5782. Hedged option positions

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    1. No margin is required for the following over-the-counter option and collateral position combinations held in equivalent quantities in a Dealer Member inventory or client account:

       

      Over-the-counter option position

       

      Acceptable collateral

      (i)

      Short call option with an equity, index, index participation unit, debt or currency underlying interest

      and

      escrow receipt evidencing the deposit of the underlying security

      (ii)

      Short call option with an equity, index, index participation unit, debt or currency underlying interest

      and

      escrow receipt evidencing the deposit of government securities

      provided the conditions in subsection 5782(2) are met.

    2. For an escrow receipt to be acceptable collateral in subsection 5782(1) the issuer of the escrow receipt must be a financial institution approved by an acceptable clearing corporation.

    3. The requirements of this section 5782 apply, regardless of any otherwise available margin reduction or margin offset, in the following circumstance:

      1. where an over-the-counter option is written by a client that is not an acceptable institution, acceptable counterparty or regulated entity,

      2. where the terms of the over‑the‑counter option require settlement by physical delivery of the underlying interest, and

      3. where a margin rate less than 100% for the underlying interest has not been established under the IIROC requirements.

    There is no history log for this rule.

    There is no history log for this rule.