Notice to Members 03-19

NASD Expands Equity Option Hedge Exemption

On February 3, 2003, the Securities and Exchange Commission (SEC) approved amendments to NASD's option position and exercise limits for positions established pursuant to certain qualified hedge strategies. These amendments conform NASD's standardized equity option position and exercise limits to recent changes adopted by the Options Exchanges. These amendments also establish new option position and exercise limits for hedged positions involving conventional equity options.

Questions concerning this Notice may be directed to Gary L. Goldsholle, Associate General Counsel, Office of General Counsel, NASD Regulatory Policy and Oversight, at (202) 728-8104.