Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rules 5.32-O and 5.35-O Related to Flexible Exchange Options
Published Date: 1/30/2026
Notice
Summary
NYSE Arca is updating its rules to let certain FLEX Equity Options be settled in cash instead of stocks. This change affects traders using these flexible options and kicks in right away, making trading smoother and more flexible. No big money changes, just smarter ways to settle deals faster and easier.
Analyzed Economic Effects
6 provisions identified: 2 benefits, 2 costs, 2 mixed.
Cash Settlement Allowed for Certain FLEX ETF Options
The Exchange now allows some FLEX Equity Options where the underlying is an ETF to be settled in cash instead of by delivering shares. To qualify, an ETF must have, measured over the prior six-month period, an average daily notional value of $500,000,000 or more and a national average daily volume of at least 4,680,000 shares.
When an ETF Loses Eligibility, New Positions Must Be Physical
If, following a bi‑annual review, an ETF no longer meets the $500 million average daily notional or 4,680,000 ADV requirements, any new FLEX option positions on that ETF must be physically-settled. Open cash-settled FLEX ETF Option positions on that ETF may only be traded to close.
Position and Exercise Limits Apply and Are Aggregated
Cash-settled FLEX ETF Options will be subject to the Exchange's position limits (Rule 6.8-O) and exercise limits (Rule 6.9-O), and positions in cash-settled FLEX ETF Options will be aggregated with physically-settled options on the same underlying ETF. Of the 50 ETFs identified as currently eligible, 34 have a 250,000-contract position limit, 10 have a 500,000-contract limit, four (EEM, EFA, FIX, and IWM) have a 1,000,000-contract limit, QQQ has a 1,800,000-contract limit, and SPY has a 3,600,000-contract limit (position limits as of June 30, 2025).
Exchange Listing May Move OTC Trades to OCC‑Cleared Exchange
The Exchange expects some market participants who trade OTC cash-settled FLEX ETF Options (for example, hedge funds, proprietary trading firms, and pension funds) to migrate to exchange-traded, OCC-cleared cash-settled FLEX ETF Options. Exchange trading would standardize terms, reduce counterparty credit risk by using the Options Clearing Corporation (OCC), and increase price transparency.
Selection Cap and Biannual Eligibility Review
The Exchange will permit cash settlement as a contract term for no more than 50 underlying ETFs that meet the $500 million average daily notional and 4,680,000 ADV criteria. The Exchange will determine eligibility bi‑annually using the prior six months of trading data on January 1 and July 1, and newly qualified securities will be permitted cash settlement beginning February 1 and August 1 following each review.
Certain Bitcoin Trusts Excluded from FLEX Trading
The Exchange will not authorize for trading a FLEX Equity Option class (either cash-settled or physically-settled) on the iShares Bitcoin Trust (IBIT), the Grayscale Bitcoin Trust (GBTC), the Grayscale Bitcoin Mini Trust (BTC), and the Bitwise Bitcoin ETF (BITB). If the Exchange later decides to allow FLEX trading on such options, it will do so by submitting a 19b-4 rule filing.
Personalized for You
How does this regulation affect your finances?
Personalize government policy and PRIA will tell you what this federal register document means for your household, plus every other regulation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.
Key Dates
Department and Agencies
Related Federal Register Documents
2026-20466, Adviser and Regulated Fund Custody Rules; Crypto Custody Rules
The SEC is updating rules for how investment advisers and funds handle crypto assets, making sure they keep these digital investments safe and properly reported. These changes affect advisers, funds, and anyone managing crypto securities, aiming to modernize rules and improve transparency. Comments on the proposal are open until December 7, 2026, so get ready to weigh in!
2026-19260, Rescission of Rule 14a-8's Federal Regulation of Shareholder Proposals and Amendments to Rule 14a-4
The SEC wants to stop its federal rule that controls how shareholders can make proposals at company meetings, letting state laws and company rules take over instead. They’re also changing rules so companies can sometimes vote on proposals not in their official materials—but shareholders can opt out if they want. This affects investors and companies, with comments open until November 20, 2026, and could shake up how shareholder voices are heard and counted.
2026-18424, Political Contributions by Certain Investment Advisers
The Securities and Exchange Commission (the "Commission" or the "SEC") is proposing to rescind the political contribution rule under the Investment Advisers Act of 1940 (the "Advisers Act"), which prohibits investment advisers from providing investment advisory services for compensation to a government client for two years after an adviser or any covered associate of the adviser makes a contribution to certain categories of elected officials or candidates, among other prohibitions. In the more than fifteen years since the rule was adopted, implementation challenges associated with the political contribution rule have resulted in a range of significant unintended consequences, including compliance practices among some investment advisers that may have had the effect of restricting all political contributions by the investment advisers and their employees. Market participants also have stated that the political contribution rule is burdensome, complex, and both lacks clarity and creates a de facto strict liability standard. The Commission is of the view that other existing requirements of the Advisers Act and its associated rules, including prohibitions on fraud, fiduciary duty requirements, the compliance rule, and the code of ethics rule (defined below), are likely sufficient to address pay-to-play practices while allowing an adviser the flexibility to implement an approach that is more appropriately tailored to its particular risks, rendering the political contribution rule unnecessary. The Commission also is proposing to amend the rule under the Advisers Act pertaining to books and records consistent with the proposed rescission.
2026-18190, Transfer Agent Rules
The U.S. Securities and Exchange Commission ("SEC" or "Commission") is proposing to adopt new rules, amend existing rules, amend the existing form for registration with the Commission as a transfer agent (Form TA-1) and the existing form for reporting activities of transfer agents (Form TA-2), and rescind an existing rule governing registered transfer agents. The proposals are designed to modernize the rules governing registered transfer agents.
2026-17183, Regulation Crypto Assets
The Securities and Exchange Commission ("Commission") is proposing new rules to create a tailored offering regime for certain investment contracts involving crypto assets. The proposed offering regime is intended to facilitate capital formation and accommodate innovation within the crypto asset markets while, at the same time, ensuring that investors are adequately protected and provided with the information they need to make informed investment decisions. The proposed rules would be set forth in a new regulation titled "Regulation Crypto Assets" and would include two exemptions from the registration requirements of section 5 of the Securities Act of 1933. The first exemption would permit offerings of up to $5 million during a four-year period. The second exemption would permit offerings of up to $75 million during each 12-month period. Under both exemptions, issuers would be required to make certain principles-based narrative disclosures available to their investors. In addition, issuers under the second exemption would be required to provide financial statements and would be subject to ongoing reporting requirements. Issuers that rely on these exemptions would remain subject to the antifraud and antimanipulation provisions of the Federal securities laws. The proposed rules also would include a conditional safe harbor from the term "investment contract" in the definitions of "security" in the Securities Act of 1933 and the Securities Exchange Act of 1934. If the conditions of that proposed safe harbor are satisfied, then a crypto asset would be deemed not to be subject to an investment contract for purposes of those definitions of "security."
2026-12163, The Trade-Through Rule and Locked and Crossed Markets Provisions of Regulation NMS
The SEC wants to scrap some old rules that stop stocks from being traded at worse prices and prevent confusing market quotes. This change affects stock traders and exchanges, aiming to simplify trading and possibly speed things up. If you want to share your thoughts, you’ve got until August 17, 2026, so don’t miss out!
Previous / Next Documents
Previous: 2026-01820, Agency Information Collection Activities; Submission for OMB Review; Comment Request; Quarterly Federal Excise Tax Return
The Treasury Department is updating the forms businesses use to report and pay federal excise taxes on things like gasoline and aviation fuel. Over 200,000 companies will keep filing quarterly, but some form details and time estimates are changing. Comments on these updates are open until March 2, 2026, so now’s the time to speak up if you have thoughts!
Next: 2026-01823, Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of a Proposed Rule Change, as Modified by Amendment No. 2, To Amend the Exchange's Rules To Enable the Trading of Securities on the Exchange in Tokenized Form
Nasdaq is updating its rules to let people trade stocks and securities in a new, digital way called tokenized form—think of it like turning shares into digital tokens. This change affects investors and companies using Nasdaq, making trading faster and more modern. The SEC is reviewing this update, with decisions and public comments happening through early 2026, potentially opening the door to a fresh era of trading.