IEX Options: New Tech Takes on Wall Street's Speed Demons
Published Date: 1/21/2025
Notice
Summary
Investors Exchange (IEX) wants to launch a new options trading platform called IEX Options. This platform will use smart tech to handle trades quickly and safely, with special features to protect traders from risky or outdated quotes. If approved, this change could shake up options trading starting soon, giving investors a fresh, fair way to trade.
Analyzed Economic Effects
8 provisions identified: 3 benefits, 4 costs, 1 mixed.
Net capital minimums for Market Makers
IEX proposes minimum net capital requirements of $200,000 for Registered Market Makers and $1,000,000 for Specialists. These minimums are set in proposed rules and are described as consistent with comparable exchange rules.
IEX launches new options trading venue
IEX proposes to operate a new options trading facility called IEX Options as a fully automated, pro‑rata priority options market built on its equities platform. The filing describes that IEX Options will list and trade options issued by the Options Clearing Corporation and will provide optional routing when trading interest is not present on IEX Options.
De minimis delay on orders and quotes
IEX Options will use a de minimis delay on incoming order and quote messages so IEX can update its view of the market before processing orders and quotes. The rule filing states this delay is designed to enable IEX to update market information prior to execution.
Optional Market Maker quote protection parameter
IEX proposes an optional Market Maker quote parameter intended to protect Market Makers from excessive risk due to execution of stale quotes. The filing states this parameter is optional and designed as a protection for Market Makers.
Continuous quoting obligations for Market Makers
Registered Market Makers must maintain a two‑sided market in at least 60% of non‑adjusted options series to which they are appointed, and Specialists must do so in at least 90% of such series (for classes with time to expiration under nine months). The filing defines continuous quoting as 90% of the time.
Limits on Market Maker orders outside appointments
An Options Market Maker with an Options Order Entry Firm (OEF) trading permit may submit orders in classes where it has no appointment, provided such orders executed do not exceed 25% of all contracts the Market Maker executes on the Exchange in any calendar quarter.
Membership and supervisory requirements for Options Members
Proposed rules require every Options Member to maintain membership in another registered options exchange (not solely under Section 6(g)) or in FINRA; OEFs and Options Members transacting with public customers must be FINRA members. Every Options Member must have at least one registered Options Principal who satisfies specified qualification criteria.
Clearing through the Options Clearing Corporation (OCC)
IEX Options will submit all Options transactions for clearance to the Options Clearing Corporation (OCC) and the Exchange will be an OCC member, with the Trading System linked to the OCC for locked‑in trade transmission for clearance and settlement.
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