Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, March 20, 2007

NASD Notice re. Portfolio Margin Risk Disclosure Statement

Portfolio Margin Risk Disclosure Statement and Written Acknowledgement to be Furnished to Customers Using a Portfolio Margin Account -- NASD Notice to Members 07-14 - March 2007

Executive Summary
As announced in Notice to Members (NTM) 07-11 (February 2007), recent amendments to NASD Rule 2520 (Margin Requirements) permit members to margin certain products according to a prescribed portfolio margin methodology on a pilot basis. Related amendments to Rule 2860 (Options) require that a disclosure statement and written acknowledgement for use with the proposed portfolio margin program be furnished to customers using a portfolio margin account. This Notice sets forth the language required for the written disclosure statement and acknowledgment pursuant to Rule 2860(c).

Member firms participating in, or planning to participate in, the Portfolio Margin Risk pilot program should refer to Attachment A of this Notice for sample disclosure and acknowledgement statements.

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