or for which it is responsible, and it does not significantly affect the respective rights or obligations of the clearing agency or persons using the service. At any time within sixty days of the filing of this 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 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 Start Printed Page 56879the 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-2001-15 and should be submitted by December 4, 2001.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[4]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

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

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3.  Should any entity qualify as a correspondent clearing corporation, OCC will work with that entity to create a linked facility with OCC as a correspondent clearing corporation for purposes of settling physical delivery contracts.

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[FR Doc. 01-28352 Filed 11-9-01; 8:45 am]

BILLING CODE 8010-01-M