SEC 'No Action' Relief

In 2007 the Securities and Exchange Commission in the United States (SEC) granted ASX “No Action” Relief in relation to certain ASX equity and index options. The relief is issued by the SEC’s Division of Trading and Markets. Details of the relief can be found at the SEC website:
http://www.sec.gov/divisions/marketreg/mr-noaction/asx081307.pdf

What does No Action Relief mean?

No Action relief enables eligible registered broker-dealers and large financial institutions in the United States to deal in ASX exchange traded options (ETOs). In particular, the relief enables ASX and ASX Participants to familiarise these institutional clients with a limited range of ETOs and ASX Participants to accept orders for ETOs from those clients. For full details see the SEC link.

No Action Relief: In Summary

In accordance with the terms of the No Action Relief US Eligible Broker-Dealers and Eligible Institutions may transact in;

  • ETOs over the S&P/ASX 200 Share Price Index (i.e. XJO index options); and
  • ETOs over Financial Products approved by ASX with the exception of low exercise price options (LEPOs), FLEX Class options and options where a foreign exchange is the primary exchange for the Financial Product.

ASX ETO Classes in which US Eligible Broker-Dealers and US Eligible Institutions may transact (PDF 205KB)

ASX Participants approved to execute client orders in ETOs (PDF 173KB)

ASX Operating Rules Procedures Appendix 2241(b)

Prior to transacting in ASX ETOs, US Eligible Broker-Dealers and Eligible Institutions must lodge a signed copy of ASX Operating Rules Procedures Appendix 2241(b) with every ASX Participant with whom they use to execute ASX ETOs.

ASX Operating Rules Procedures Appendix 2241(b) (PDF 20KB)

ASX Operating Rules Procedures Appendix 3803

To streamline the paperwork requirements for an Institutional options customer ASX supports Appendix 3803 which acts as our Wholesale Client Agreement Form (Options Market contract only).

Completing and lodging this form with ASX Clear allows an Institutional options customer to use multiple brokers for execution whilst giving up all business back to that customer’s Clearer without the customer having to have in place a Client Agreement with each executing broker.

ASX also makes this Appendix 3803 available to US Eligible Broker-Dealers and Eligible Instiutions. Accordingly this assits US Eligible Broker-Dealers and Eligible Insitutions to use multiple brokers for execution without having individual Client Agreements in place with each executing broker. However, this remains subject to the SEC’s requirements where Eligible Broker-Dealers and Eligible Institutions who lodge Appendix 3803 with ASX Clear would still need to lodge Appendix 2241 with every ASX Participant with whom they use to execute ASX ETOs.

ASX Operating Rules Procedures Appendix 3803 (PDF 50KB)

The ASX Disclosure Document (Options)

The ASX Disclosure Document (Options) (ASXDD) explains how the ASX ETO market works. The ASXDD is updated from time to time as changes are made to the operation of the ASX ETO market. ASX Participants have an obligation to ensure that their US Clients have access to the current working version of the ASXDD. The current version of the ASXDD is version 7.0 (July, 2012).

ASX Participants, US Eligible Broker-Dealers and Eligible Institutions wishing to receive a current version of the ASXDD should contact:

Graham O'Brien
Manager, Equity Derivative Sales
+61 2 9227 0672
graham.obrien@asx.com.au