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.
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