Quick Answer
Two product-specific disclosure documents drive this unit: the Options Disclosure Document (ODD), which must reach the customer at or before options-account approval, and the municipal official statement, delivered by no later than settlement. Prospectus delivery timing for stock and fund offerings is covered in the Required Disclosures unit.
This unit is about the documents and agreements a firm gathers when it opens and manages an account. Before covering those agreements, this section fixes which disclosure document goes with which product, since the exam mixes them together.
Which Disclosure Document Applies to Which Product?
| Product | Disclosure Document | Who Publishes It | When Delivered |
|---|---|---|---|
| Registered stock offering | Prospectus | The issuer | At or before the time of sale (see the Required Disclosures unit for the exact delivery periods) |
| Mutual fund shares | Prospectus | The fund | At or before the sales solicitation or presentation; the investor must receive it before or with the confirmation of purchase |
| Standardized exchange-traded options | Options Disclosure Document (ODD) | The Options Clearing Corporation (OCC) | At or before options-account approval |
| Municipal securities | Official statement | The issuer (or its financial advisor/underwriter) | By no later than settlement of the transaction |
Exam Tip: Gotchas
The exam tests which document goes with which product. A prospectus is required for registered offerings under the Securities Act of 1933. The ODD is specific to options accounts and comes from the OCC, not FINRA. The official statement applies to municipal securities. Do not mix them up.
What Is the Options Disclosure Document (ODD)?
- The ODD's official title is "Characteristics and Risks of Standardized Options."
- It is published by the Options Clearing Corporation (OCC), not by FINRA or the broker-dealer.
- It describes the characteristics of exchange-traded options, including risks, tax consequences, and the mechanics of exercise and assignment.
- Delivery timing: the ODD must reach the customer at or before the time the account is approved for options trading (other than for an OCC-cleared OTC option). This is earlier than the customer's first options trade.
- Amendments to the ODD go only to customers who previously received the ODD, delivered no later than the confirmation for a transaction in the option category the amendment covers.
The full sequence for opening an options account, including principal approval and the signed options agreement, is covered in the Options Accounts section of this unit.
What Is a Municipal Official Statement?
- For municipal securities offerings, the official statement serves the same disclosure function that a prospectus serves for a registered stock or fund offering.
- It describes the issuer, the terms of the bond, and the security behind the debt.
- Broker-dealers must deliver the official statement to customers by no later than settlement of the transaction.
Exam Tip: Gotchas
Municipal securities are generally exempt from the Securities Act of 1933's registration requirements, so there is no prospectus for a muni deal. The official statement fills that role, but its delivery deadline is settlement, later than a prospectus's confirmation-time backstop.
What Should You Check on Exam Day?
- Match the product to its document: prospectus for registered stock/fund offerings, ODD for options, official statement for munis.
- The ODD comes from the OCC, not FINRA, and is due at or before options-account approval.
- The official statement is due by no later than settlement, later than a prospectus's confirmation-time backstop.
- Do not confuse ODD delivery (a product disclosure) with the signed options account agreement (a customer commitment), covered next.