EXAMPLE: If a yen-denominated option covering 500.0O0 British pounds is purchased at a premium of 2.63, the cost of the option will be JVI ,315,000 (JY2.63 times the unit of trading of 500,000). Premium settlements of cross-rate options are ef- fected in a trading currency other than U.S. dollars. Similarly, in the event of exercise, the exercise price is paid in the trading currency. OCC has established banking arrangements permitting it to receive and pay foreign currencies in the country of origin for purposes of both premium and exercise settlement of cross-rate options between OCC and its Clearing Members. Cus- tomers ordinarily settle with their brokerage firms, al- though OCC may establish procedures whereby Clearing Members may permit customers to make ex- ercise settlement directly with an OCC correspondent bank. Each customer should consult his brokerage firm to determine the procedures and time require- ments for payment of foreign currencies on settlement of transactions in, and exercises of, cross-rate options. If OCC should determine that foreign governmental restrictions or taxes or other events beyond the control of OCC would prevent the orderly settlement of exer- cises of. or premium payments with respect to transac- tions in, cross-rate options or would result in undue burdens on OCC or its Clearing Members. OCC has the authority to impose special settlement procedures. These could range from technical changes in payment procedures for the trading currency or underlying for- eign currency to the fixing of U.S. dollar settlement prices payable in lieu of either currency. OCC also has the authority to prohibit exercises of cross-rate options by holders who would be unable to meet the settle- ment obligations resulting from the exercise. The po- tential effects of such a prohibition are discussed in paragraph 5 under "Risks of Option Holders" in Chap- ter X. If special exercise settlement procedures are imposed, investors ma