SEC approves listing of binary options tied to company key performance indicators

The Commission voted to approve a securities exchange's proposed rule change permitting listing of binary options overlying specified key performance indicators reported by certain stock issuers. The approval order describes them as cash-settled, European-style, standardized options that are NMS securities, traded similarly to existing standardized non-binary options and subject to exchange rules on customer accounts, margin, halts, auctions, market-maker obligations, order types and times-in-force. The order addresses only these specific contracts, not similarly structured products, and neither addresses nor forecloses CFTC jurisdiction over KPI contracts structured to fall under it. The statement's author cites a new spirit of harmonization and investor choice.

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