The Securities and Exchange Commission issued an Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, on 13 October 2026, carrying Release No. 34-106659 and File No. SR-CBOE-2026-061. Cboe Exchange, Inc. filed the change under Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4, and the Commission approved it on an accelerated basis under Section 19(b)(2). The approval is final as to the rule change, and listing remains subject to conditions the Exchange has yet to satisfy.
The order approves a new Section I of Chapter 4 of the Cboe rules, made up of Rule 4.80 on definitions, Rule 4.81 on designation, Rule 4.82 on terms, Rule 4.83 on settlement value determination and Rule 4.84 on adjustment. A binary KPI option is a European style, cash settled contract on a key performance indicator that an issuer reports in a filing on Form 8-K, Form 10-Q or Form 10-K, with the eligible issuers and indicators designated in Rule 4.81(a). Rule 4.82(g) fixes the multiplier at one. Rule 4.83 sets the settlement value at the figure in the issuer earnings filing on the expiration date, and a later restatement does not change it. Rule 8.36 imposes a position limit of 25,000 standard option contracts per expiration, counting 100 binary contracts as one standard contract, with reporting under Rule 8.43(f). Rule 6.5, Interpretation and Policy .10 disapplies the obvious error rule, and Rule 6.20(g)(2) provides for automatic exercise. The Commission relied on Section 6(b)(5) of the Exchange Act, 15 U.S.C. 78f(b)(5).
Cboe may not list the contracts until the registration and clearing rule filings of its clearing counterparty are approved or effective, and the Exchange committed to filing an amendment to the Options Listing Procedures Plan within ten business days after a notice from the Options Clearing Corporation on binary KPI clearing. The exercise settlement amount is one dollar per contract, series may run up to twelve months, and no more than two expirations may stand at one time for a given indicator of a given issuer. A Market Maker holding a short put together with a short call qualifies for a hedge exemption from the position limit regardless of strike. Brokers routing retail orders meet a listed product whose expiration falls on the issuer earnings disclosure date and to which the obvious error rule does not apply.
Chairman Paul Atkins published a statement on 13 October 2026 recording that the order speaks solely to the trading of these specific binary options contracts, and that it does not address and does not foreclose Commodity Futures Trading Commission jurisdiction over KPI contracts. Products referencing issuer indicators but structured differently sit outside the order. Where the key performance indicator is unavailable at expiration, the Clearing Corporation rules allow the exercise amount to be the last closing price, which will fall between $0.01 and $1.00, and the contract expires worthless where no reliable closing price exists.
Licentium advises exchanges, clearing members, brokers and trading firms on United States derivatives listing standards and on the line between securities regulation and commodity event based products. Work we undertake includes analysis of binary KPI option terms against Rules 4.80 to 4.84, position limit and hedge exemption reviews under Rule 8.36, clearing and Options Listing Procedures Plan readiness, and jurisdictional assessments spanning the Securities and Exchange Commission and the Commodity Futures Trading Commission.