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OCC Comment Letter Regarding FINRA Release Soliciting Comment on Effective Sales Practices and Rule Enhancements Concerning Complex Products and Options

May 09, 2022

In a May 9 letter to FINRA, OCC commented on FINRA’s release soliciting comment on effective sales practices and rule enhancements concerning complex products and options. OCC believes that the current model for ensuring that investors understand options before entering into options trades—robust broker-dealer account opening requirements, comprehensive disclosures, and a wealth of educational material made available to individual investors—is a sound one that has served the options industry and its participants well. OCC welcomes FINRA’s efforts to understand and disseminate best practices within the industry. OCC further welcomes and encourages efforts to provide investors with disclosures and education about the responsible use of options in the most accessible form. In addition, this letter also addresses two of the specific questions FINRA raises in the Regulatory Notice: (1) whether brokerdealers should be required to provide specific disclosures to customers in addition to delivery of the “Characteristics and Risks of Standardized Options,” also known as the “Options Disclosure Document,” and (2) whether FINRA should enhance its rules concerning exercise cut-off times to address potential expiration risk associated with certain trading strategies that involve purchasing and selling options on the same underlying.

This web site discusses exchange-traded options issued by The Options Clearing Corporation. No statement in this web site is to be construed as an endorsement, recommendation or solicitation to purchase or sell a security, or to provide investment advice. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of the disclosure document, Characteristics and Risks of Standardized Options. Individuals should not enter into option transactions until they have read and understood this document. To obtain copies, contact your broker, any exchange on which options are traded, or The Options Clearing Corporation, 125 S. Franklin Street, Suite 1200, Chicago, IL 60606 ([email protected]).