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Monday, March 1, 2021

Options Regulatory Alert #2021 - 16
PHLX, NOM, BX, ISE, GEMX and MRX - Transfer of Positions


  • Regulatory

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The Nasdaq Surveillance Department would like to remind member firms seeking to transfer option positions pursuant to Nasdaq PHLX (PHLX), The Nasdaq Options Market (NOM), Nasdaq BX (BX), Nasdaq ISE (ISE), Nasdaq GEMX (GEMX) and Nasdaq MRX (MRX), collectively “the Exchanges,” Rule at Options 6, Section 5, “Transfer of Positions,” that member firms must submit to the exchange, in a manner determined by the exchange, written notice prior to effecting a transfer from or to the account(s) of a member firm.

Existing positions in options listed on the exchange of a member firm or non-member firm that are to be transferred on, from, or to the books of a Clearing Member may be transferred off the exchange if the transfer involves one or more of the following events:

  1. pursuant to Options 9, Section 1, an adjustment or transfer in connection with the correction of a bona fide error in the recording of a transaction or the transferring of a position to another account, provided that the original trade documentation confirms the error;
  2. the transfer of positions from one account to another account where no change in ownership is involved (i.e., accounts of the same Person, provided the accounts are not in separate aggregation units or otherwise subject to information barrier or account segregation requirements;
  3. the consolidation of accounts where no change in ownership is involved;
  4. a merger, acquisition, consolidation, or similar non-recurring transaction for a Person;
  5. the dissolution of a joint account in which the remaining member or member organization assumes the positions of the joint account;
  6. the dissolution of a corporation or partnership in which a former nominee of the corporation or partnership assumes the positions;
  7. positions transferred as part of a member or member organization's capital contribution to a new joint account, partnership, or corporation;
  8. the donation of positions to a not-for-profit corporation;
  9. the transfer of positions to a minor under the Uniform Gifts to Minors Act; or
  10. the transfer of positions through operation of law from death, bankruptcy, or otherwise.

The notice must indicate: the exchange-listed options position to be transferred; the nature of the transaction; the enumerated qualifying provision pursuant to which the positions are being transferred; the name of the counterparty; the anticipated transfer date; the method for determining the transfer price pursuant to the rule; and any other information required by the exchange.

Unless otherwise permitted, when effecting a transfer, no position may net against another position (“netting”) and no position transfer may result in preferential margin or haircut treatment.

Receipt of notice of the transfer does not constitute a determination by the exchange that the transfer was effected or reported in conformity with the requirements of this Rule. Notwithstanding submission of written notice to the exchange, member firm and Clearing Member that effect transfers that do not conform to the requirements of Options 6, Section 5 will be subject to appropriate disciplinary action.

All other transfer of positions must meet one of the qualifying conditions set-forth in Options 6, Section 5 unless there are unusual or extraordinary circumstances to the maintenance of fair and orderly markets and the protection of investors and is in the public interest.

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