FINRA Modifies Process for Firms to Designate Allocation Methodology for Options Exercise Assignment Notices

FINRA RN 11-35

July 29, 2011

FINRA published a regulatory notice regarding modified procedures by which firms designate their method of allocating options exercise notices. The notice provides a new application for firms beginning an options business or changing their allocation method. In addition, FINRA updated the "random selection allocation procedures," included in the notice. FINRA also reminds firms that they must inform customers in writing of the method used to allocate option exercise assignment notices - including an explanation of the systems and the consequences of the system. The new procedures are effective August 8, 2011.

Cross References

FINRA Rule 2360(b)(23)(C)