CBOE - The SEC Releases New Information Regarding A FINRA Rule Change For Options Trading | Benzinga
The U.S. Securities and Exchange Commission (SEC) has released information regarding a proposed rule change by the Financial Industry Regulatory Authority, Inc. (FINRA). This change is intended to provide relief in margin requirements for specific index options transactions, referred to as "protected options," and aligns with a similar rule change proposed by Cboe Global Markets (BATS: CBOE) with the SEC.
Understanding The Proposed Rule Change
The proposed rule change by FINRA involves an amendment to FINRA Rule 4210 (Margin Requirements). The primary goal is to offer margin relief for certain index option transactions known as "protected options." These options are part of a strategy that involves offsetting short option positions or warrants with positions in underlying assets such as stock baskets, non-leveraged index mutual funds or non-leveraged exchange-traded funds (ETFs) linked to the same index.
Conforming With The Cboe Rule Change
Cboe Global Markets previously submitted a proposed rule change that was approved by the SEC. This change established an exception to margin requirements for "protected options" under Cboe Rule 10.3. FINRA's ...