SEC Division of Trading and Markets no-action letter: London International Financial Futures and Options Exchange (LIFFE)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON. D.C. 20549
DIVISION OF
MARKET REGULATION March 6, 1996

Clifford Chance

One New York Plaza

New York, New York 10004

Re: Trading of XEXstvle options on The London International Financial Futures and Options Exchange ("LIFFE"). Dear Ms. Jacklin:
This responds to your letter dated January 22, 1996, on behalf of the London International Financial Futures Exchange (Administration and Management) ("LIFFE A&M"), LIFFE, and The London Clearing House Limited ("LCH"), in which you request advice that the Division of Market Regulation (the "Division") will not recommend .enforcement action to the Commission against LIFFE A&M or LIFFE under Section 6 of the Securities Exchange Act of 1934 (the "Exchange Act"), against LCH under Section 17A of the Exchange Act, or against LIFFE A&M, LIFFE or LIFFE members under Section 15(a) of the Exchange Act, if-LIFFEA&M on behalf of LIFFE and LIFFE members act as descnied below to familiarize certain registered brokerdealers and large financial institutions in the United States with LIFFE, without LIFFE A&M or LIFFE registering with the Commission as a national securities exchange, without LCH registering with the Commission as a clearing agency, and without LIFFE members registering with the Commission as brokerdealers. We understand the facts to be as follows:
By letter dated May I, 1992, the staff provided such advice (the 'ZIFFE No-Action Letter") based on the facts, conditions and representations descnied therein. Since March 1992, equity options trading on LIFFE has been limited to standardized put and call equity options and equity index options ('Standardized Options"). In addition, on June 30, 1995, a FLEX option on the FI'SE 100 Index became available for trading on LIFFE. FLEX style options may be traded as puts or calls with investor-specified duration (ie. expiry date) and an investor-specified exercise price. The m-SE 100 FLEX option may only be traded with a European-style exercise whereas the FTSE 100 Standardized Option is traded both with an American-style exercise and with a European-style exercise. Trading in the FT￾SE 100 FLEX option is similar to that of the FTSE 100 Index Standard Option except that a member will make a "Request For Quoten which will then be responded to by members, including market-makers in the contract. It is the introduction of FLEX options for trading In LIFFE which underlies the present no-action request.