ASC

Position Limits:

Currently the Australian Options Market ("AOM") has both position limits and exercise limits. Position limits are broken down into two categories.

Firstly, Individual Account Position Limits are limited to the resulting Net Position, IF SHORT, not to exceed the following:

3,000 contracts for classes with underlying security turnovers under 60 million shares per annum;

6,000 contracts for classes with underlying security turnovers over 60 million shares but under 120 million shares per annum; and

8,000 contracts for classes with underlying security turnovers over 120 million shares per annum.

Those Accounts with a Long Result after the Offsetting in a class will not be subject to a Position Limit but will be regulated by way of Exercise Limits.

Secondly, the Total Position Limits governs the maximum number of Options relating to a particular Underlying Security for which Options are traded on the Exchange. This Limit will be 10% of the total issued capital of the Underlying Security.

Exercise Limits:

The AOM also imposes exercise limits upon its members. Except with the written permission of the Board no clearing Member shall exercise, for any account in which it has an interest or for account of any client, a taken position in any Option of a Class where such Clearing Member or client acting alone or in concert with others, directly or indirectly, have or will have exercised within any five consecutive business days aggregate taken positions in excess of such number of that Class of Options as may be fixed from time to time by the Board as the exercise limit for that Class.

ASE

SOFFEX:

While no exercise limits exist, the following regulation applies for position limits.

Stock Options

Reg. 4.3.8.1 No person or Exchange member shall control more than the specified number of short calls and long puts or the combined number of short puts and long calls of all series referring to the same underlying at any time, except for an exchange member with a market maker license in the underlying. The difference between long calls and short calls plus the difference between long puts and short puts related to the same underlying securities may not exceed the specified limit at the end of the daily trading period.

Ordinance 7 Position limits are related to the number of outstanding shares of the underlying securities.

Group Outstanding shares	Position limit
I < 500,000 shs	1,000 cts
[currently no class]
II > 500,001 shs
< 1,250,000 shs	2,500 cts
[currently no class]
III > 1,250,001 shs
< 2,500,000 shs	5,000 cts
[currently -1- class]
IV > 2,500,001 shs
< 3,750,000 shs	7,500 cts
[currently -2- classes]
V > 3,750,001 shs
< 7,500,000 shs	15,000 cts
[currently -4- classes]
VI > 7,500,001 shs	30,000 cts
[currently -6- classes]

For Agent and Principal positions the simple limit is applicable while for Market Maker positions the triple limit is allowed.

Index-Options

No position limits apply; SOFFEX, however, reserves the right to introduce position limits at any time if deemed necessary in order to maintain a fair and orderly market.

BDF

Frankfurt Stock Exchange:

Not relevant.

DTB:

Paragraph 30 (Determination of Position Limits) of the Rules and Regulations of the DTB:

"(1) The Board of Governors may set position limits in order to ensure orderly options and futures trading and to avoid risks for the spot market. A position limit is a maximum number of contracts that may be held by one Exchange participant or one customer for his or its own account."

  As of May 1993 the position limits are as follows:
 
  Option on   Normal limit    Position limit for 
  underlying   number of contracts  market-makers 
           number of contracts
  
  Allianz   no limit    no limit 
  BASF    11,400    34,200 
  Bayer    13,200    39,600 
  BMW     1,700      5,100 
  Commerzbank   5,800     17,400 
  Daimler-Benz   4,700     14,100 
  Deutsche Bank   9,300     27,900 
  Dresdner Bank   7,400     22,200 
  Hochst   11,700    35,100 
  Mannesmann   6,400     19,200 
  RWE     4,400     13,200 
  Siemens   11,000    33,000 
  Thyssen    4,700     14,100 
  Veba     9,300     27,900 
  Volkswagen    5,400     16,200

Normal position limit: 1% of free float of nominal capital. Position limits for participants with a status as a market-maker: three times the normal limit. Position limits apply only to options on shares. There are no exercise limits.

CFTC

Position Limits for Arbitrage Transactions:

Section 4a of the Commodity Exchange Act ("CEA") authorizes the CFTC to set limits on the number of futures positions which may be held by any trader. Rule 1.61 requires exchanges to set speculative position limits for those contracts not having a limit set by the CFTC. For example, the position limits on the S&P 500 stock price index, the Nikkei stock index and the Value Line Stock Index contracts are 5,000 contracts; the limit on the Major Market Index contract is 8000 contracts; and the limit on the NYSE Composite Index is 10,000 contracts. All CFTC and exchange "speculative" position limits exempt bona fide hedge transactions and positions which are "spreads, straddles or arbitrage" positions. In some cases, position accountability rules have been adopted by exchanges in lieu of speculative position limits, primarily in long term T-bonds, T-notes, Eurodollar, dollar index and major foreign currency contracts (but not in stock index futures contracts). Under these rules, traders who hold positions beyond certain levels (usually set at former speculative position limit levels) are subject to a request by the exchange to provide information concerning the trader's position.

Position Reporting:

CEA §4i requires traders whose positions exceed the large trader reporting levels set by the CFTC to file the appropriate report with the CFTC disclosing relevant information, to maintain complete records regarding all such transactions and related material, and to keep those records open for inspection at all times for representatives of the CFTC or the Department of Justice. CFTC rule 19.00 requires reports from, among others, persons who have reportable positions which constitute a bona fide hedge position as defined in CFTC §1.3(z). For example, CFTC rules establish the following quantities for the purpose of filing large trader reports: S&P 500 stock price index - 300 contracts; NYSE Composite index - 50 contracts; Nikkei stock index - 50 contracts; Value Line stock index - 50 contracts. CFTC also has access to cash market position data on a special call basis.

The CFTC routinely conducts daily market surveillance on the basis of data detailing aggregate market activity and the positions of individual large traders. The CFTC also intensively reviews the principal equity securities and cash index positions of individual reporting index futures and options market participants during periods of unusual market volatility, such as in October 1987, and specifically reviews the use of index arbitrage strategies during these periods. Exchanges also have large trader reporting requirements for market and financial surveillance purposes.

CNV

The Mexican derivative market consists of warrants listed on the stock exchange on individual stocks, baskets and indexes, although Mexico is in the process of developing a market for listed standardized products.

The mechanisms that are in place for the warrants in case of a market disruption are similar to the ones applied to the underlying market, with the addition of warrants' operations being in recess or suspended automatically when the underlying security (or 30% of the market value of stocks included of indexes or baskets) is in recess or suspended.

CNV regulation also contemplates a mechanism being implemented when the underlying securities listing is suspended from the exchange, which is referred to as an extraordinary event. When this occurs, the warrant is simultaneously suspended and its holder may not exercise the right implicit in the instrument during this period. The warrants will begin operating as soon as the suspension of the underlying is lifted, with the same exercise and settlement conditions as before.

If the suspension lasts five working days after the expiration date, the warrants will be valued considering the last price of the underlying security that was quoted on the exchange and will be automatically exercised if they have an intrinsic value. The issuer of the warrants may establish in the prospect and issuance act the form of settlement, in cash or with the underlying, or a combination of both, when an extraordinary event occurs.

COB

Position Limits on the MATIF:

The aggregate initial margins paid by a firm for its own account must not exceed 20% of its net capital.

The aggregate initial margins paid by one customer to a firm must not exceed 100% of the firm's net capital.

The aggregate initial margins paid by all customers to a firm must not exceed 200% of the firm's net capital.

No customer can hold more than 20% of the first term total opened position.

Position Limits on the MONEP:

On the MONEP, the "Société des Bourses Françaises" can implement position limits. Those position limits will determine how large a net position an investor or a group of investors acting in concert may own or control, on a specific instrument and/or on all products traded on that market.

In France, the clearing houses, which have a risk exposure vis à vis any failure of a market member, have implemented financial compliance programs.

MATIF SA's risk management Department centralizes all open positions of all the clients and intermediaries. To achieve this purpose, the market members have to communicate to MATIF SA the name of all account holders. MATIF knows all the open positions of a client even if the client holds different accounts at different intermediaries.

The risk management Department monitors all traders and firms for compliance with the prudential rules. A score system facilitates the detection of any "high risk" situation which could threaten the firm's solvency.

In the case of high losses by a customer, MATIF SA immediately informs the customer's member. The latter also receives a monthly summarized report on its risk exposure.

CONSOB

CVMQ

The Montreal Exchange currently has position and exercise limits, set forth in sections 6651 to 6670 of its By-Laws and Rules, which are summarized below.

Position Limits:

Subject to certain exceptions, no member or restricted permit holder shall make for any account in which it has an interest, or for the account of any client, an opening transaction if the member of the restricted permit holder has reason to believe that as a result of such transaction the member or its client, or the restricted permit holder would, acting alone or in concert with others, directly or indirectly, hold, control or be obligated with respect to a position on the same-side-of-the-market relating to the same underlying interest (whether long or short) in excess of the position limits established by the Exchange.

Except as otherwise indicated, the applicable position limits are as follows:

1. Stock options

a) 3,000 contracts, where the underlying security does not meet certain requirements;

b) 5,500 contracts, where either the most recent inter-listed six-month trading volume of the underlying interest totals at least 20 million shares, or the most recent inter-listed six-month trading volume on the underlying interest totals at least 15 million shares and at least 40 million shares are currently outstanding;

c) 8,000 contracts, where either the most recent inter-listed six-month trading volume in the underlying interest totals at least 40 million shares, or the most recent inter-listed six-month trading volume on the underlying interest totals at least 30 million shares and at least 120 million shares are currently outstanding.

2. Debt options

4,000 contracts

3. Options on futures

4,000 contracts

The Exchange may, by notice, change position limits, such changes becoming effective on the date set by it and reasonable notice shall be given of each new position limit. Additional provisions relate to conversions, reverse conversions, and long and short hedges.

The Exchange is also empowered to grant exemptions from position limits to bona fide hedgers. An application in the appropriate form must be presented in compliance with Policy C-1.

Exercise Limits:

Except with the written permission of the Exchange, no member or restricted permit holder shall exercise, for any account in which he has an interest or for the account of any client, a long position in any option where such member, client or restricted permit holder, acting alone or in concert with others, directly or indirectly, has or will have exercised, within any five consecutive business days an aggregate long position exceeding the number of contracts established as position limits.

In addition, specific provisions deal with the case of a stock split in the underlying interest, reports that must be filed in relation to position limits or uncovered short positions, limits on outstanding uncovered short positions, liquidation or positions in excess of limits and certain other restrictions on options transactions and exercises.

MOF

None.

OSC

The TFE:

Position Limits - Subject to the provisions in section 22.07(4) of the By-law with respect to conversions, reverse conversions and long and short hedges, no member of the TFE or competitive option trader shall make for any account in which it has an interest or in any account of any client, an opening transaction in an equity option if such an individual would, acting alone or in concert with others, directly or indirectly, hold or control or be obligated in respect of a position (whether long or short) in excess of

3,000 Equity or Participation Unit Options, where the underlying security does not meet certain requirements;

5,500 Equity or Participation Unit Options, where either the most recent inter-listed six-month trading volume of the underlying security must have totalled at least 20 million shares, or the most recent inter-listed six-month trading volume of the underlying security must have totalled at least 15 million shares and the underlying security must have at least 40 million shares currently outstanding;

8,000 Equity or Participation Unit Options, where either the most recent inter-listed six-month trading volume of the underlying security must have totalled at least 40 million shares, or the most recent inter-listed six-month trading volume of the underlying security must have totalled at least 30 million shares and the underlying security must have at least 120 million shares currently outstanding on the same side of the market relating to the same underlying interest.

Where the limit exceeds such figures, the member of the TFE or competitive option trader is required to promptly take action necessary to bring the position into compliance with the applicable limits.

With respect to Equity Index Options, the position limit (whether long or short) is 25,000 contracts on the same side of the market, with no more than 15,000 of such contracts in the series of such market index with the nearest expiration date. This position limit can be changed by the TFE upon giving reasonable notice.

The position limit on the TFE Options is (whether long or short)

in the case of silver options, 20,000 TFE options on the same side of the market, and

in the case of bond options (a) 2,000 TFE Options where the outstanding face value of the underlying interest is less than $2 billion, or (b) 4,000 TFE options where the outstanding face value of the underlying interest is $2 billion or more, or (c) 25% of (a) or (b) above for short uncovered Call positions on the same side of the market. Further provisions apply to the application of Puts and Calls and Conversions and Reverse Conversions.

Reporting Requirements - Reports must be filed with the Exchange where an account is either long or short in an aggregate position of 500 or more silver options or 250 or more bond options. The report must indicate the number of options comprising each position for each class of TFE Option and, in the case of short positions, whether the position is covered or uncovered. In addition, each dealer member is required to report to the TFE any incidents in which the dealer has reason to believe that a client has exceeded or is attempting to exceed the position limits established.

Where the position limits described above are exceeded, section 22.09 of the TFE General By-law grants power to the TFE to order liquidation of the position to put the account within applicable position limits as expeditiously as possible, consistent with the maintenance of an orderly market.

Exercise Limits - Options - Finally, section 22.12 of the By-law grants the TFE the authority to impose such restrictions on transactions or exercises on one or more series of Options of any class if the TFE in its judgment deems it advisable in the interests of maintaining a fair and orderly market in Options or an underlying interest, or as it otherwise deems advisable in the public interest or for the protection of investors.

The TSE:

Position Limits - Under section 27.09 of the TSE General By-law, no IMS Trader shall make, for any account, an opening transaction on the TSE in any IMS Option if the IMS Trader has reason to believe that, as a result of such transaction, the account would hold or control or be obligated in respect of the position (whether long or short) in excess of 2,000 IMS Options on the same side of the market relating to the same underlying interest.

The TSE may, from time to time, by notice, change the position limits giving reasonable notice of each new position limit fixed by the TSE and posting notice on the Bulletin Board on the Options Trading Floor. Additional provisions relate to the calculation of conversions and reverse conversions, as well as reporting requirements related to position limits.

Reporting Requirements - The reporting requirement requires reporting on each business day of the name and address of any account which, on the previous business day, held in the aggregate long or short positions of 500 or more IMS Options of any single class. The report must indicate for each class the number of options comprising the position and, in the case of short positions, whether the position is covered or uncovered. Reporting is also required where it is believed that an account exceeds or has exceeded the limit. As with the TFE provisions discussed above, section 27.11 of the General By-law gives the TSE the authority to liquidate positions in excess of limits.

Option Exercise - The TSE is also empowered to impose such restrictions on transactions or exercises on one or more series of IMS Options of any class as the TSE in its judgment deems advisable in the interests of maintaining a fair and orderly market in IMS Options or an underlying interest or as it otherwise deems advisable in the public interest or for the protection of investors.

Further restrictions on position limits are contained in the Policies of the Exchange. Part IX of the TSE Policy provides that the total amount which a member may lend on any one security, for all clients and inventory accounts, shall be limited to an amount equal to two-thirds of the member's Net Free Capital as most recently calculated. Where, in the event that a security is carried on margin by a member and the amount being loaned on that security for all clients and/or inventory accounts, as computed under the policy exceeds one-half of the member's Net Free Capital, as most recently calculated, the maximum amount that may be loaned on any other security which is being carried on margin for all clients and/or inventory accounts, as computed under this policy, shall not exceed one-half of the member's Net Free Capital, as most recently calculated.

SEC

Position and Exercise Limits:

Position limits are limits set upon the number of options contracts overlying a particular instrument (i.e., a stock or a stock index) that an investor, or group of investors acting in concert, may own or control. ^/ Similarly, exercise limits prohibit the exercise of more than a specified number of puts or calls on a particular instrument within five consecutive business days. The principal purposes of position and exercise limits are: (1) minimizing the potential for mini-manipulations, ^/ as well as other forms of market manipulation; and (2) reducing the possibility of disruption in the options markets.

Position limits for equity options are limited to positions of 8,000, 5,500, and 3,000 contracts. The position limit applicable to a particular option is determined by the trading volume in the underlying security. Position limits for narrow-based stock indexes have a similar three-tiered structure, i.e., 8,000, 6,000, and 4,000 contracts. The applicable position limit is determined by the percentage weighting of a single or specified group of stocks within the index.

In addition, the exchanges have been operating under a pilot program for equity options that provides for an automatic exemption from position limits for accounts that have established one of the four most commonly used hedged positions on a limited one-for-one basis (i.e., 100 shares of stock for one option contract). The exempted hedged positions are: (1) long stock and short calls; (2) long stock and long puts; (3) short stock and long calls; and (4) short stock and short puts. The maximum position limit (hedged and unhedged combined) held pursuant to the exchanges' pilot programs may not exceed twice the normal position limit. ^/

The only hedge position limit exemption program currently available for narrow-based index options is in the PHLX's UTY Index. Under the pilot program, if public customers hold a stock portfolio consisting of 10 UTY-component stocks, no one of which accounts for more than 15% of the portfolio, then they may apply to the PHLX for a position limit exemption of up to 16,000 contracts (hedged and unhedged combined), twice the normal limit. ^/

Due to diversification, larger positions are permitted with regard to broad-based stock index options than in individual equity options. The rules currently in place for CBOE's S&P 100 Index options and OEX ^/ and AMEX's S&P MidCap 400 Index options (MID) ^/ limit positions to 25,000 contracts on the same side of the market, with no more than 15,000 of such contracts in the nearest expiration

month. ^/

The AMEX's Major Market Index option (XMI) is limited to a position of 34,000 contracts on the same side of the market with no more than 20,000 contracts in the nearest expiration month. ^/

In addition, the options exchanges have been operating under a pilot program for broad-based stock index options that provides public customers with the ability to apply for a "hedge exemption" from position limits. Under the pilot programs, the exchanges may exempt from the position limits any positions held by public customers, provided they are hedged against qualified portfolios of stock which are approved by the relevant exchange. To be qualified, a portfolio must: (1) be comprised of at least 20 stocks (or their equivalents), no one of which constitutes more than 15% of the portfolio value; (2) be net long (or short) in each of such 20 component stocks (or security readily convertible to common stock); (3) include at least four industry groups; and (4) be carried by a member firm of the relevant exchange. ^/ The NYSE pilot program, for example, provides for a customer hedge exemption for qualified portfolios with NYSE-traded, broad-based stock index option contracts up to a maximum of 125,000 contracts without regard to the normal position limits. ^/

On July 21, 1992, the SEC approved a CBOE proposal making several changes with respect to European-style, S&P 500 Index options (SPX) that settle based on the opening prices of its component securities ("A.M. settled SPX options"). ^/ First, position limits for A.M. settled SPX options have been increased from 25,000 contracts (approximately $1 billion) to 45,000 contracts (approximately $1.8 billion) on the same side of the market without the telescoping provision. Second, upon application and approval by the CBOE, seven hedging transactions involving A.M. settled SPX options and a qualified portfolio have been added which will not be counted against position limits up to 150,000 contracts (approximately $6 billion). Third, the position limits for hedged positions applicable to money managers was increased. In particular, a money manager is now able to hold up to 250,000 A.M. settled SPX option contracts (approximately $10 billion) on the same-side-of-the-market in its aggregate accounts, with any single account under its control limited to 135,000 contracts (approximately $5.4 billion) on the same-side-of-the-market. Lastly, in order to facilitate large customer orders, member firms may obtain a position limit exemption of up to 100,000 A.M. settled SPX option contracts (approximately $4 billion) on the same-side-of-the-market. On October 16, 1992, the SEC approved a similar AMEX proposal to increase position limits for European-style, Institutional Index options (XII) that settle based on the opening prices of its component securities. ^/

The position limit for foreign currency options is 100,000 put or call option contracts on the same side of the market relating to the same underlying currency. For each foreign currency option, the exercise limit is 100,000 contracts within five consecutive business days.

SFC

The HKFE Rules empower the Chief Executive to impose position limits on all HKFE members, or any particular member, in respect of any one futures delivery month or option series, or in respect of all delivery months and options series combined. Once a position limit is imposed, the member is required to close out any

positions in excess of the position limit. The current levels of position limits per client and per member's own trading account are as follows:

Hang Seng Index Futures Nil

Hang Seng Sub-Index Futures

Finance 300 contracts

Properties 250 contracts

Commerce & Industries 300 contracts

Utilities 300 contracts

Hang Seng Index Options Nil

Since the Hang Seng Index Option is a European style option and at expiry, all in-the-money options are exercised automatically and cash settled, exercise limits have not been imposed.

In addition, the HKFE Board may from time to time specify the number of open contracts in a particular futures delivery month or options series carried or held by HKFE members on behalf of any client or for their own account which is to be regarded as a Large Open Position. HKFE members must make reports of such Large Open Positions as required by HKFE.

SIB

Exchanges in the United Kingdom do not have position or exercise limits.