New MX2 Options Platform Aims to Revamp Trading Rules
Published Date: 7/7/2025
Notice
Summary
MX2 LLC is launching a new options trading platform called MX2 Options, using tech similar to their current MEMX system. This change affects traders and brokers who deal with options, introducing new rules to keep trading smooth and fair. The SEC is reviewing these rules now, and once approved, MX2 Options will open up fresh opportunities in the options market.
Analyzed Economic Effects
9 provisions identified: 3 benefits, 5 costs, 1 mixed.
Exchange Authorization Required to Trade
To trade on MX2 Options, an Exchange Member must be specifically authorized by MX2 and meet the qualification requirements in proposed Chapter 17. The Exchange will authorize Options Members and Sponsored Participants (including two types: Options Order Entry Firms and Options Market Makers) before they can access MX2 Options.
Membership and FINRA Requirement
Every Options Member must maintain membership in another registered options exchange that is not registered solely under Section 6(g) of the Exchange Act or be a FINRA member. Options Order Entry Firms (OEFs) that transact with public customers must at all times be FINRA members.
Continuous Quoting Duty for Market Makers
MX2 Options would require Options Market Makers to enter continuous two-sided bids and offers in their appointed classes for at least 60% of the cumulative number of seconds the classes are open for trading (excluding certain series and outage/halt periods). Substantial or continued failure to meet obligations can lead to disciplinary action, suspension, or revocation of registration or appointments.
Lead/Preferred Market Maker Advantages
MX2 Options allows designations such as Lead Market Maker and Preferred Market Maker that can receive execution priority (priority overlays) over non-customer orders. The filing notes lenders may extend credit to broker-dealers financing market making without regard to Regulation T restrictions when the credit is used for market maker activities.
Quotation and Trading Increments Set
MX2 Options proposes minimum quoting increments: if a series trades below $3.00 the increment is $0.05; if $3.00 or higher the increment is $0.10; under the Penny Interval Program the increments are $0.01 for series under $3.00 and $0.05 for $3.00 or higher, except QQQ, SPY, and IWM which use $0.01 for all series. The minimum trading increment for all options series is $0.01.
Reserve Orders and Replenishment Options
MX2 Options will offer Reserve Orders with a displayed 'Display Quantity' and a non-displayed 'Reserve Quantity.' Users can choose Random Replenishment (including an optional random time interval up to 1 millisecond) or Fixed Replenishment. Reserve Orders will be handled as new orders on each replenishment and MEMX-type obfuscation of order IDs for replenishments is described.
MX2 Options Trading Hours Defined
MX2 Options will accept orders after 9:30 a.m. Eastern Time (after specified opening observations) and will keep orders open until 4:00 p.m. Eastern Time, except option contracts on Fund Shares, certain index-linked notes, and broad-based indexes which may close at 4:15 p.m. Eastern Time.
Anonymous Display but Trade Reports Reveal IDs
Orders entered into the System will be displayed anonymously on MX2 Options, but aggregated and individual transaction reports will include the contra party's executing firm ID (EFID), capacity, and clearing firm account number. The Exchange will also reveal a User's identity in certain circumstances, such as regulatory requests or clearing agency actions.
Options Principal Qualification Requirement
Every Options Member must have at least one registered Options Principal who meets the criteria in proposed Rule 17.2(g), including passing the required qualification examination, to supervise the member's options activities on MX2 Options.
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