Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Definition of Stock Fund Shares

[Federal Register Volume 64, Number 22 (Wednesday, February 3, 1999)]
[Notices]
[Pages 5334-5335]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-2483]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40981; File No. SR-OCC 98-15]


Self-Regulatory Organizations; The Options Clearing Corporation; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to the Definition of Stock Fund Shares

January 26, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 16, 1998, 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 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

    The proposed rule change modifies the definition of ``stock fund 
shares.''

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 clarify the 
definition of ``stock fund shares'' as currently defined in Section 1 
of Article 1 of OCC's By-laws \3\ by replacing the term ``common

[[Page 5335]]

stocks'' with the phrase ``equity securities'' in the definition. When 
the definition was originally drafted, the term ``common stock'' was 
intended to be interpreted broadly enough to include other equity 
securities such as ADRs.\4\ The substitution of the term ``equity 
securities'' will make it clear that stock fund shares includes 
interests in entities holding portfolios or buckets of equity 
securities other than common stocks.
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    \3\ This definition was introduced in a recently approved rule 
change. Securities Exchange Act Release No. 40595 (October 23, 
1998), 63 FR 58438 [File No. SR-OCC-98-08] (order approving rule 
change relating to OCC's rules and by-laws which govern options on 
publicly traded interests in unit investment trusts, investment 
companies, or similar entities holding portfolios or baskets of 
common stock).
    \4\ The intention to cover ADRs was apparent in the original 
filing which approved a rule change permitting OCC to issue, clear, 
and settle options on unit investment trust interests and investment 
company shares that hold portfolios or baskets of common stock. The 
filing noted that underlying stock fund shares would include World 
Equity Benchmark Shares (``WEBs''). WEBs represent interests in 
funds whose holdings consist of or include ADRs. Securities Exchange 
Act Release No. 40132 (June 25, 1998), 63 FR 36467 [File No. SR-OCC-
97-02].
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    OCC believes that the proposed rule change is consistent with the 
requirements of Section 17A of the Act \5\ and the rules and 
regulations thereunder because it promotes the prompt and accurate 
clearance and settlement of transactions in stock fund options by 
eliminating any potential ambiguity as to the definition of ``stock 
fund shares.''
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    \5\ 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 will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants or Others

    No comments on the proposed rule change were solicited or 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) \6\ of the Act and pursuant to Rule 19b-4(e)(1) \7\ 
promulgated thereunder because the proposal constitutes a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule. At any time within 
sixty days of the filing of such 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.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(i).
    \7\ 17 CFR 240.19b-4(e)(1).
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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. 
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. Sec. 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 also will be available for 
inspection and copying at the principal office of OCC. All submissions 
should refer to File No. SR-OCC-98-15 and should be submitted by 
February 24, 1999.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-2483 Filed 2-2-99; 8:45 am]
BILLING CODE 8010-01-M