NASD Notice to Members 05-06 - January 2005

Exemption for Delta Neutral Positions of OTC Derivatives Dealers; Effective Date: February 28, 2005

Executive Summary

On November 29, 2004, the Securities and Exchange Commission(SEC) approved amendments to NASD’s rules governing stock options position and exercise limits for stock options positions held by an OTC Derivatives Dealer affiliated with an NASD member firm when the position is “delta neutral.”1 Under the amended rule, a stock options position of an OTC Derivatives Dealer that is “delta neutral” is exempt from position and exercise limits if certain conditions are satisfied. Stock options positions of an OTC Derivatives Dealer that are not delta neutral remain subject to position and exercise limits.

 

Questions concerning this Notice may be directed to Gary L. Goldsholle, Associate Vice President and Associate General Counsel, Office of General Counsel (OGC), Regulatory Policy and Oversight (RPO), at (202) 728-8104; or James L. Eastman, Assistant General Counsel, OGC, RPO, at (202) 728-6961.