SEC Approves MX2 Options: Wall Street's Latest Trading Toy Unleashed
Published Date: 10/2/2025
Notice
Summary
MX2 LLC just got the green light to launch MX2 Options, a brand-new electronic platform for trading options. This means qualified members, like Options Order Entry Firms and Market Makers, can start trading under fresh, clear rules similar to those on MEMX Options. The new rules kick in right away, opening exciting opportunities for traders without changing fees or costs.
Analyzed Economic Effects
10 provisions identified: 5 benefits, 3 costs, 2 mixed.
Priority Overlays: Customer & Market Maker Entitlements
MX2 may apply a Customer Overlay giving Customers priority over non-Customer interest at the same price. Lead Market Makers and Preferred Market Makers can receive participation entitlements equal to the greater of their pro rata share or 60% (or 40% in some multi-participant situations) of contracts allocated at the same price; small orders (five or fewer contracts) can be allocated in full to the LMM when applicable.
Approval to Launch MX2 Options
The SEC approved MX2 LLC's proposed rules on September 30, 2025, allowing MX2 to operate a new electronic options facility called MX2 Options. Qualified Exchange Members can begin trading on MX2 Options under the new rules immediately.
Who Can Be Options Members
MX2 Options will authorize two types of Options Members: Options Order Entry Firms (OEFs) and Options Market Makers. OEFs serving Public Customers must be FINRA members and every Options Member must have a registered Options Principal and meet other qualification requirements described in the rules.
Continuous Quoting Requirement (60%)
Options Market Makers must enter continuous bids and offers in 60% of the cumulative number of seconds their appointed classes are open for trading (or a higher percentage if the Exchange announces it in advance), excluding certain series and periods. Failure to meet quoting obligations can lead to discipline, suspension, or revocation of registration.
One-Second Order Exposure Rule
MX2 will prohibit Members from executing as principal on orders they represent as agent unless the agency order is exposed on MX2 for at least one (1) second or the Member has been bidding/offering for at least one (1) second prior. During that one-second exposure period, other Options Members can enter orders to trade against the exposed order.
User Risk Controls and Mass Cancellation Tools
MX2 will offer Users configurable risk controls (volume, notional, count, percentage, risk trips) and functions to cancel or suspend orders, including mass cancellation and blocking new inbound orders. These risk control features include automatic cancellations if limits are breached and other protections like fat-finger checks.
Reserve Orders and Random Replenishment
MX2 Options will offer Reserve Orders (display + reserve quantity) and allows Random Replenishment where replenishment time intervals can be randomly set by the Exchange up to one (1) millisecond following each execution that triggers replenishment. Reserve Orders will create a new order ID each time the displayed quantity is replenished.
Routing, Pre-Trade Credit Checks, and Order Rejection
MX2 can route orders through MEMX Execution Services or other routing services; MEMX Execution Services implements tests under Rule 15c3-5 and may reject or cancel orders that are erroneous, duplicative, exceed preset credit thresholds, or fail pre-trade regulatory checks. Use of MX2 routing services is optional and Members can mark orders as not available for routing.
Trading Hours and Product Close Times
MX2 Options will accept orders after 9:30 a.m. Eastern Time and generally close at 4:00 p.m. Eastern Time; certain option contracts (Fund Shares, exchange-traded notes, and broad-based index options) will close at 4:15 p.m. Eastern Time. The System opens only after observing the first transaction/index value and applicable Limit Up-Limit Down bands after 9:30 a.m.
No Change to Fees or Costs
The launch and approval of MX2 Options are described as occurring without changes to fees or costs for trading on the Exchange. The new rules take effect immediately upon approval on September 30, 2025.
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