EFTA Document EFTA01393156

If an adjustment panel delays fixing an exercise set- tlement value for a series of index options past the last trading day before expiration of that series, normal expi- ration exercise procedures will not apply to the affected series. Instead. exercise settlement will be postponed until the next business day following the day when the adjustment panel fixes the exercise settlement value, and each long position in the affected series will be treated as having been exercised if the exercise settlement amount per contract for that series is $1.00 or more. If the exer- cise settlement amount per contract is less than $1.00, the option will be treated as having expired unexercised. As a result of these procedures, holders of expiring index options may not know whether their options have been exercised, and writers of such options may not know whether they have been assigned an exercise notice. until after the expiration date. An adjustment panel's determinations shall be conclusive, binding on all inves- tors, and not subject to review. The first paragraph on page 41 of the Booklet is amended to read: It OCC should determine that foreign governmental restrictions or taxes would prevent the orderly settlement of delivery foreign currency option exercises or would result in undue burdens on OCC or its Clearing Mem- bers, OCC has the authority to impose special exercise settlement procedures. These could range from techni- cal changes in delivery procedures to the fixing of U.S. dollar settlement prices. If special exercise settlement procedures are imposed, investors may determine the nature of such procedures from their brokers. The last paragraph on page 53 of the Booklet is amended to read: In certain unusual circumstances. an event may threaten to reduce the available supply of an underlying security to a level insufficient to allow settlement if all of the outstanding option contracts for the affected security were exercised. This could happen, for example, in the event of a successful tender offer for all or substantially all of the outstanding shares of an underlying security or if trading in an underlying security were enjoined or sus- pended. If OCC in its discretion determines that a situa- tion of that type exists, OCC may impose special exercise settlement procedures. These special procedures, appli- cable only when an assigned call writer or an exercising put holder is unable to obtain the underlying security, may involve the suspension of the settlement obligations of the holder and writer andfor the fixing of cash settle- ment prices in lieu of delivery of the underlying security. When special exercise settlement procedures are imposed, OCC will announce to its Clearing Members how settlements are to be handled. Investors may obtain that information from their brokerage firms. 110 CONFIDENTIAL - PURSUANT TODEEBGPLYO06€595 P. 6(e) CONFIDENTIAL SDNY_GM_00244779 EFTA01393156