FINRA extends options and margin rules to binary options

FINRA extended its options communications and margin rules to binary options Oct. 22, 2026, including contracts that pay out on an issuer's reported financial or operating metrics.

The amendments cover Rules 2220 (options communications), 2360 (options) and 4210 (margin requirements). FINRA said the changes are intended to make its existing investor-protection framework for listed options apply to binary options in a manner substantially comparable to other listed options.

For firms whose platforms carry these products, the listed-options supervisory framework now covers binary options, applying the same communications review under Rule 2220 and margin treatment under Rule 4210.

The notice covers binary metric options, defined as cash-settled contracts whose exercise settlement amount is established at creation and whose payout is based on the value of an issuer's reported financial or operating metrics. It also reaches binary options cleared by a registered clearing agency other than The Options Clearing Corporation.

Amended Rule 2360(a)(2) defines a binary option as a cash-settled contract whose exercise settlement amount is fixed at creation and is payable only if the settlement value of the underlying security, index or metric at expiration equals or exceeds the exercise price for a call. The amendments also include conforming updates to Rules 2351 and 2357, which cover trading in index warrants, currency index warrants and currency warrants.