SEC lets Cboe Clear U.S. members count customer binary-option margin in reserve calculations, as they do OCC margin

The SEC has granted conditional exemptive relief that lets broker-dealers clearing binary options through Cboe Clear U.S. (CCUS) treat customer margin posted there as they treat margin posted at The Options Clearing Corporation (OCC) when they compute their customer protection reserve. The order (Release No. 34-106726; File No. 4-930) is dated 23 October and was issued under Section 36(a)(1) of the Exchange Act. It went on Federal Register public inspection on 27 October (FR Doc. 2026-21931) and is scheduled for publication on 28 October.

This follows our 27 October report on FINRA’s binary-options rules and the SEC’s order giving CCUS an 18-month temporary registration to clear binary KPI options traded on Cboe Exchange. That order records CCUS’s statements that the contracts “will be fully margined” and that their payouts are “$0.00 or a maximum payout of $1.00”.

The limitation

Under Rule 15c3-3, a broker-dealer that holds customer cash and securities must compute what it owes customers using the formula in Rule 15c3-3a, and keep a matching deposit in a special reserve bank account. It must run the same computation for proprietary accounts of other broker-dealers (PAB accounts). The order explains that Item 13 of the formula allows a debit for “margin required and on deposit with OCC for all option contracts written or purchased in customer accounts”. Note F limits that debit to margin “represented by cash, proprietary qualified securities and letters of credit collateralized by customers’ securities”.

The SEC says it added the Item 13 debit in 1977, “when the OCC was the only clearing agency registered with the Commission that provided central counterparty services for options contracts”. It adds: “However, circumstances have changed. CCUS has been approved as a second clearing agency for options.”

CCUS applied on 18 September, arguing, as the order records, that its members would otherwise face “a customer reserve computation penalty”. The SEC issued a notice of the application for comment on 25 September, and it was published in the Federal Register on 29 September (91 FR 61528).

What the order allows

The order applies to “Clearing Members”, which it defines as broker-dealers that are CCUS clearing members. They are exempt from the limitation in Item 13 and Note F, and “may include a debit in Item 13 of their customer and PAB reserve computations for margin required and on deposit with CCUS for all binary options contracts written or purchased in customer accounts”.

Without the debit, the SEC says, higher customer margin at CCUS “would result in corresponding increases in the need for Clearing Members to use their own cash and securities to meet CCUS customer margin requirements”, and could raise their required reserve deposits.

The six conditions

The order sets the following conditions, quoted from its text:

1. Registration: “CCUS is registered with the Commission as a clearing agency in accordance with section 17A(b) of the Exchange Act and Rule 17ab2-1 thereunder.”
2. Eligibility Limitation: “The relief will apply solely to margin required and on deposit with CCUS with respect to customer positions in binary options.”
3. Margined Customer Positions: “The binary options that CCUS clears will be margined by CCUS consistent with the requirements of Rule 17Ad-22(e) and Clearing Members will collect such margin from their customers, with any proposed changes to CCUS’s margin system subject to Commission review, and, as appropriate, approval pursuant to section 19(b) of the Exchange Act and Rule 19b-4 thereunder.”
4. Segregation of Customer Margin: “For purposes of Rule 15c3-3a, CCUS will maintain margin required and on deposit with CCUS for binary options contracts written or purchased in customer accounts separately and independently from margin required and on deposit for proprietary positions of Clearing Members.”
5. “The relief would be subject to the same conditions set forth in Note F to Item 13 of Rule 15c3-3a that apply to margin required and on deposit with OCC for all option contracts written or purchased in customer accounts.”
6. “The rules of CCUS must have been amended to reflect the conditions of this order.”

The SEC says the second condition ensures that margin posted for a Clearing Member’s proprietary positions “may not be included as a debit in the reserve computations”. The final wording differs in places from the conditions CCUS proposed in its application. The proposed segregation condition referred to “options contracts” and the final one refers to “binary options contracts”. The proposed sixth condition said CCUS “shall amend its rulebook as may be necessary”. In its discussion of the final condition, the SEC says Clearing Members “may only include an Item 13 debit in their reserve computations pursuant to this order where the rules of CCUS have been amended to conform to the conditions of this exemptive order”. The relief therefore depends on CCUS amending its rules. The order does not say whether CCUS has already done so.

The one comment letter asked for extra conditions modelled on Notes G and H to Rule 15c3-3a. The SEC declined, calling CCUS’s conditions “robust and reasonably designed to protect investors”.

The prediction-markets overlap

Binary KPI options pay a fixed amount or nothing on a company’s reported figures, much like event contracts on CFTC-regulated venues, but they are SEC-regulated security options. Our Prediction Markets Desk covers the CFTC side, including the proposal to treat event contracts as swaps and the S&P DJI–Kalshi index licence.

Why it matters

For market practitioners at carrying broker-dealers, the reserve formula links clearing choices to funding. The SEC says the relief puts CCUS and OCC margin on the same footing under Item 13, and that it may reduce the “capital constraints and inefficiencies” that could “reduce their willingness to intermediate customer access” to binary options cleared at CCUS.

The relief is narrow. It covers binary options only, customer and PAB positions only, and only collateral that Note F permits: cash, proprietary qualified securities and letters of credit collateralised by customers’ securities. Margin for a firm’s own positions at CCUS gets no debit. Reserve-computation and regulatory-reporting systems built to recognise only OCC margin under Item 13 may need to treat CCUS margin separately, and only for qualifying positions.

The conditions also tie the relief to CCUS’s rulebook and margin model. CCUS operates under an 18-month temporary registration. Changes to the margin system would go through the SEC’s rule-filing process under the third condition. The order does not set a trading start date for Cboe’s binary KPI options, which the SEC approved on 13 October.

What we are watching

• The Federal Register citation once FR Doc. 2026-21931 is published.
• Any CCUS rule filing that amends its rules to reflect the order, as the sixth condition requires.
• A launch date from Cboe for binary KPI options.
• Any cross-margining arrangement involving CCUS. The temporary registration order says CCUS intends to pursue such arrangements, but does not describe any as in place.