The Options Clearing Corporation
One North Wacker Drive, Suite 600
Chicago, Illinois 60606
William H. Navin
Executive Vice President and General Counsel
TEL: 312.322.1817 FAX: 312.322.1836

September 4, 2002

Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
Attention: Jonathan G. Katz, Secretary

Re: Exemption for Standardized Options from Provisions of the Securities Act of 1933 and from the Registration Requirements of the Securities
Exchange Act of 1934
File No. S7-29-02
Release Nos. 33-8114 and 34-42624 ("Release")

Ladies and Gentlemen:

The Options Clearing Corporation ("OCC") is pleased to respond to the Commission's request for public comment on the new rule and rule amendments proposed in the Release. OCC, a clearing agency registered under Section 17A of the Exchange Act, is issuer and clearing agency for all standardized options listed in the United States.

We applaud the Commission's proposals. For all of the reasons cited in the Release, adoption of the proposals will, we believe, adjust the regulatory treatment of standardized options in a manner that is more appropriate to the unique characteristics of these instruments. Adoption of the new rules will also result in more consistent regulatory treatment between standardized options and security futures products. Without the new rules, we believe that differential regulation of standardized options and security futures products would have resulted in an unfair competitive advantage for security futures products. Further, we believe that the new exemptions are fully consistent with the public interest and the protection of investors because they will eliminate unnecessary regulatory filings while leaving intact the options disclosure mechanism established under the Commission's Rule 9b-1. The options disclosure document mandated by that rule has served its function well and has made entirely unnecessary those filings that would be eliminated through the adoption of the Commission's present proposals. We urge the Commission to proceed expeditiously to adopt the proposals.

In response to certain of the Commission's specific requests for comment, our views are as follows:

  • Securities Act registration of standardized options does not provide investor protection. The registration provisions of the Securities Act and the Exchange Act were created for securities very unlike, and are wholly incongruous when applied to, standardized options. The Commission effectively recognized this years ago, when it eliminated the requirement that the options prospectus be delivered to investors except upon request. The continued registration of options under the Securities Act and the Exchange Act, including the preparation of a prospectus, is purely vestigial and serves no current function.

  • OCC strongly advocates comparable regulatory treatment for security futures and standardized options.

  • We believe that the exemptions are appropriate as proposed in the Release and require no modification.

  • We believe that the current proposal is appropriate in applying the exemptions only to standardized options that are issued by a clearing agency registered under Section 17A of the Exchange Act and traded on a national securities exchange or association. In expressing this view, we recognize that corresponding exemptions applicable to security futures products would apply to such products when issued by a registered clearing agency or a clearing agency exempted from registration under Section 17A(b)(7). However, that exemption applies only to security futures products and by its terms could not exempt a clearing agency issuing standardized options. Accordingly, the exemptive rules as proposed appear to us to be consistent with the principle of equal regulatory treatment of standardized options and security futures products, taking into consideration the shared regulatory jurisdiction applicable to the latter. Future events may recommend consideration of further action, but we believe that the current proposal is appropriate under the current circumstances.

  • We do not believe that any information that is currently in the OCC prospectus should be required to be added to the ODD. A significant amount of the information in the prospectus is redundant to information already contained in the ODD. Information in the registration statement that is not in the ODD-such as the information in OCC's financial statements and the description of OCC's backup system, for example-is readily available to the public from one or more other sources including OCC's annual report, other OCC publications, and the published By-Laws and Rules of OCC, all of which may be accessed through our web site, The ODD was designed and is required to contain the information deemed by the Commission to be sufficiently important that it must be delivered to each options customer. Information in the registration statement that was not included in the ODD was deliberately excluded because it was not thought to rise to that level of significance. Adoption of the present exemption from registration should not be an occasion to clutter the ODD with information previously deemed inappropriate for inclusion there.

    Once the Commission adopts the proposed exemptions, we will seek to terminate the existing registration statement on Form S-20 and recommend to the exchanges that the ODD be revised to delete references to the S-20 prospectus, which will have been made obsolete.

    We appreciate the opportunity to present our comments. If you require any further information, please contact OCC's outside counsel, James R. McDaniel at (312) 853-2665 or Michael Hyatte at (202) 736-8012.

    The Options Clearing Corporation

    /s/ William H. Navin

    William H. Navin
    Executive Vice President and General Counsel