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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 Clearing Cash-Settled Foreign Currency Index Options

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Start Preamble July 23, 2009.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),[1] notice is hereby given that on July 12, 2009, 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. OCC filed the proposed rule change pursuant to Section 19(b)(3)(A)(i) of the Act [2] and Rule 19b-4(f)(1) [3] thereunder 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.

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

The proposed rule change would clarify that index options cleared by OCC may include options on foreign currency indexes, including options on the International Securities Exchange (“ISE”) Leveraged USD Basket Index.Start Printed Page 38243

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.[4]

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

ISE has proposed for trading cash-settled foreign currency index options (“Currency Index Options”) on the ISE USD Leveraged Basket Index (“ISE FX Index”). In its rule filing, ISE states that the ISE FX Index, which is a foreign currency index, tracks two times the performance, relative to the U.S. Dollar, of a basket of the official currencies associated with the other “Group of 10” countries (“G-10”).[5] The ISE FX Index was created by ISE and will be maintained and calculated by an index calculation agent based on a methodology developed by ISE. The ISE FX Index is intended as a benchmark for investors interested in the performance of the US Dollar versus the currencies of other G-10 countries. OCC may clear options on other foreign currency indexes in the future.

Currency Index Options are similar to other index options cleared by OCC. Therefore, OCC believes that the provisions of its By-Laws and Rules governing index options, as they are currently in effect, are sufficient to support the clearance and settlement of Currency Index Options. The purpose of this rule change is to make a purely technical amendment to the definition of “index component” in Article XVII of the By-Laws to make it more transparent that index options cleared by OCC may include options on foreign currency indexes.

The proposed rule change is consistent with the purposes and requirements of Section 17A of the Act because it is designed to promote the prompt and accurate clearance and settlement of transactions in, including exercises of, foreign currency index options, and to foster cooperation and coordination with persons engaged in the clearance and settlement of such transactions, to remove impediments to and perfect the mechanism of a national system for the prompt and accurate clearance and settlement of such transactions, and, in general, to protect investors and the public interest. The proposed rule change accomplishes this purpose by applying the same rules and procedures to these transactions as OCC applies to transactions in other index options. The proposed rule change is not inconsistent with the existing rules of OCC, including any 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

The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(i) of the Act [6] and Rule 19b-4(f)(1) [7] promulgated thereunder because the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule. However, OCC will not begin to clear and settle foreign currency index options until distribution of a supplement to the options disclosure document, Characteristics and Risks of Standardized Options, addressing such options. At any time within sixty days of the filing of the 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. Comments may be submitted by any of the following methods:

Electronic Comments

Paper Comments

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

All submissions should refer to File Number SR-OCC-2009-12. 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 inspection and copying 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 the principal office of OCC. 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-2009-12 and should be submitted on or before August 21, 2009.

Start Signature
Start Printed Page 38244

For the Commission by the Division of Trading and Markets, pursuant to delegated authority.[8]

Florence E. Harmon,

Deputy Secretary.

End Signature End Preamble

Footnotes

2.  15 U.S.C. 78s(b)(3)(A)(i).

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4.  The Commission has modified parts of these statements.

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5.  Although there are eleven countries in the G-10, because several of these countries are members of the European Union and use the Euro as their currency. As a result, there are only seven currencies associated with the G-10: US Dollar, Euro, Japanese Yen, British Pound, Canadian Dollar, Swiss Franc and Swedish Krona.

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6.  15 U.S.C. 78s(b)(3)(A)(ii).

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[FR Doc. E9-18273 Filed 7-30-09; 8:45 am]

BILLING CODE 8010-01-P