NYSE Arca Proposes FLEX Options Rule Cleanup
Published Date: 7/7/2026
Notice
Summary
NYSE Arca wants to update its rules for FLEX Options, which let investors customize their trading contracts. These changes aim to make trading smoother and clearer for everyone involved. The updates could affect investors and traders using FLEX Options, with no big cost changes announced, and the new rules could roll out soon after approval.
Analyzed Economic Effects
5 provisions identified: 2 benefits, 2 costs, 1 mixed.
Cash Settlement Allowed for 50 Non-ETF Stocks
The Exchange proposes to allow cash settlement as a contract term for up to 50 non-ETF FLEX Equity Options whose underlying security has (over the prior six-month period) an average daily notional value of at least $500,000,000 and a national average daily volume of at least 4,680,000 shares. The Exchange identified 143 non-ETF securities that met these criteria as of December 31, 2025, and would permit the top 50 (by its selection method) to have cash-settled FLEX options.
Position Limits Apply to Cash-Settled FLEX
Positions in all FLEX Equity Options that are settled in cash under the proposed Rule 5.32-O(f)(3)(ii) would be subject to the Exchange's position limits in Rule 5.35-O and the exercise limits in Rule 5.36-O. As of December 31, 2025, the applicable position limit for each qualifying underlying would be 250,000 contracts under Rule 6.8, Commentary .06(e).
Exchange-Traded Alternative to OTC Options
The Exchange expects that some market participants who currently trade cash-settled customized options in the OTC market (e.g., hedge funds, proprietary trading firms, and pension funds) may migrate to exchange-traded cash-settled FLEX non-ETF Equity Options, which would be cleared through OCC and subject to standardized contract terms and Exchange surveillance. The Exchange asserts this could increase transparency, reduce counterparty credit risk, and may open these instruments to more retail investors.
Eligibility Metric Switch to Notional Value
Where more than 50 ETFs or more than 50 non-ETF securities qualify for cash-settled FLEX options, the Exchange will select the 50 qualifying securities with the highest average daily notional value rather than the highest average daily share volume. The notional-value metric uses the sum of trade share counts multiplied by execution price averaged over the prior six-month period.
OCC Clearance Required Before Trading
Cash-settled FLEX non-ETF Equity Options would not be available for trading on the Exchange until the Options Clearing Corporation (OCC) represents to the Exchange that it is fully able to clear and settle such options. The Exchange also represents it and OPRA have systems capacity to handle additional traffic.
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
2026-17183, 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!
2026-10373, Registered Offering Reform
The SEC wants to make it easier and cheaper for more companies to sell their stocks and bonds to the public. They’re opening up special forms and benefits to more businesses, updating rules to be more modern, and cutting red tape by overriding some state rules. If you’re a company planning to raise money, these changes could speed things up and save you money, with feedback due by July 27, 2026.
2026-10222, Enhancement of Emerging Growth Company Accommodations and Simplification of Filer Status for Reporting Companies
The SEC is making it easier for companies that report their finances by simplifying their categories into just two groups: big and small filers. Smaller companies, including emerging growth ones, will get more time to file reports and enjoy simpler rules, while big companies keep stricter standards. These changes aim to save time and money, with feedback open until July 20, 2026.
2026-07651, Concept Release on Consolidated Audit Trail and Other Audit Trails and Data Sources
The SEC wants your thoughts on how it tracks stock market trades using the Consolidated Audit Trail and other data tools. They’re thinking about updating rules to keep up with new tech, privacy, and security needs, and to make sure the system is fair and cost-effective. If you’re involved in the stock market or data tracking, speak up by June 22, 2026!
2026-17058, Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Connectivity Schedule and Discontinue a Previously Proposed Offering
Previous / Next Documents
Previous: 2026-13650, Self-Regulatory Organizations; NYSE American LLC; Notice of Filing of a Proposed Rule Change To Amend Rule 903G and 906G
NYSE American is updating rules for FLEX Options, which let investors customize their stock and index option contracts. These changes aim to make trading clearer and smoother for everyone involved, with no new fees announced. The new rules could start soon after the SEC reviews and approves them, so traders should keep an eye out!
Next: 2026-13652, Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2900 Regarding Information Circular Requirements
MIAX PEARL is updating its rules to make sharing info about certain traded products easier and faster. They’re dropping the old rule that required sending info before trading starts and now require info to be shared by the first trade confirmation. This change affects traders and companies listing products and kicks in right away with no extra costs.