Self-Regulatory Organizations; The Options Clearing Corporation; Order Granting Approval to Proposed Supplement to Options Disclosure Document Regarding Options on Exchange-Traded Fund Shares

[Federal Register Volume 63, Number 226 (Tuesday, November 24, 1998)]
[Notices]
[Pages 64980-64981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31353]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40680; File No. SR-ODD-98-1]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Order Granting Approval to Proposed Supplement to Options Disclosure 
Document Regarding Options on Exchange-Traded Fund Shares

November 13, 1998.
    On November 13, 1998, The Options Clearing Corporation (``OCC'') 
submitted to the Securities and Exchange Commission (``SEC'' or 
``Commission''), pursuant to Rule 9b-1 under the Securities Exchange 
Act of 1934 (``Act''),\1\ five definitive copies of a Supplement to its 
options disclosure document (``ODD''), which describes, among other 
things, the risks and characteristics of trading in options on 
interests in unit investment trusts, investment companies, and similar 
entities holding portfolios of equity securities.\2\
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    \1\ 17 CFR 240.9b-1.
    \2\ See Letter from James C. Yong, First Vice President and 
General Counsel, OCC, to Sharon Lawson, Division of Market 
Regulation, Commission, dated November 12, 1998.
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    The ODD currently contains general disclosures on the 
characteristics and risks of trading options on equity securities. The 
Commission has approved proposals by two options exchanges to list and 
trade options on interests in unit investment trusts, investment 
companies, and similar entities holding portfolios of equity 
securities.\3\ The proposed Supplement to the ODD provides for 
disclosures to accommodate the introduction of these options. Pursuant 
to Rule 9b-1, the Supplement will have to be provided to investors in 
options on Exchange-Traded Fund Shares before their accounts are 
approved for trading options on these products.
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    \3\ See Securities Exchange Act Release Nos. 40157 (July 1, 
1998) 63 FR 37426 (July 10, 1998) (order approving File No. SR-Amex-
96-44); and 40166 (July 2, 1998) 63 FR 37430 (July 10, 1998) (order 
approving File No. SR-CBOE-97-03).
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    The Commission has reviewed the ODD Supplement and finds that it 
complies with Rule 9b-1 under the Act.\4\ The Supplement is intended to 
be read in conjunction with the ODD, which discusses the 
characteristics and risks of options generally. The Supplement provides 
additional information regarding options on interests in unit 
investment trusts, investment companies, and similar entities holding 
portfolios of equity

[[Page 64981]]

securities sufficient to further describe the special characteristics 
of these products.
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    \4\ 17 CFR 240.9b-1.
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    Rule 9b-1 provides that an options market must file five 
preliminary copies of an amended ODD with the Commission at least 30 
days prior to the date definitive copies of the ODD are furnished to 
customers, unless the Commission determines otherwise, having due 
regard for the adequacy of information disclosed and the protection of 
investors.\5\ The Commission has reviewed the Supplement, and finds 
that it is consistent with the protection of investors and in the 
public interest to allow the distribution of the Supplement as of the 
date of this order.
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    \5\ This provision is intended to permit the Commission either 
to accelerate or extend the time period in which definitive copies 
of a disclosure document may be distributed to the public.
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    It is therefore ordered, pursuant to Rule 9b-1 under the Act,\6\ 
that the proposed Supplement regarding options on interests in unit 
investment trusts, investment companies, and similar entities holding 
portfolios of equity securities (SR-ODD-98-1) is approved.

    \6\ 17 CFR 240.9b-1.
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(39).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-31353 Filed 11-23-98; 8:45 am]
BILLING CODE 8010-01-M