IEX Options: New Trading Playground Seeks SEC Nod
Published Date: 6/24/2025
Notice
Summary
IEX is planning to launch a new options trading platform called IEX Options and has proposed rules to make it happen. This affects investors and traders who want more ways to buy and sell options, with the SEC reviewing the final details before giving the green light. The process is ongoing, so keep an eye out for updates that could impact how and when you trade options on IEX.
Analyzed Economic Effects
10 provisions identified: 4 benefits, 4 costs, 2 mixed.
Market Maker Net Capital Rules
IEX proposes minimum net capital requirements for Options Market Makers: $200,000 net capital for Registered Market Makers and $1,000,000 net capital for Specialists, consistent with comparable exchange rules.
Market Maker Quoting Requirements
Options Market Makers must maintain a two‑sided market on a continuous basis (continuous defined as 90% of the time) in at least 60% of non‑adjusted options series for Registered Market Makers and at least 90% for Specialists, for options classes with time to expiration under nine months. Directed Market Makers face enhanced quoting obligations.
Limit on Out‑of‑Appointment Trading
An Options Market Maker with an OEF trading permit may submit orders in classes where it has no appointment, provided that executed orders in such classes do not exceed 25% of all contracts the Market Maker executes on the Exchange in any calendar quarter.
Membership and Qualification Rules
Every Options Member must maintain membership in another registered options exchange or in FINRA; OEFs and Options Members that transact with Public Customers must be FINRA members. Each Options Member must have at least one registered Options Principal who meets the rule's qualification requirements.
New IEX Options Trading Venue
IEX plans to launch a new options trading platform called IEX Options that will operate a fully automated, pro‑rata priority market and offer an optional order routing service. This gives investors and traders an additional venue to list and trade individual equity options (IEX is not proposing to trade index options at this time).
Speed Protections Against Latency Arbitrage
IEX proposes a de minimis delay on incoming order and quote messages and an optional Market Maker quote parameter designed to protect Market Makers from executions at stale prices that can be exploited by latency arbitrage strategies. These protections are intended to reduce harmful speed‑based trading advantages.
Options Risk Parameter Values Set
IEX proposes to codify initial values for three ORP (Options Risk Parameter) variables — Delta Bound Band, Quote Instability Threshold, and the frequency of implied volatility calculation — and says any change to codified values within specified ranges would require a rule filing under Rule 19b‑4(f)(1) or another appropriate filing type.
ORP Would Rarely Interrupt Quotes
IEX provides data estimating that the ORP would not impact a quote for significantly more than 99% of the trading day, indicating the Exchange expects the ORP to have only a de minimis impact on market maker quotes on IEX.
Position Aggregation Rule Changes
IEX proposes to revise Rule 19.160 regarding when accounts should be aggregated for position limit calculations, adopting language substantially similar to CBOE's rules on account aggregation.
No Index Options Initially
IEX states it is not proposing to trade index options at this time and is focusing on listing and trading individual equity options on IEX Options.
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