NASD Notice to Members 06-54 - September 2006

Amendments to Option Disclosure Documents Delivery Requirements in Rule 2860; Implementation Date: October 26, 2006

Executive Summary

On August 17, 2006, NASD filed with the Securities and Exchange Commission (SEC) for immediate effectiveness a rule change to Rule 2860 (Options) to (1) require that a copy of each amendment to the options disclosure document, Characteristics and Risks of Standardized Options, be distributed to each customer not later than the time of the delivery of a confirmation of a transaction in the category of options issued by The Options Clearing Corporation (OCC) to which the amendment pertains, and (2) clarify that revisions to the Special Statement for Uncovered Option Writers be distributed to each customer approved for writing uncovered short options not later than the time of the delivery of a confirmation of a transaction in options issued by the OCC.1 Rule 2860, as amended, is set forth in Attachment A of this Notice. The amendments will be implemented on October 26, 2006.

 

Questions regarding this Notice may be directed to Gary Goldsholle, Vice President and Associate General Counsel, Office of General Counsel (OGC), Regulatory Policy and Oversight (RPO), at (202) 728-8104; or Kathryn M. Moore, Assistant General Counsel, OGC, RPO, at (202) 974-2974.

 

1 See Exchange Act Release No. 54463 (September 15, 2006), 71 FR 55814 (September 25, 2006) (Notice of Filing and Immediate Effectiveness of File No. SR-NASD-2006-100). Under Section 19(b) of the Securities Exchange Act of 1934 (Act), the SEC has the authority to summarily abrogate this type of rule change within 60 days of filing.