[Federal Register Volume 67, Number 164 (Friday, August 23, 2002)]
[Notices]
[Pages 54689-54690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21519]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-46377; File No. SR-OCC-2002-15]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of a Proposed Rule Change Relating to Dating
Assignments
August 19, 2002.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on July 3, 2002, 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 persons.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The proposed rule change would amend OCC Rule 803 to provide that
assignments of exercise notices will be dated and effective on the same
date that the applicable exercise notice was accepted by OCC.
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.\2\
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\2\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The purpose of this rule change is to modify Rule 803 to provide
that assignments will be dated and effective on the same date that the
related exercise notice was accepted by OCC. Rule 803(b) currently
provides that assignments are dated and effective as of the business
day following the exercise date. This reflects the mechanics of OCC's
processing. OCC assigns exercises on an overnight basis, but assigned
clearing members do not receive notice of assignment until the morning
of the day after exercise. OCC's practice has been to date assignments
as of the day the assigned clearing members receive the notice of
assignment. However, the trade (i.e., the purchase or sale of stock)
resulting from the exercise is treated as having occurred on the
exercise date not the assignment date. Thus, settlement takes place on
the third business day following the exercise date.\3\
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\3\ OCC Rule 902.
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This has the potential to cause confusion for call writers. OCC has
learned that some, if not all, clearing members use the same assignment
date
[[Page 54690]]
as OCC. As a result, when a holder exercises a call on the day before
an ex-dividend date in order to capture the dividend, the writer who is
assigned the exercise may see an assignment date the same as the ex-
dividend date. The writer's broker may then have to explain that the
writer is required to give up the dividend to the exercising holder
because the exercise occurred before the ex-dividend date even though
the assignment did not. While the language of this filing reflects
OCC's current business of clearing and settling exchange traded
options, the filing and the change to OCC's by-laws and rules extend to
matching trade information from national securities exchanges, national
securities associations, futures merchants, security futures markets,
and international markets for which OCC clears and settles
transactions. \4\ Dating assignments on the same date as the related
exercise will lessen the potential for this kind of confusion.
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\4\ OCC Rules 912 and 913(e).
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Other, nonsubstantive changes are proposed for Rule 803 for the
purposes of updating obsolete language. In addition, a conforming
change is made to Rule 402, which pertains to supplemental reports of
matched trades.
OCC believes that the proposed rule change is consistent with
section 17A of the Act because it eliminates a potential source for
investor confusion.
(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
Within thirty five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
(a) By order approve the proposed rule change or
(b) institute proceedings to determine whether the proposed rule
change should be disapproved.
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 the
Commission's Public Reference Section, 450 Fifth Street NW.,
Washington, DC 20549. Copies of such filing will also be available for
inspection and copying at the principal office of OCC. All submissions
should refer to the File No. SR-OCC-2002-15 and should be submitted by
September 13, 2002.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-21519 Filed 8-22-02; 8:45 am]
BILLING CODE 8010-01-P