FINRA Applies Options Rulebook to Binary Metric Options Under SEC Oversight

FINRA will apply its existing options regulatory framework to binary metric options, including options cleared by registered clearing agencies other than OCC, under Regulatory Notice 26-21. The National Law Review reported the notice and the accompanying amendments to FINRA Rules 2220, 2360 and 4210.

FINRA's Notice 26-21 and the Rule Changes

FINRA said some of its existing rules did not "clearly contemplate" binary metric option structures. The notice states that FINRA's investor protection framework would apply to binary metric options "in a manner substantially comparable to other listed options."

Rule 2360(a) gains definitions of "binary metric option," "underlying metric" and "Registered Clearing Agency," which replaces OCC-specific references. New Rule 2360(b)(3)(D) bars opening transactions that would exceed the listing exchange's position limits, and Large Options Positions Report requirements now expressly reference options on metrics. Under Cboe's convention, 100 binary KPI option contracts equal one standard option contract.

Firms must deliver the disclosure document of the registered clearing agency that issues the option rather than only OCC's Options Disclosure Document, and confirmations must identify the underlying metric. The prohibition on writing calls for an issuer's own account now also covers a corporation that is the subject of the underlying metric. Rule 2220's communications requirements expressly cover options on metrics, and FINRA updated four Rule 4210 margin interpretations.

The Options Clearing Corporation provides central counterparty clearing and settlement services for MX2 Options, a new options exchange from MEMX Group, Theocc reported on September 15, 2026.

FINRA's Earlier Rule and Technology Moves

According to akta.pro company records, the SEC approved FINRA's Rule 4210 amendments in April 2026, replacing the Pattern Day Trader rule with technology-driven real-time intraday margin monitoring and eliminating the $25,000 minimum equity requirement, effective June 4, 2026. The same records show FINRA launched the Financial Intelligence Fusion Center in March 2026, a portal for member firms to share cybersecurity and fraud threat intelligence in real time.

FINRA Enforcement Actions Preceding the Notice

FINRA fined Citigroup Global Markets $250,000 and censured it for failing to implement proper AML procedures, delaying escalation of 171 potential fraud events and 88 SAR filings, Fxnewsgroup reported on November 9, 2026. On November 5, 2026, MarketWatch reported that FINRA fined Webull $4.2 million for failing to implement anti-money laundering and identity theft prevention programs. FinanceFeeds reported on November 10, 2026 that a FINRA arbitration claim alleges Jefferies and Pershing aided a $100 million fraud scheme by Uruguayan broker Sara Goldring.

Pending Exchange Filings and the CFTC's Tesla Contract

MEMX LLC filed a proposal in August 2026 to list "securities event contracts" on issuer-reported metrics, and NYSE Arca, Inc. and NYSE American LLC filed proposals on September 3, 2026. Nasdaq MRX, LLC filed a similar proposal on October 2, 2026. The NYSE Arca, MEMX and Nasdaq MRX proposals remain pending before the SEC. The CFTC approved on October 27, 2026 a submission by a DCM to list as a swap an event contract on whether Tesla, Inc. will report fourth-quarter 2026 adjusted EPS greater than $0.65.