regulatory organizations; proposed rule changes: Options Clearing Corp.,

[Federal Register: November 24, 1998 (Volume 63, Number 226)]

[Notices]

[Page 64980-64981]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr24no98-114]

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\

\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.

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.

\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).

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.

\4\ 17 CFR 240.9b-1.

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.

\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.

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.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\7\

\7\ 17 CFR 200.30-3(a)(39).

Margaret H. McFarland, Deputy Secretary.

[FR Doc. 98-31353Filed11-23-98; 8:45 am]

BILLING CODE 8010-01-M