Recently, the Securities and Exchange Commission
approved a Supplement1 (see Attachment) to the
Options Disclosure Document (“ODD”).2 The Supplement is
related to U.S. dollar-denominated foreign currency options (“USD
FCOs”). These options are traded on the Philadelphia Stock Exchange
(“Phlx”). The Supplement provides additional disclosure with regard
to U.S. dollar settled foreign currency options.3 The
Exchange is advising member organizations, pursuant to Rule 726.30
(“Delivery of Options Disclosure Documents and Prospectuses”), that
the ODD Supplement has been amended.
Specifically, the Supplement updates certain
disclosures such as the calculation of exercise prices and the
premiums for USD FCOs.4 Furthermore, the Supplement also
relates to cash settlement disclosures such as the cash settlement
calculations and exercise settlement values.5 Lastly, the
disclosure in the ODD related to the expiration of USD FCOs is
updated.6
Subsequently,
a non-material, technical change to an example in the recently
approved Supplement has been made to now use the actual contract
size of USD FCOs traded by the Phlx. The Supplement should be read
in conjunction with the current ODD, which is entitled,
“Characteristics and Risks of Standardized Options.”
NYSE Rule 726(a) provides, in
part, that all new options customers must receive the current ODD.
Additionally, according to the Rule, member organizations must
provide each customer who has been previously furnished an ODD with
a copy of an amended current ODD. Member organizations may comply
with this requirement in various ways, including, but not limited
to, the following:
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 a customer, who has already
received the ODD, with the first confirmation of an option
transaction involving a USD FCO.
Questions concerning this Information Memo may be
directed to Stephen A. Kasprzak at (212) 656-5226 or Cory Figman at
(212) 656-4893.
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