Regulatory Notice 08-04

FINRA Adopts Rule Amendments that Expand the Delta Hedging Exemptions for Options Positions Limits; Effective Date: February 1, 2008

Executive Summary

Effective February 1, 2008, FINRA is expanding the class of entities permitted to use the delta hedging exemption to include other broker-dealers and certain financial institutions.1 NASD Rule 2860, as amended, is set forth in Attachment A to this Notice.

In addition, FINRA is issuing this Notice to notify member firms using the delta hedging exemption of how to report options positions, and to remind firms when it is permissible to disaggregate certain option accounts. Questions concerning options position reporting requirements may be directed to Joaquin Gubb, Team Leader, Market Regulation Department, at (240) 386-5102; or Susan Tibbs, Director, Market Regulation Department, at (240) 386-5082.

Questions concerning this Notice or NASD Rule 2860 in general may be directed to Gary L. Goldsholle, Vice President and Associate General Counsel, Office of General Counsel (OGC), at (202) 728-8104; or Kathryn M. Moore, Assistant General Counsel, OGC, at (202) 974-2974.

1 See Securities Exchange Act Release No. 56916 (December 6, 2007), 72 FR 7-627 (December 12, 2007) (Approval Order for File No. SR-NASD-2007-044).