Rule 705. Exercise Limits
This rule is no longer applicable effective February 17, 2009.
Except with the prior approval of the Exchange in each instance, no member or member organization shall exercise, for any account in which such member or member organization has an interest or for the account of any member or employee of such member or member organization or for the account of any customer, a long position in any option of a class if as a result thereof such member or member organization, or member or employee of such member or member organization or customer, acting alone or in concert with others, directly or indirectly,
(a) in the case of an exercise of a class of options that is dealt in on the Exchange, has or will have exercised within any five consecutive business days aggregate long positions in excess of
(i) in the case of stock option contracts and industry index option contracts, the number of contracts specified in or pursuant to Rule 704 (Position Limits) as the position limit for such class or
(ii) in the case of broad index stock group option contracts, 25,000 contracts plus, on the last business day prior to expiration and until expiration, any expiring series held in reliance upon paragraph (c)(ii) of Rule 704 or
(iii) such other number of option contracts as may be fixed from time to time by the Exchange as the exercise limit for such class, or
(b) in the case of an exercise (i) of options of a class that is not dealt in on the Exchange and (ii) that an Exchange member or member organization effects on an exchange of which it is not a member or member organization, has or will have exceeded such applicable exercise limits as the other exchange may from time to time establish, after taking into consideration any applicable exemption of the other exchange.
• • • Supplementary Material: --------------
.10 It shall be the responsibility of each member and member organization accepting orders for the purchase (in opening transactions) to inform its customers of the applicable exercise limits and not to accept any exercise of an option from any customer in any instance in which such member or member organization has reason to believe that such customer, acting alone or in concert with others, has exceeded or is attempting to exceed such exercise limits.
.20 The Exchange will not approve exercises exceeding the limits established by this Rule except in highly unusual circumstances. Requests for such approval should be directed in writing to the Exchange and must include a detailed statement of the facts justifying an exception to such exercise limits.
.30 In the event the Exchange reduces an exercise limit, the number of contracts exercised during the four days prior to the reduction shall, for the purposes of applying the new limit, be reduced by the difference between the old limit and the new limit.
.40 A reduction in the exercise limit in effect with respect to options on a particular stock or a particular industry index stock group that is dealt in on the Exchange shall not apply to any series then trading.
.50 Whether option exercises should be aggregated under this Rule shall be determined in accordance with the definitions, criteria and procedures described in Rule 704. Supplementary Material .40–.50.
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Adopted. October 7, 1982. Amendments. September 22, 1983. February 17, 1984. February 13, 1985. March 8, 1990. August 2, 1996. Amended by SR-FINRA-2008-036 eff. Nov. 11, 2008. Selected Notice: 08-64. |