SEC approves the listing of exchanges for binary options based on KPI as the underlying asset

On October 13, Paul S. Atkins, Chairman of the U.S. Securities and Exchange Commission (SEC), issued a statement announcing that the Commission voted that day to approve a proposed rule change by a certain securities exchange, allowing for the listing of binary options based on specific key performance indicators (KPIs) reported by certain stock issuers.

According to the approval order, these binary KPI options will be listed and traded on the securities exchange, classified as cash-settled, European-style, standardized options, and recognized as NMS securities, protected under securities law. Their listing and trading methods will be largely similar to existing standardized non-binary options and will be subject to the exchange's rules regarding customer accounts, margin, trading halts, auction mechanisms, market maker designations and quoting obligations, order types, validity periods, and order instructions.

The approval order only covers the aforementioned specific binary option contracts traded on exchanges that comply with securities law and the listing and trading of standardized securities options, and does not involve similar products that are based on the same KPIs but have different structures. The statement also noted that the approval order does not address or exclude the jurisdiction of the U.S. Commodity Futures Trading Commission (CFTC) over contracts based on the same KPIs but designed to fall under its jurisdiction.