The OSI is a plan to overhaul the existing method of identifying exchange-listed options contracts to decrease the current limitations in today's marketplace. This will be accomplished with the elimination of OPRA codes and fractional strike price values. The new Symbology Key will contain explicit expiration dates (including day) and decimal strike price values. Conversion of option symbols into the base underlying symbol to create consistency is also included in the OSI plan.

Some of the important goals and objectives of this initiative are

- Provide documentation to trade, clear and settle listed options where all market participants utilize explicit data elements to identify option series

- Represent all strike prices in decimal formats where the number of decimal places is equal to the trading increment of the underlying instrument

- Identify industry organizations that will be impacted and create a mechanism for communicating developments throughout the life of the project.

The plan was developed by a group of option industry professionals that are responsible in supporting the infrastructures from the business and technical areas from broker dealers, vendors, exchanges and the clearinghouse. Representatives from varying industry organizations were also involved.

The plan was published on The Options Clearing Corporations public web site for comment for 120 days. Exchange, clearinghouse and industry organization email distribution lists and press releases were used to disseminate information regarding the plan and the comment period.

It is mandatory for all affected market participants including Exchanges, Clearing Members, Vendors, the Clearing House and additional participants to adhere to these OSI changes.

The following asset classes/option types will be impacted

- Equity options

- Index options

- Yield Based Options

- Short Dated Options

- Flex Options

- Foreign Currency Options.

The new Symbology Key consists of Symbol – 6 bytes, Year – 2 bytes, Month – 2 bytes, Day – 2 bytes, Call/Put Indicator – 1 byte, Strike Dollar – 5 bytes and Strike Decimal – 3 bytes. The new symbol thus consists of 21 characters.

The size of the “symbol” was extensively debated prior to the first release of the plan and ultimately agreed that the concept of symbol and a string of data elements comprising a unique identifier for each option contract was in essence the same thing. The 21 character “symbol” resulted from discussions where the recommendations ranged from 9 characters to 35 characters. The OSI defines the minimum data requirements when interfacing directly with options utilities (exchanges or the clearinghouse).

The minimum year requirement was debated extensively and agreed to compromise to this requirement based upon message size and throughput concerns that were raised on a consistent basis. The technical specifications for many exchanges and the clearinghouse reveal the fact that many data interfaces will continue to require four character year data elements.

The following interfaces will be impacted

- Exchange interface

- Clearing house interface

- Market data interface

- Clearing member / client interface

- Regulatory interface

- Historical data.

Listed option contracts with different exercise characteristics on the same underlying deliverable security or cash carrying unique symbols will be used to differentiate between listed option contracts with identical deliverable securities that settle American style versus European style.

Listed option contracts with different settlement price calculation methods on the same underlying deliverable security or cash carrying unique symbols will be used to differentiate between listed options contracts with identical deliverable securities that settle on the underlying opening settlement price versus the underlying closing settlement price.

There is no special non-standard deliverable indicator envisioned under the OSI to denote non standard options. It has been determined that the requirement of an extra field for non-standard deliverables on every transmission would create extraneous overhead for a relatively small percentage of open interest.

Non-standard deliverables that result from corporate actions will contain numeric values at the end of the symbol. Once a contract delivering non-standard shares or other delivery components is assigned a numeric value at the end of the root symbol, the numeric value should remain unchanged throughout the life of the contract.

The new option symbols and explicit data elements will affect how DTC participants pledge assets to OCC. Other DTCC services that will be affected will include ACATS and Payment Orders that support option premiums.

The industry will be effectively undergoing a symbol consolidation after Feb 12, 2010 and it is not correct to name this change over as symbol conversion. In the conversion process there is a one to one relationship between the old and new symbol. Under the current Options Symbology Initiative consolidation process, many symbols will be collapsed into a single option root symbol that is equal to the symbol used in the underlying securities markets.

Some of the benefits that may flow from this initiative are

- Decrease the number of errors in the front, middle and back office processes

- Represent the vast majority of listed option contracts using the same symbol as the underlying security

- Reduce corporate action symbol conversions

- Eliminate wrap symbols

- Eliminate the need for LEAP rollover process

- Reduce the frequency of coordination among exchanges for symbol elections