FINRA extends its options and margin rules to binary options, including contracts on company metrics

FINRA has amended three of its rules and updated its margin interpretations so that binary options, including a new type of option that pays out on a company’s reported financial or operating metrics, fall under the same investor protection framework as other listed options. It announced the changes in Regulatory Notice 26-21 on 26 October; they took effect on 22 October 2026.

What has changed

According to the notice, several US securities exchanges have filed proposals with the SEC to list binary options whose payout is fixed when the option is created and depends on the value of an issuer’s reported metric. Some of these contracts may be cleared by a registered clearing agency other than The Options Clearing Corporation (OCC). FINRA calls them “binary metric options”.

The amendments touch three rules:

• Rule 2220 (options communications) now states that it covers options on metrics and options cleared through a clearing agency other than OCC.
• Rule 2360 (options), which sets position limits, large position reporting, disclosure, account opening, suitability and supervision requirements, gains new definitions of “binary option” and “underlying metric”, and its other definitions now explicitly include options overlying a metric.
• Rule 4210 (margin requirements) now applies its options provisions to contracts cleared outside OCC.

FINRA has also added four margin interpretations covering binary option requirements, spreads, and straddles or similar combinations. Conforming changes were made to Rules 2351 and 2357 on index and currency warrants.

Under the amended Rule 2360, a binary option is a cash-settled contract that pays its fixed amount only if the underlying security, index or metric settles at or above the exercise price for a call, or below it for a put.

What it means for traders and brokers

For broker-dealers, the practical effect is that any binary metric options they offer come with the same communications, account-approval, suitability, reporting and margin obligations as other listed options. For retail traders, these products arrive inside the existing options regime rather than outside it. Our guide to margin calls explains how margin requirements work in practice.

The rule filing is SR-FINRA-2026-022, filed on 22 October 2026. The trading mechanics of each contract are set by the rules of the exchange that lists it.