SEC Approves Binary Options on KPIs for Exchange Listing

ChainCatcher report: On October 13, U.S. Securities and Exchange Commission (SEC) Chairman Paul S. Atkins issued a statement announcing that the Commission had voted to approve a proposed rule change by a securities exchange, permitting the listing of binary options based on specific key performance indicators (KPIs) reported by certain issuers of securities. Pursuant to the approval order, these binary KPI options will be listed and traded on the securities exchange as cash-settled, European-style, standardized options and are classified as NMS securities, protected under securities laws. Their listing and trading procedures will generally mirror those of existing standardized non-binary options and will be subject to the exchange’s rules regarding customer accounts, margin requirements, trading halts, auction mechanisms, market maker designation and quoting obligations, order types, validity periods, and order instructions. This approval order applies solely to the specified binary option contracts traded on securities exchanges that comply with securities laws and list and trade standardized securities options; it does not encompass similar products based on the same KPIs but with different structures. The statement further clarifies that the approval order does not address or exclude the Commodity Futures Trading Commission’s (CFTC) jurisdiction over contracts based on the same KPIs but structured to fall within its regulatory scope.