Rule 709. Other Restrictions on Exchange Option Transactions and Exercises
This rule is no longer applicable effective February 17, 2009.
The Exchange may impose, from time to time in its discretion, such restrictions on Exchange option transactions or on the exercise of options in one or more series of any class dealt in on the Exchange as it deems advisable in the interests of maintaining a fair and orderly market in options of that class or in the underlying securities, or otherwise deems advisable in the public interest or for the protection of investors. During the effectiveness of any such restriction, no member or member organization shall effect any Exchange option transaction or exercise any option in contravention of such restriction. No such restriction on exercise shall remain in effect with respect to any series beyond the time for the opening of business ten business days prior to the series' expiration date (in the case of a series of stock options) or on the last trading day prior to the series' expiration date (in the case of a series of index stock group options).
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Adopted. October 7, 1982. Amendments. September 22, 1983. February 13, 1985. |
• • • Supplementary Material: --------------
Stock Options
.10 Whenever the issuer of a stock underlying a call traded on the Exchange is engaged or proposes to engage in a public underwritten distribution (a "public distribution") of the stock or of securities exchangeable for or convertible into the stock, the Exchange shall impose restrictions upon all opening writing (sale) transactions in such calls at a "discount" (as defined in paragraph .20 of this Supplementary Material) where the resulting short position will be uncovered ("uncovered opening writing transactions"). Such restrictions will be imposed for the period (a) commencing at the time the Exchange is advised by the issuer or the representative of the underwriters for the distribution (the "representative"), or the Secretary of the Exchange is otherwise notified, that the underwriters have placed or transmitted a stabilizing bid for or effected a stabilizing transaction in the stock in its primary market ("stabilizing activities") in accordance with the rules under the Securities Exchange Act of 1934, as amended, (but no earlier than 15 minutes after it has been announced on the Floor) and (b) terminating upon conclusion of such stabilizing activities by the underwriters. The Exchange will impose such restrictions only if the following conditions are met:
(a) less than a majority of the securities to be publicly distributed are being sold by existing security holders,
(b) the representative agrees to notify the Exchange upon the termination of the stabilizing activities, and
(c) the underwriters initiate stabilizing activities in the stock in its primary market when the price of the stock is either at a "minus" or "zero minus" tick.
.20 For purposes of paragraph .10 of the Supplementary Material, an uncovered opening writing transaction in a call is effected at a "discount" when the premium in the transaction is either:
(a) in the case of a public distribution of the stock not involving the issuance of rights and in the case of a public distribution of securities exchangeable for or convertible into the stock, less than the amount by which the stabilization bid for the stock exceeds the exercise price of the call; or
(b) in the case of a public distribution being offered pursuant to rights, less than the amount by which (i) the stabilization bid for the stock at the subscription price exceeds (ii) the exercise price of the call.
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Amendments. February 13, 1985. |