[ by Howard Haykin ]

The SEC's Division of Corporation Finance issued a no-action letter to The Options Clearing Corporation regarding the status of over-the-counter (OTC) options cleared by OCC.  It was one week ago that the OCC's outside counsel, Michael Hyatte of Sidley Austin, submitted the no-action request to the CorpFin staff.  

Thomas Kim, CorpFin Chief Counsel and Associate Director, detailed OCC's request, as follows:  ... you have asked for confirmation that we concur in your view that over-the-counter options cleared by The Options Clearing Corporation ("OCC") pursuant to its By-Laws and Rules ("Cleared OTC Options") are equal in seniority to OCC-issued standardized options that are listed on a national securities exchange that is named in Section 18(b)(1)(A) of the Securities Act or in Rule 146(b) under the Securities Act ("Listed Options"), and would therefore be "covered securities" under the "equal in seniority" language of Section 18(b)(1)(C).

Mr. Kim's responded that the Division of Corporation Finance is of the view that Cleared OTC Options are equal in seniority to Listed Options, and therefore are "covered securities" under Section 18(b)(1)(C) of the Securities Act.  This response, of course, is based on the facts presented in Sidley's No-Action Request Letter, and in reliance on Sidley's supporting opinion that the Cleared OTC Options would have equal priority with Listed Options with respect to the distribution of assets and payment of amounts due to option holders.

As is standard protocol, the expressed view of the SEC staff is limited to Cleared OTC Options - and the staff's position is based on representations made to the Division in the request letter.

For further details, go to:   [SEC CorpFin No Action Letter, 2/19/13].