NYSE American moves ByRDs binary options to closing-auction settlement and cuts the eligible underliers from 305 to 100

The filing

NYSE American filed SR-NYSEAMER-2026-96 on 21 October 2026. The SEC notice (Release No. 34-106743) was published in the Federal Register on 30 October. The change took effect on filing. The Commission waived the usual 30-day operative delay and “designates the proposal operative upon filing.” Comments are due by 30 November 2026.

Binary Return Derivatives (ByRDs) are European-style, cash-settled binary options on individual stocks, ETFs and Index-Linked Securities. They are issued and guaranteed by the Options Clearing Corporation (OCC). Under the current rules, a “Finish High” ByRD returns $100 per contract if the settlement price is above the strike at expiration, and a “Finish Low” ByRD returns $100 if it is below. The products were first approved in 2007 as Fixed Return Options and relaunched under the ByRDs name in 2014. The filing refers to how ByRDs “would be available for trading” under the current rules. It also commits the exchange to review listing criteria no later than four months “from the date that ByRDs begin to trade”. Both phrases suggest the product is not trading now.

What changes

• Settlement price. Expiring ByRDs will settle on the underlying’s closing price “as reported by the primary listing market”. This replaces the all-day volume-weighted average of composite prices during regular trading hours.
• No more rounding. Under the current rules, a settlement price exactly equal to a strike is rounded up by $0.01 so that the Finish High contract pays. The new text writes this outcome into the definitions instead. Finish High pays if the stock “closes (1) at or above the strike price”, and Finish Low pays if it closes “below the strike price”.
• Listing criteria. The minimum market capitalisation for single-stock underliers rises from $40 billion to $290 billion. A new initial and continued listing standard requires an average daily trading value in the primary market’s closing auction “of at least $10 million over the prior six months.” The exchange says the criteria leave “100 eligible ByRDs underliers, as opposed to the 305” without the new auction test. It puts the median closing-auction value across those 100 at $92.5 million a day.
• Market makers. Appointments to an underlying security automatically extend to its ByRDs. Under new Commentary .02 to Rule 958ByRDs, appointed market makers are not required to quote ByRDs. Those that do quote must keep to the existing maximum widths of $0.25, or $0.50 on the last trading day before expiry.
• Price checks. The arbitrage and intrinsic-value checks in Rule 928.1NYP will not apply to ByRDs. They are replaced by a class-level maximum price under new Rule 928.1NYP(e). The filing links that maximum to the $1.02 Catastrophic Error level in Rule 975NY.

The exchange’s case

NYSE American calls the closing price “the most carefully determined price of the day”. It cites NYSE TAQ data showing that US closing auctions “have matched just over $100 billion per day” in 2026 and “accounted for 9.4% of total notional value traded”. It argues that a VWAP is “more susceptible to intraday manipulation than a supervised closing auction”. It also points to the conditional exemptive relief the SEC gave CME to settle certain cash-settled security futures on a closing price rather than an opening price.

In waiving the delay, the Commission referred to the limit of 100 highly liquid underliers. It said this “should help mitigate the impact (if any) of ByRDs on the closing process of the underlying equity securities”.

Why it matters

Analysis. The filing follows the SEC’s approval of Cboe’s binary options on company KPIs on 13 October and FINRA’s broker rules for those products. Exchange-listed, OCC-cleared binaries on US stocks worth at least $290 billion would give retail brokers a securities-regulated alternative to CFTC-regulated event contracts on equity prices. The exchange’s own case is more general: it describes ByRDs as “a securities exchange-listed alternative” to similar products in the OTC market and on other trading platforms. Settling on the close also means hedging flow for these contracts would arrive in the closing auction. The $290 billion threshold is designed to make sure the stocks involved can absorb it. Market practitioners will want to see the launch date and which market makers choose to quote.

What we are watching

• A launch date and the first list of underliers.
• The follow-up filing NYSE American says it will make to stop ByRDs on certain ETPs trading between 4:00pm ET and 4:15pm ET on expiry day.
• Whether other options exchanges file competing exchange-listed binaries.