The Securities and Exchange Commission (“SEC” or the
“Commission”) recently approved a Supplement1 (see
attachment) to the Options Disclosure Document (“ODD”).2
The Supplement amends the ODD to provide disclosure relating to
indexes intended to measure the predicted volatility of the daily
returns of a stock index and options on such volatility indexes. It
also provides a general description of the characteristics of
volatility indexes.
NYSE Rule
726.30 (“Delivery of Options Disclosure Documents and Prospectuses”)
provides that the Exchange will advise members and member
organizations when an ODD or Prospectus is amended. Members and
member organizations are further advised that they must, pursuant to
NYSE Rule 726(a), distribute a copy of each new amendment to the ODD
to every customer having an account approved for trading the
particular kind of option covered by the revised ODD or, in the
alternative, distribute such amendment not later than the time a
confirmation of a transaction in such particular kind of option is
delivered to such customer. Accordingly:
a. A member organization may choose
to conduct a mass mailing of the Supplement to all of its
approved customers who have already received the ODD;
or
b. A member organization
may deliver the Supplement to customers who have already
received the ODD with the first confirmation of an option
transaction involving a volatility
index.
In addition,
all new options customers must receive
the revised ODD.
Copies of the ODD or the Supplement may be obtained by
contacting Diane Svoboda at the Options Clearing Corporation at
(312) 322-6212 or at dsvoboda@theocc.com.
Questions
concerning this Information Memo may be directed to Stephen A.
Kasprzak at (212) 656-5226 or Gregory F. Taylor at (212)
656-2920.
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