SEC Approves Rule Amendment Relating to Close-Out of Options in a Broker-Dealer Liquidation

The SEC approved a rule amendment to SIPC Rule 400 ("Satisfaction of Customer Claims for Standardized Options") relating to a trustee's handling of "standardized" options under SIPA ("Securities Investor Protection Act"). Currently, the SIPC rules require a SIPC trustee to liquidate the option positions held by an insolvent broker-dealer. The rule change would give the trustee the option to transfer the option positions to another broker-dealer. Additionally, the options that could be handled in such a manner would include not only U.S. exchange-traded and cleared options but also other options issued by a U.S. or non-U.S. clearing agency.

The rule will become effective upon publication in the Federal Register.

See: Final Rule; Proposed Rule.See generally: Guide to Broker-Dealer Regulation, Insolvency Chapter.