OCC Proposed Rule Change Related to Dividend Plays

SIFMA provided comments to the Securities and Exchange Commission (SEC) regarding a proposed rule change filed by The Options Clearing Corporation (OCC) with the SEC that, coupled with the related system modifications, will curtail use of a trading strategy know as “dividend plays” in the options industry.

Specifically, OCC proposed to add an interpretation and policy to Rules 801 and 805, respectively, stating that “OCC will process all sales of options in a Market-Maker’s account prior to the exercise of any long call options in the account to ensure that only net long positions in a particular series may be exercised.”

SIFMA strongly agrees with OCC’s request to curtail the trading strategy known as “dividend plays”, and accordingly, SIFMA believes it is appropriate that the SEC approve OCC’s added interpretation and policy to OCC Rules 801 and 805.

Related Material 

SIFMA Comments to the OCC to Address Concerns About Dividend Trading (December 3, 2012)