What is the process by which exercise notices are assigned to written option positions?
When the taker of an option decides to exercise that option, they instruct their broker to lodge a Notice of Exercise with the Australian Clearing House (ACH). ACH then randomly assigns that exercise to an account with an open written position in the same Option Series. The following morning, the broker whose client has that account receives the Notice of Assignment, and advises the client that they have been exercised. Settlement of the share transaction that results from exercise of the option takes place T + 3 – that is, three business days after the date the taker of the option exercises the option.
