NYSE Arca amends FLEX option rules to expand cash-settlement eligibility

On September 16 2026, NYSE Arca, Inc. filed a proposed rule change with the Securities and Exchange Commission under Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4. The filing, identified as Release No. 34-106523 and File No. SR-NYSEARCA-2026-99, seeks to amend Rule 5.32-O, which governs the terms of Flexible Exchange (FLEX) options, and is effective immediately upon filing.

The amendment would raise the eligibility thresholds for cash-settled FLEX Equity Options on exchange-traded funds (ETFs) to an average daily notional value of $600 million and an average daily volume of 5,616,000 shares, based on the prior one-month trading statistics. It also removes the existing provision that limits cash settlement to no more than 50 underlying ETFs and introduces tiered criteria to address ETFs that fall below the thresholds during the Exchange's bi-annual review on January 1 and July 1.

NYSE Arca explains that the heightened thresholds are intended to limit cash-settled FLEX ETF options to the most liquid and actively traded ETFs, thereby reducing the risk of price manipulation at settlement. The Exchange uses average daily notional value as a proxy for price-related manipulation risk and the share-volume metric to ensure continuous trading activity.

The proposed changes align with substantially identical amendments recently adopted by Cboe Exchange, Inc., Nasdaq ISE, LLC, and Nasdaq PHLX Exchange. The Commission is publishing this notice to solicit comments from interested persons on the proposed rule change.