[Federal Register Volume 64, Number 78 (Friday, April 23, 1999)]
[Notices]
[Pages 20043-20044]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10198]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41298; File No. SR-OCC-99-05]
Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of Proposed Rule Change Regarding Joint Back Office
Participants
April 16, 1999.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on March 3, 1999, The Options
Clearing Corp. (``OCC'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule
[[Page 20044]]
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 from interested persons on the proposed rule
change.
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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
Under the proposed rule change, OCC will amend its rules and by-
laws to allow clearing members to maintain joint back office accounts
in which long positions can be used to offset short positions in
options for broker-dealers with which they have joint back office
arrangements.
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 the text of the summaries
prepared by OCC.
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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 the proposed rule change is to allow OCC clearing
members to maintain joint back office accounts (``JBO accounts'') for
broker-dealers with whom the clearing members have joint back office
arrangements. (These broker-dealers are referred to as JBO
participants.) Under the proposed rule change, a broker-dealer
registered with the Commission will be considered a JBO participant if
it (1) maintains a joint back office arrangement with an OCC clearing
member that satisfies the requirements of Regulation T,\3\ (2) meets
the applicable requirements as specified in exchange rules, and (3)
consents to having its exchange transactions cleared and its positions
carried in a JBO participant account.
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\3\ Joint back office arrangements are authorized under Section
220.7 of Regulation T of the Board of Governors of the Federal
Reserve System and permit non-clearing broker-dealers to be deemed
self-clearing for credit extension purposes if the non-clearing
broker-dealer has an ownership interest in the clearing firm.
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OCC will treat JBO participants like market makers and specialists
and will treat JBO participants' accounts like market maker's accounts
and specialist's accounts. For example, long positions in a JBO
participants' account will be treated as unsegregated long positions.
The one exception to this treatment relates to Chapter IV of OCC's
rules which pertains to matched trade reporting. OCC does not
anticipate that its participant exchanges will report JBO transactions
as market maker or specialist transactions for purposes of reporting
matched trades. Accordingly, JBO participants will not be included
within the term ``market maker'' or ``specialist'' for the purposes of
the rules in Chapter IV.
To implement the above changes, OCC will add definitions for ``JBO
participant'' and ``JBO participants' account'' in Article I, Section 1
of the by-laws. OCC will also amend the definition of ``unsegregated
long position'' to include long positions in JBO participants'
accounts. OCC will amend Interpretation .03 to Article V, Section 1 of
the by-laws, which provides that applicants for clearing membership
must agree to seek approval for the membership/margin committee to
clear types of transactions for which the applicant did not initially
seek approval in its membership application, by adding JBO participant
transactions. Finally, Article VI, Section 3 of the by-laws will be
amended to add JBO participants' accounts to the list of permissible
accounts clearing members may maintain with OCC.
OCC believes that the proposed rule change is consistent with
Section 17A of the Act \4\ and the rules and regulations thereunder
because the proposal is consistent with OCC's requirement to assure the
safeguarding of securities and funds which are in OCC's custody or
control or for which OCC is responsible.
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\4\ 15 U.S.C. 78q-1.
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B. Self-Regulatory Organization's Statement on Burden on Competition
OCC does not believe that the proposed rule change would impose any
material impact 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 OCC consents, the Commission will:
(A) by order approve such 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, N.W., Washington, D.C. 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, N.W.,
Washington, D.C. 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-99-05 and should be
submitted by May 14, 1999.
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. 99-10198 Filed 4-22-99; 8:45 am]
BILLING CODE 8010-01-M