Skip to Content

Notice

Self-Regulatory Organizations; The Options Clearing Corporation; Order Granting Approval of Accelerated Delivery of Supplement to the Options Disclosure Document Reflecting Certain Changes to Disclosure Regarding Dividend Index Options

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble December 10, 2009.

March 26, 2009, The Options Clearing Corporation (“OCC”) submitted to the Securities and Exchange Commission (“Commission”), pursuant to Rule 9b-1 under the Securities Exchange Act of 1934 (“Act”),[1] five preliminary copies of a supplement to its options disclosure document (“ODD”) reflecting certain changes to disclosure regarding options on dividend indexes.[2] On November 10, 2009, the OCC submitted to the Commission five definitive copies of the supplement.[3]

The ODD currently contains general disclosures on the characteristics and risks of trading standardized options. Recently, the Chicago Board Options Exchange, Incorporated (“CBOE”) amended its rules to permit the listing and trading of options that overlie the S&P 500 Dividend Index.[4] The proposed supplement amends the ODD to accommodate this change by providing disclosure regarding dividend index options.[5]

Specifically, the proposed supplement to the ODD adds new disclosure regarding the characteristics of dividend index options. Further, the proposed supplement to the ODD adds new disclosure regarding the special risks of these options. The proposed supplement to the ODD also adds new disclosure stating that the options markets may use other methods than those specified in the ODD to set exercise prices. The proposed supplement is intended to be read in conjunction with the more general ODD, which, as described above, discusses the characteristics and risks of options generally.[6]

Rule 9b-1(b)(2)(i) under the Act [7] provides that an options market must file five copies of an amendment or supplement to the ODD with the Commission at least 30 days prior to the date definitive copies are furnished to customers, unless the Commission determines otherwise, having due regard to the adequacy of information disclosed and the public interest and protection of investors.[8] In addition, five copies of the definitive ODD, as amended or supplemented, must be filed with the Commission not later than the date the amendment or supplement, or the amended options disclosure document is furnished to customers. The Commission has reviewed the proposed supplement and finds, having due regard to the adequacy of information disclosed and the public interest and protection of investors, that the proposed supplement may be furnished to customers as of the date of this order.

It is therefore ordered, pursuant to Rule 9b-1 under the Act,[9] that definitive copies of the proposed supplement to the ODD (SR-ODD-2009-01), reflecting changes to disclosures regarding certain options on dividend indexes, as well as the other changes noted above, may be furnished to customers as of the date of this order.

Start Signature

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10

Florence E. Harmon,

Deputy Secretary.

End Signature End Preamble

Footnotes

2.  See letter from Jean M. Cawley, Senior Vice President and Deputy General Counsel, OCC, to Sharon Lawson, Senior Special Counsel, Division of Trading and Markets (“Division”), Commission, dated March 26, 2009.

Back to Citation

3.  See letter from Jean M. Cawley, Senior Vice President and Deputy General Counsel, OCC, to Sharon Lawson, Senior Special Counsel, Division, Commission, dated November 9, 2009.

Back to Citation

4.  See Securities Exchange Act Release No. 61136 (December 10, 2009) (SR-CBOE-2009-022).

Back to Citation

5.  The proposed November 2009 Supplement to the ODD supersedes and replaces the September 2008 supplement and amends the May 2007 and June 2008 supplement.

Back to Citation

6.  The Commission notes that the options markets must continue to ensure that the ODD is in compliance with the requirements of Rule 9b-1(b)(2)(i) under the Act, 17 CFR 240.9b-1(b)(2)(i), including when future changes regarding dividend index options are made. Any future changes to the rules of the options markets concerning dividend index options would need to be submitted to the Commission under Section 19(b) of the Act. 15 U.S.C. 78s(b).

Back to Citation

7.  17 CFR 240.9b-1(b)(2)(i).

Back to Citation

8.  This provision permits the Commission to shorten or lengthen the period of time which must elapse before definitive copies may be furnished to customers.

Back to Citation

9.  17 CFR 240.9b-1.

10.  17 CBR 200.30-3(a)(39).

Back to Citation

[FR Doc. E9-30081 Filed 12-17-09; 8:45 am]

BILLING CODE 8011-01-P