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June 2024 Options Disclosure Document

FINRA has informed member firms  that the Options Clearing Corporation has released the June 2024 Options Disclosure Document (ODD). The ODD provides investors with essential information about the features and potential risks of trading standardized options. The June 2024 Options Disclosure Document has been updated to include MEMX, LLC in the list of options markets and to adjust settlement information for T+1 settlement.

Rule 9b-1 under the Securities Exchange Act and FINRA Rule 2360(b)(11)(A)(1) both mandate broker-dealers  to provide each customer at or before the time the customer is approved to trade options.

Firms have the option to distribute the June 2024 ODD in different ways to meet the requirements of FINRA Rule 2360, such as one of the following methods.

1. A mass mailing of the June 2024 ODD will be conducted to all customers approved to trade options and who have already received the ODD.

2. The June 2024 ODD should be provided to a customer who has previously received it, no later than when the customer gets a transaction confirmation in related options categories.

Firms have the option to distribute this version of the ODD either as a one-page supplement (June 2024 Supplement) for March 2023 ODD recipients or as the full June 2024 ODD for other customers. The June 2024 Supplement is planned to be a one-time occurrence due to minimal changes in the March 2023 ODD and the anticipation of needing an update within a year for the June 2024 ODD. Firms need to seek advice from their compliance and legal teams to figure out how to distribute to customers correctly. FINRA regulations allow firms to send required documents electronically, as long as they follow the guidelines outlined in specific October 1995 and May 1996 Securities and Exchange Commission releases and Notice to Members 98-03. Firms can send the ODD to customers who agreed to electronic delivery by using a hyperlink.

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