FINRA – Options Allocation of Exercise Assignment Notices

July 29, 2021 – FINRA Rule 2360(b)(23)(C) requires that member firms conducting transactions in exchange-listed options to establish fixed procedures for allocating options exercise assignment notices to short options positions in their customer accounts. Firms may elect to allocate exercise assignment notices on first in-first out basis; random selection basis; or another equally random selection basis determined by firm. However, firms must receive prior FINRA approval for the method selected. Any changes to firm’s allocation method must be reported to and approved by FINRA. As detailed in Regulatory Notice 11-35, member firms initiating options business, changing clearing firm, or changing allocation method must file with FINRA. Firms that receive requests on behalf of a group of accounts under common ownership for exception from approved method of allocating options exercise assignment notices. To permit reallocation of exercise assignment notices for such accounts, must submit reallocation instructions for approval as part of their overall allocation method.

For more information, visit

Discover More Regulatory Insights

Visit the AxiomSL resource center for recent Regulatory Changes for financial institutions, InsideView Blog, and Thought Leadership.

We use cookies in order to give you the best possible experience on our website. By continuing to use this site, you agree to our use of cookies.