SEC Grants Cboe Clear Temporary 18-Month Registration to Clear Binary Options
Key Facts
The U.S. Securities and Exchange Commission approved Cboe Clear U.S. for temporary registration as a clearing agency on October 22, 2026, to provide central counterparty services for binary options contracts deemed to be securities, according to the SEC order. The decision gives the unit a defined path to clear these products, rather than a broad and immediate expansion of all clearing activities across the group. Cboe says it will initially use the registration to clear contracts linked to company performance metrics. The registration is effective for no more than 18 months from the date of the order. The company plans to list the contracts on Cboe Options and make them available through Robinhood in the fourth quarter of 2026.
The decision adds securities product clearing to Cboe Clear U.S.'s existing authority as a derivatives clearing organization registered with the Commodity Futures Trading Commission, which covers clearing futures and swaps, according to a Cboe statement. The company describes the new contracts as exchange-listed, cash-settled options whose payout at expiration depends on whether a condition tied to a specified company performance metric is met. The metrics Cboe cited include earnings per share, revenue, segment revenue, operating margins and company-specific operating statistics. An amendment to the listing rules allowing these options was approved by the SEC on October 13, 2026. The amendment set a position limit of 25,000 contracts for binary performance options.
Cboe and Robinhood previously announced on September 30, 2026, plans to launch contracts linked to performance metrics for 23 U.S.-listed companies, subject to regulatory approval. Cboe said Robinhood would be the first retail broker to make these products available to its customers at the planned launch. Cboe also announced that it would charge no fees on performance options through the end of 2026, subject to regulatory review, and Robinhood said it would offer them commission-free through year-end. Cboe says the binary contracts will be fully margined, with collateral covering potential price movements after initial settlement. According to the application detailed in the SEC order, the payout ranges from $0.00 to a maximum of $1.00 per contract.
Cboe Clear U.S. says its intraday exposure, before the settlement cycle is complete, is mitigated through binary payout limits, intraday margin calls and a default mechanism, as the SEC order recounts from the company's application. The step complements, according to a Cboe statement, its existing partnership with the Options Clearing Corporation (OCC), the clearinghouse for traditional equity options, and its commitment to the established infrastructure for clearing those options. The registration, within its announced scope, does not change the role that partnership plays in traditional clearing. In derivatives activity, quarterly average daily volume for Cboe's multi-listed contracts was 15.3 million contracts in the third quarter of 2026 across its four options exchanges. The company said that was the second-best quarter on record for this measure.
The SEC based its decision on an application filed by Cboe Clear U.S. on June 30, 2026, and amended by the company on July 7 and 17, then on August 18, September 4 and October 1. The commission granted exemptions from specific requirements in Sections 17A(b)(3)(B) and 17A(b)(3)(F), and determined that the application met the remaining requirements of Section 17A and its rules. The commission received one comment letter supporting temporary approval as an interim measure, while raising concerns about permanent registration. The concerns included risks from vertical integration, capital costs and the potential for greater fragmentation of the clearing structure. The SEC said that no later than 9 months after the temporary registration takes effect, it must grant permanent registration or begin proceedings under Section 19.
The registration order was issued on October 22, the same day Cboe shares closed at $327.72, compared with a close of $318.82 on October 21, according to EL7 data. The registration was announced the following day. Cboe had said the new contracts would expand its prediction markets offerings, while their actual launch remains tied to the schedule the company announced for the fourth quarter of 2026. Under the terms of the temporary registration, the SEC must take action on permanent registration or begin regulatory proceedings within 9 months of its effective date. The commission's order sets a maximum temporary registration period of 18 months from the date it was issued.