DTC-2021-005

Discussion in 'Options' started by Tavurth, Apr 2, 2021.

Will this rule affect you?

  1. Yes it will affect me

    1 vote(s)
    50.0%
  2. I don't think I will be affected

    1 vote(s)
    50.0%
  1. Tavurth

    Tavurth

    Seems like the DTCC released a new rule for review by the SEC last night after hours.

    - Securities can't be "borrowed" more than once
    - Some securities won't be able to be used as collateral
    - Short/naked options selling or buying won't be possible: HF will need to have the shares when buying puts or selling calls.

    Page 42:

    Pledges to the Options Clearing Corporation A Participant writing an option on any options exchange may fully collateralize that option by pledging the underlying securities by book-entry through DTC to the Options Clearing Corporation (OCC). If the option is called (exercised), the securities may be released and delivered to the holder of the call. If the option contract is not exercised, OCC validates a release of the pledged securities, which are then returned to the Participant's general free account.

    Release of Deposits with Options Clearing Corporation on Expired Options OCC automatically releases securities deposited with it to cover margin requirements on an option contract when the option contract expires. The securities are then allocated to your general free account. Notification of the released securities is received via the Collateral Loan Services functionality in the Settlement User Interface or automated output.


    Borrowed some text from:

    reddit.com/r/GME/comments/mibedc/the_moass_wont_happen_until_options_are_not

    Link to the PDF
    https://www.dtcc.com/-/media/Files/Downloads/legal/rule-filings/2021/DTC/SR-DTC-2021-005.pdf

    My questions:
    - Is this April fools?
    - Does this mean we can't buy or sell naked options contracts any more without holding the underlying?
    - Are the above statements accurate, or has the OP been reading too much into the DTCC text?
     
  2. I also read about it but couldn’t find details. Thanks for sharing them here.