SR-NASD-2006-007

Proposed Amendments to Rule 2860 to Revise the Definition of the Term Underlying Index and Allow Members to Calculate Position Limits for Certain Conventional Equity Options

NASD has filed with the Securities and Exchange Commission ("SEC" or "Commission") a proposed rule change to amend Rule 2860 to:  (a) revise the definition of the term "underlying index" to include all indexes underlying standardized index options and other indexes that meet certain specified criteria; and (b) allow members to calculate the position limits, in accordance with volume and float criteria specified by the options exchanges, for conventional equity options overlying securities that are part of the FTSE World Index Series.