SEC weighs MEMX plan to list securities event contracts

The Securities and Exchange Commission (SEC) has published a notice of filing for a proposed rule change by MEMX LLC to adopt new Chapter 30 of its Exchange Rules, establishing a framework for the listing and trading of securities event contracts on its options platform, MEMX Options. The notice, dated August 24, 2026 and published in the Federal Register of August 27, 2026, invites interested persons to submit written comments on whether the proposal is consistent with the Securities Exchange Act of 1934.

The proposal, filed with the Commission on August 11, 2026, would bring event-based prediction products into the SEC-regulated securities market. Securities event contracts are cash-settled, European-style binary options whose value at expiration is determined by whether a specified event condition relating to an underlying security is satisfied, rather than by the magnitude of a price movement.

What the contracts would look like

Under the proposal, securities event contracts would be based on objective, verifiable events tied to the financial performance of an issuer of an NMS stock — for example, whether an issuer announces earnings, revenues, sales, or another key financial metric that equals or exceeds a specified threshold. The contracts would have a fixed, all-or-nothing payout and a known amount at risk at the time a position is entered.

• Contracts would be cleared through a registered clearing agency designated as the Clearing Corporation.
• They would be automatically exercised if in-the-money and cash-settled pursuant to the clearing agency’s rules.
• Quotation and transaction information would be disseminated through OPRA.
• The framework preserves flexibility to propose additional contract types in the future, subject to a separate rule change.

Regulatory classification

MEMX argues the contracts are properly classified as options on a security, and therefore excluded from the definition of a security-based swap under the Commodity Exchange Act. The exchange points to the Commission’s prior approvals of Cboe’s credit default options and credit default basket options as precedent, and notes that Cboe has separately filed a proposal for similar “binary KPI options.”

The exchange contends that listing these contracts on a registered national securities exchange subjects trading to SRO and Commission surveillance, including antimanipulation restrictions, insider-trading prohibitions, and material nonpublic information (MNPI) controls. It also argues the products would be “standardized options” under Rule 9b-1, subject to the established options disclosure framework.

Comment process

The Commission is publishing the notice to solicit comments from interested persons. Comments may be submitted electronically or in paper form, and all submissions should refer to file number SR-MEMX-2026-25.

• Electronic comments: via the SEC’s internet comment form or by email to rule-comments@sec.gov.
• Paper comments: in triplicate to the Secretary, SEC, 100 F Street NE, Washington, DC 20549-1090.
• Deadline: comments must be submitted on or before September 17, 2026.

The proposal responds to significant recent growth in prediction markets, which have developed on CFTC-regulated designated contract markets offering event contracts referencing a broad range of political, economic, commercial, and other outcomes. If approved, the framework would give retail and institutional investors a regulated, exchange-traded alternative to over-the-counter and other venues for event-based exposure, while extending the SEC’s investor-protection regime to a fast-growing segment of the derivatives market.

Source: Federal Register, Vol. 91, No. 165, August 27, 2026, Notices section, p. 55384 (official reference: Release No. 34-106182; File No. SR-MEMX-2026-25; FR Doc. 2026-17465).