EFTA01393150

that some or all of his short position may be assigned. (See the discussion in Chapter X under "Risks of Option Writers.") However, if less than all of the open interest in an options series is exercised, OCC's proce- dures for assigning exercises to Clearing Members and brokers' procedures for allocating assignments to customers may affect the likelihood that a customer's position will be assigned and the potential size of the assignment. To address special considerations with respect to the deadlines for the exercise of certain options that expire on a day on which an options market is open for trading, the fourth paragraph under the caption "How to Exercise" in Chapter VIII of the Booklet is amended to read as follows: A brokerage firm's cut-off time for accepting exer- cise instructions becomes critical on the last trading day before an option expires. An option that expires unexercised becomes worthless. An option holder who intends to exercise_ art option before expiration must give exercise instructions to his brokerage firm before the firm's cut-off time for accepting exercise instructions on the last trading day before expiration. If the expiration date of an option falls on a day on which an options market is open for trading in that option, a brokerage firm's last cut. off time for accepting exercise instructions prior to the option's expiration may be on the expiration date. Investors should be aware of their brokerage firm's policies in this regard. Many broker- age firms accept standing instructions to exercise, or have procedures for the exercise of, every option which is in the money by a specified amount at expira- tion. These procedures often incorporate by reference OCC's administrative procedures that provide for the exercise of every option that Is in the money by a specified amount at expiration unless the Clearing Firm carrying the option in its accounts instructs OCC not to exercise the option. Investors should determine from their brokerage firm the applicable cut-off times. the firm's procedures for submitting exercise instruc- tions, and whether any of their options are subject to automatic exercise. Investors should also determine whether the exercise of their options is subject to standing instructions of their brokerage firm, and, it so, they should discuss with the firm the potential conse- quences of such instructions. 99 CONFIDENTIAL - PURSUANT TODI$BCIRI1GH098584 P. 6(e) CONFIDENTIAL SDNY_GM_00244768 EFTA01393150