Are Issuers Of Options Broker-Dealers?

In the last two posts, I’ve been discussing standardized options trading. Today, I address the question of whether persons engaged in the regular business of issuing options may fall within the definition of a “broker-dealer” for purposes of the Corporate Securities Law of 1968. The short answer is that they can.

In Standardized Options – Who’s Your Daddy?, I noted that the SEC has taken the position that The Options Clearing Corporation is the issuer of standardized options even though it is not the issuer of the underlying security. California Corporations Code Section 25004(a) defines “broker-dealer” to include a person engaged in the regular business of issuing or guaranteeing options with regard to securities not of its own issue. The legislature added this language in 1974, Stats. 1974, ch. 1103 § 2.

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