Self-Regulatory Organizations; MEMX LLC; Notice of Filing of a Proposal To Adopt Rules for the Listing and Trading of Securities Event Contracts on the Exchange

SECURITIES AND EXCHANGE COMMISSION [Release No. 34-106182; File No. SR-MEMX-2026-25] Self-Regulatory Organizations; MEMX LLC; Notice of Filing of a Proposal To Adopt Rules for the Listing and Trading of Securities Event Contracts on the Exchange August 24, 2026. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on August 11, 2026, MEMX LLC (the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1  15 U.S.C. 78s(b)(1). 2  17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing with the Commission a proposed rule change to adopt new Chapter 30 of the Exchange Rules to provide for the listing and trading of securities event contracts on the Exchange's options platform (“MEMX Options”). The text of the proposed rule change is provided in Exhibit 5 and is available on the Exchange's website at https://info.memxtrading.com/regulation/rules-and-filings/. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Background Prediction markets recently have experienced significant growth and increasing customer interest as platforms for obtaining exposure to, and hedging risks associated with, objectively determinable events. These markets generally have developed on exchanges regulated by the Commodity Futures Trading Commission (“CFTC”) as designated contract markets and have offered event contracts referencing a broad range of political, economic, commercial, and other outcomes. At the same time, the Exchange believes that similar products would be valuable to investors in the securities markets by: (1) providing more tailored investment and hedging opportunities for both retail and institutional investors; and (2) creating valuable data that can then be used by investors in the pricing of the underlying securities or other derivatives such as standardized options. Against this backdrop, the Exchange's proposal responds to this growing market demand for event-based products by establishing a framework for the listing and trading of securities event contracts as standardized options on the Exchange. In doing so, the proposal would bring these securities products within the established regulatory infrastructure applicable to listed options, including exchange trading and surveillance, standardized disclosure, and centralized clearance and settlement through a registered clearing agency, as further described below. To implement this framework, the Exchange proposes to adopt new Chapter 30 of the Exchange Rules governing the listing and trading of securities event contracts on MEMX Options. Securities event contracts are cash-settled, European-style binary options that are based on the outcome of an event question related to the financial performance of an issuer of an NMS stock. A securities event contract provides a fixed payout if the condition specified in the contract terms occurs in the manner specified in the contract terms and expires without a payout if that condition does not occur. The proposed rules are intended to support securities event contracts based on objective, verifiable events relating to the financial performance of the issuer of an underlying security. Under the proposal, the Exchange would initially list securities event contracts based on an underlying financial metric, 3 such as whether an issuer announces earnings, revenues, sales, or another key financial metric that is equal to or exceeds a specified threshold. At the same time, the proposed framework preserves flexibility for the Exchange to propose additional securities event contract types in the future, including contracts based on other events affecting the issuer's financial performance that may not involve an underlying financial metric, subject to a separate proposed rule change. 3  For purposes of this filing and the Rules proposed herein, references to a “financial metric” include both financial and operating metrics relating to an issuer. Although certain metrics may be characterized as operating metrics, such metrics generally reflect, influence, or otherwise relate to the issuer's financial performance and are therefore included within the broader concept of a financial metric as used herein. Similarly, references to an issuer's “financial performance” include the issuer's operating performance because operating performance generally reflects, influences, or is otherwise associated with the issuer's financial performance. The proposal is designed to provide market participants with a more targeted means of obtaining exposure to, or hedging risks associated with, discrete issuer events that are material to the value of an underlying NMS stock. Existing listed options generally allow investors to express views or hedge risks based on movements in the market price of an underlying security or index. Certain investment or hedging views, however, may relate more directly to a particular issuer event or component of issuer performance—such as reported earnings, revenues, sales, or another objectively determinable financial metric or development affecting the issuer—than to the issuer's share price alone. Because the market price of an issuer's stock may be affected by numerous factors unrelated to a particular event, an investor may be correct about whether that event takes place but nevertheless receive an imperfect result from a trade based solely on the issuer's stock price. Securities event contracts are intended to address that gap by allowing investors to trade standardized options that reference an issuer event that is material to the value of an underlying security, rather than the security's market price itself, and whose exercise value is determined by whether a specified event condition relating to the underlying security is satisfied, rather than by the magnitude of a price movement in that security. Unlike traditional listed calls and puts, the value of a securities event contract at expiration would be determined solely by whether the option is in-the-money, rather than the degree to which the option is in-the-money. As a result, payout at expiration would be all-or-nothing, providing market participants with a defined outcome and a fixed payout. Securities event contracts also would provide market participants with a known amount at risk at the time the position is entered. Additionally, securities event contracts would be cleared through a registered clearing agency, which would serve as the central counterparty to each transaction and facilitate risk mitigation through established clearing, settlement, contract adjustment, and other standardized operational processes. The Exchange notes that Cboe Exchange, Inc. (“Cboe”) has filed a proposed rule change to permit the listing and trading of “binary KPI options,” which are binary options based on issuer-reported key performance indicators (“KPIs”). 4 Like the Cboe KPI Proposal, the Exchange's proposal is intended to permit market participants to obtain targeted exposure to specified issuer financial metrics through standardized, exchange-traded binary options that are resolved using objective issuer disclosures. The Exchange's proposal, however, establishes its own securities event contract framework and adopts different approaches in certain areas that the Exchange believes are more appropriately tailored to the characteristics of these products. Those differences are reflected in various aspects of the proposed Rule framework and are discussed in the relevant Rule-specific sections below. 4   See Securities Exchange Act Release No. 105877 (July 10, 2026), 91 FR 43418 (July 15, 2026) (SR-CBOE-2026-061) (Notice of Filing of a Proposed Rule Change to Amend its Rules to Permit the Listing of Binary Options Overlying Key Performance Indicators Reported by Certain Issuers of Stock) (the “Cboe KPI Proposal”). Proposed Rule 30.1—Application of Securities Event Contract Rules Proposed Rule 30.1 provides that Chapter 30 would apply only to securities event contracts traded on MEMX Options. The Exchange's Rules also would apply to securities event contracts unless those rules are specifically replaced or supplemented by Chapter 30 or the context otherwise requires. Accordingly, securities event contracts would trade within the Exchange's existing options regulatory framework, including applicable provisions governing access, trading conduct, surveillance, disciplinary authority, and other requirements designed to protect investors and the public interest. The Exchange believes this approach is appropriate because the Exchange's proposed securities event contracts are options, but like other existing options products, such as index options, they have features that require targeted product-specific rules. Chapter 30 therefore would supplement the Exchange's existing options rules with provisions addressing product definitions, contract terms, contract designation, expiration, exercise price selection, order entry, contract adjustment, resolution, and position limits, each as further described below. Where the specialized provisions in Chapter 30 address a subject differently from the Exchange's generally applicable options rules, the Chapter 30 provisions would control with respect to securities event contracts. Proposed Rule 30.2—Definitions Proposed Rule 30.2 would define the key terms used throughout Chapter 30, which are noted below. The term “binary option” would mean a European-style option contract having an exercise settlement amount that is fixed at the creation of the option. The term “Clearing Corporation” would mean the registered clearing agency designated by the Exchange to clear securities event contracts. 5 5  The definition of Clearing Corporation reflects that the Exchange may designate the Options Clearing Corporation (“OCC”) or another registered clearing agency to clear securities event contracts. References in Chapter 30 and in this filing to the Clearing Corporation therefore are intended to be clearing agency-neutral. The proposed definition does not alter the requirement that clearing and settlement occur through a registered clearing agency subject to the applicable provisions of the Act and the rules and oversight applicable to that clearing agency. The term “contract type” would mean one of the types of securities event contracts enumerated in Rule 30.4(b). The term “definitive resolution source(s)” would mean the source(s) of information used to determine the value of the underlying financial metric as specified in the contract terms. The term “event question” would mean a binary yes-or-no question the outcome of which determines whether a securities event contract is considered in-the-money at expiration. The term “expiration date” would mean the date on which the outcome of an event question is determined pursuant to Rule 30.5 and the Interpretations and Policies thereto. The term “exercise price” would mean, where applicable, the value of the underlying financial metric to which the settlement value is compared to determine whether a securities event contract is considered in-the-money at expiration. The term “exercise settlement amount” would mean the amount of cash that a holder will receive upon exercise of the contract. The term “no contract” would mean a securities event contract that is considered in-the-money at expiration if the condition specified in the contract terms does not occur in the manner specified in the contract terms. The term “securities event contract” would mean a binary option that is based on the outcome of an event question related to the financial performance of an issuer of an NMS stock. The term “settlement value” would mean the value of the underlying financial metric on the expiration date as determined by an Official  6 pursuant to Rule 30.9. 6  Proposed Rule 30.9(a) defines the term “Official” as an Officer of the Exchange or such other employee designee of the Exchange. The term “underlying financial metric” would mean the financial metric on which the event question is based as specified in the contract terms. The term “yes contract” would mean a securities event contract that is considered in-the-money at expiration if the condition specified in the contract terms occurs in the manner specified in the contract terms. Proposed Rule 30.3—Terms of Securities Event Contracts Proposed Rule 30.3 describes the terms by which securities event contracts listed and traded on the Exchange are designated. Each securities event contract would be designated by expiration date, underlying security, contract type, event question, and, if applicable, exercise price. The rule would also require the Exchange to make available both yes contracts and no contracts for each securities event contract. The yes contract and no contract for an event question represent complementary outcomes, where a yes contract would be in-the-money if the specified condition occurs in the manner stated in the contract terms, while the associated no contract would be in-the-money if that condition does not occur in that manner. Because the two contracts reference the same event question and other material terms, they are directly linked and together create a single market for the two possible outcomes of that event question. Proposed Interpretation and Policy .01 to Rule 30.3 would require the Exchange to publish the contract terms for securities event contracts in advance of listing and trading. Proposed Interpretation and Policy .02 to Rule 30.3 provides that, unless otherwise specified, each securities event contract would have an exercise settlement amount of $1, and also provides that securities event contracts would not have a contract multiplier. Although the rules permit the Exchange to specify a different exercise settlement amount where appropriate, the Exchange intends for $1 to serve as the standard exercise settlement amount for securities event contracts, as a $1 exercise settlement amount provides a simple and intuitive framework for pricing the complementary contracts associated with a particular event question, enabling market participants to readily understand the relationship between a contract's price and its potential payout. The Exchange believes these default terms would make the product's economics straightforward and promote consistency and transparency across securities event contracts by establishing a standardized payout amount and avoiding the additional complexity associated with contract multipliers. Proposed Rule 30.4—Designation of Securities Event Contracts Proposed Rule 30.4(a) would permit the Exchange from time to time to approve for listing and trading securities event contracts based on two categories of eligible underlying securities selected by the Exchange. First, pursuant to proposed Rule 30.4(a)(1), the Exchange may select the NMS stocks of no more than 25 issuers, each of which, at the time of initial selection, is ranked in the top 25 of NMS stocks by market capitalization, equities volume, or options volume. Second, pursuant to proposed Rule 30.4(a)(2), the Exchange may select the NMS stock of any issuer for which securities event contracts or similar options are listed and traded on another national securities exchange pursuant to rules approved by the Commission. Proposed Rule 30.4(a)(3) provides that an issuer selected pursuant to paragraph (a)(2) would not count toward the limitation in paragraph (a)(1). The Exchange would identify eligible underlying securities through a notice distributed to Members and posted on the Exchange's website. The objective eligibility criteria in proposed Rule 30.4(a)(1) confine the Exchange's initial selection authority to a limited universe of issuers that rank among the largest or most actively traded NMS stocks. Market capitalization, equities volume, and options volume are objective measures that reflect different, but relevant, aspects of public market interest and generally correlate with characteristics such as broad investor participation, significant liquidity, and robust public information and analyst coverage. A high market capitalization generally reflects issuer scale and broad investor ownership, while high equities or options volume reflects active participation, liquidity, and developed price discovery in markets related to the issuer. Allowing an issuer to qualify under any one of these criteria recognizes that issuer significance may be reflected in different ways and that market capitalization, equities volume, and options volume provide objective and relevant measures for identifying issuers that are most likely to be significant to market participants, while maintaining a bounded and transparent framework for issuer eligibility. The limitation to no more than 25 issuers selected under proposed Rule 30.4(a)(1) is intended to provide the Exchange with sufficient flexibility to offer contracts on a meaningful range of issuers while maintaining a limited and manageable initial universe as the Exchange and its Members gain experience with trading in this new product. The proposed rule provides for assessing eligibility only at the time of initial selection and does not require that an issuer remain in the applicable top-25 ranking after selection. The Exchange may later determine to increase the number of issuers on which securities event contracts may be listed and, if it decides to do so, will file such change with the Commission as a proposed rule change. Proposed Rule 30.4(b) provides that each securities event contract will specify the event question, the underlying financial metric, if applicable, and the definitive resolution source(s) that will be used to determine whether the event has or has not occurred. The rule would permit the Exchange to list four categories of contract types: Earnings Contracts, Revenue Contracts, Sales Contracts, and Other Key Financial Metric Contracts. Earnings Contracts would be based on whether an issuer announces earnings that are equal to or exceed a specified exercise price. Revenue Contracts would be based on whether an issuer announces revenues for the company, or a division, segment or product within the company, that are equal to or exceed a specified exercise price. Sales Contracts would be based on whether an issuer announces sales for the company, or a division, segment or product within the company, that are equal to or exceed a specified exercise price. Other Key Financial Metric Contracts would be based on whether an issuer announces a specified key financial metric other than earnings, revenues, or sales that is equal to or exceeds a specified exercise price, provided the metric is reported in the issuer's periodic reports filed with the Commission and is objectively determinable from those reports. Such metrics may include, for example, metrics relating to customers, users, subscribers, production, margins, cash flows, or other aspects of the issuer's financial performance. The proposed contract types encompass earnings, revenues, sales, and other key financial metrics that are objective, quantifiable measures of an issuer's financial performance. Other Key Financial Metric Contracts would be limited to metrics reported by the issuer in its periodic reports filed with the Commission and objectively determinable from those reports. This category is directed to “key” financial metrics—measures used to describe significant aspects of the issuer's financial condition, results of operations, or business performance. In light of the nature of those measures and the disclosure framework through which they are reported, eligible metrics will bear a meaningful relationship to the issuer's business and financial performance and will be material to the value of the underlying NMS stock. The requirement that an eligible metric be reported in an applicable Commission report provides a reasonable and objective basis for identifying measures that are significant to investors' evaluation of the issuer. The Commission's disclosure framework is designed to provide investors with information relevant to evaluating an issuer's financial condition, results of operations, business performance, and securities. Consistent with that framework, Commission requirements and guidance direct issuers to focus on material information and key variables relevant to understanding its financial condition, results of operations, and business performance, including financial metrics that management uses to manage or monitor the business. 7 7   See, e.g., Item 303(a) of Regulation S-K, 17 CFR 229.303(a) (stating that the objective of MD&A is to provide material information relevant to an assessment of financial condition and results of operations and that the discussion must address financial statements and other statistical data the registrant believes will enhance a reader's understanding); Rule 12b-20 under the Act, 17 CFR 240.12b-20 (requiring further material information necessary to make required statements, in light of the circumstances in which they are made, not misleading); Commission Guidance on Management's Discussion and Analysis of Financial Condition and Results of Operations, Securities Act Release No. 33-10751 and Exchange Act Release No. 34-88094 (Jan. 30, 2020), 85 FR 10568, 10569-70 (Feb. 25, 2020) (noting that companies should consider whether key variables management uses are material to investors and generally expecting disclosure of a metric to explain why it is useful to investors and how management uses it). Eligible metrics may include, for example, GAAP and non-GAAP financial measures, as well as operating measures relating to the issuer's business activities, products, customer base, production levels, or business segments. Because these metrics are publicly reported by the issuer in its Commission filings, they reflect information that is either required to be disclosed under the Commission's reporting framework or that the issuer has deemed sufficiently important to disclose to investors. Consequently, such metrics are commonly used by investors, analysts, and other market participants to evaluate issuer performance and the value of the underlying stock. Accordingly, this proposed category is limited to metrics that bear a meaningful relationship to the issuer's business, financial performance, and market valuation, and are therefore material to the value of the underlying NMS stock. The proposed categories would permit contracts on consolidated company results as well as divisions, segments, products, or other components of the issuer's business where the applicable metric is reported in the issuer's periodic filings, thereby permitting market participants to obtain targeted exposure to the particular aspect of the issuer's financial performance relevant to their investment or hedging view. Proposed Interpretation and Policy .01 to Rule 30.4 would require the contract terms for contracts listed pursuant to Rule 30.4(b) to identify the reporting period to which the underlying financial metric relates (for example, Q3 2027) and designate as the definitive resolution source the first periodic report (on Form 8-K, Form 10-Q or Form 10-K, as applicable) filed with the Commission that reports the applicable metric for that reporting period. This approach is intended to ensure that the contract terms identify with specificity both the financial period and the issuer disclosure that will resolve the event question and to anchor settlement to the issuer's initial public disclosure of the relevant metric through the Commission's reporting framework. The Exchange intends for Chapter 30 to provide a flexible framework that can support other securities event contracts relating to an underlying security if the Exchange later determines that there is customer demand for additional contract types. Such contracts could be based on objective events that are not underlying financial metrics and therefore may not require an exercise price because the yes/no event question itself would determine whether the contract is in-the-money at expiration. In any case, the event question would be resolved by reference to the definitive resolution source(s) specified in the contract terms, which is intended to ensure that each contract can be settled by applying objective, pre-published criteria to public, verifiable information. The proposal does not permit the Exchange to list such additional contract types under the currently proposed rule. If the Exchange later seeks to add an additional contract type, it would file a proposed rule change with the Commission. Proposed Rule 30.4(c) provides that securities event contracts listed and traded on the Exchange would constitute a separate class from other options overlying the same underlying NMS stock and constitute a separate class from other securities event contracts with different underlying financial metrics for the same issuer. Proposed Rule 30.5—Expiration Date Proposed Rule 30.5(a) would permit the Exchange, after approving a particular securities event contract class for listing and trading, to designate and open for trading series that expire from one day up to 12 months from the date they are listed. The Exchange believes it is appropriate to permit listing of securities event contracts that expire up to 12 months from the time they are listed to accommodate different issuer reporting periods (including semiannual reporting if the Commission approves recently proposed rules to permit such reporting), as well as to permit the Exchange to list expirations for consecutive calendar quarter periods or for one or more calendar quarters and an annual reporting period at the same time. Issuers disclose financial metrics in their periodic reports submitted to the Commission on periodic reporting cycles, and a 12-month outer limit would permit the Exchange to offer contracts corresponding to those cycles without providing the substantially longer-dated expirations available for certain traditional options. Proposed Rule 30.5(b) provides that securities event contracts based on an underlying financial metric would expire on the date the metric is first publicly announced in a definitive resolution source. That rule also provides that when listing a securities event contract, the Exchange would establish the expiration date by reference to the anticipated timing of the announcement of the relevant underlying financial metric, with the specific expiration date to be finalized when the issuer announces the date on which it will disclose the relevant metric for the applicable reporting period. This proposed rule would permit the Exchange to list series that expire on the date the issuer announces its financial results for the applicable reporting period (such as a calendar quarter). The expiration date for a securities event contract would be the date on which an issuer discloses the applicable financial metric in its financial results (for example, the date on which it issues an earnings results press release) for the specified reporting period, with the specific expiration date to be finalized when an issuer announces the date on which it will disclose its financial results for that reporting period. 8 8  For example, for a securities event contract series, the Exchange may designate the reporting period for a series to be the fourth quarter of 2026. The expiration date for that series would be the date on which the applicable issuer establishes as the date it will announce financial results for that quarter. The Exchange will issue a notice to Members when the specific expiration date for a securities event contract is finalized. While an expiration date for a securities event contract would be a specific date, as is the case for traditional options, the Exchange's proposed designation of expiration dates for securities event contracts would differ to reflect standard issuer disclosure practices. In some instances, an issuer might not establish the specific date on which it will announce its financial results for a reporting period until weeks prior to the release date. Consequently, unlike standard equity and index options that have an exact expiration date when series are first listed, a securities event contract would be listed for trading with a placeholder expiration date if the date the underlying financial metric will be released by the issuer is not publicly known. If a placeholder expiration date is required, it would be set as the first trading day that is three months following the date of the prior quarterly release date for a financial metric (for financial metrics announced quarterly) and six months following the date of the prior semiannual release date for a financial metric (for financial metrics announced semiannually, if the Commission approves proposed rules that would permit such reporting). Once the issuer announces the release date of the relevant financial metric, the expiration date would be updated as the finalized expiration date of the securities event contract. Ultimately, however, the expiration date for a securities event contract is an issuer's financial results release date (even if the exact date is not known in advance). Proposed Interpretation and Policy .01 to Rule 30.5 provides that the expiration date determines the last possible date for an event to occur before a securities event contract is resolved. That rule further provides that, notwithstanding the announced expiration date, if an event question can be resolved before that date pursuant to the contract terms, the contract will expire as of the date and time the contract can first be resolved pursuant to public announcement in a definitive resolution source. This provision is designed to align contract expiration with the availability of the information necessary to resolve the contract and to prevent trading from continuing after the event question has become objectively resolvable pursuant to the contract terms. The Exchange recognizes that information regarding an underlying financial metric may also become publicly available through a source other than the definitive resolution source before the announced expiration date. If there is such an unofficial disclosure of the metric before expiration, Interpretation and Policy .01 also provides that the Exchange may halt trading in the applicable series pursuant to Rule 20.3 (Trading Halts) while it evaluates the information. This authority is intended to address the unusual circumstance in which relevant information appears to have become publicly available through a source other than an official definitive resolution source. If the Exchange determines that the unofficial information is unreliable or insufficient to resolve the event question, trading may resume until the contract otherwise expires. Proposed Interpretation and Policy .02 to Rule 30.5 provides that the last day of trading for securities event contracts based on an underlying financial metric would be determined by reference to the time that the issuer discloses its financial results for the relevant reporting period. If the issuer discloses its financial results for the relevant reporting period after the close of trading, the last day of trading would be the day of expiration. If the issuer discloses its financial results for the relevant reporting period prior to the opening of trading, the last day of trading would be the trading day before expiration. This approach is designed to permit trading through the final regular trading session before the information necessary to resolve the event question becomes public, while preventing trading after market participants have access to that information. The Cboe KPI Proposal addresses the same timing issue by designating binary KPI options as A.M.-settled or P.M.-settled depending on whether the issuer discloses its financial results before the opening or after the close of regular trading hours. Although the practical timing of the final trading session under the Cboe KPI Proposal is generally aligned with the timing contemplated by the Exchange's proposal, the Exchange's proposal states the applicable timing convention directly rather than characterizing securities event contracts as A.M.-settled or P.M.-settled. In the traditional-options context, those designations ordinarily describe whether an option's settlement value is derived from the opening or closing price of an underlying security or index, whereas the proposed securities event contracts settle by reference to an issuer-reported financial metric. Accordingly, the Exchange's proposal ties the last trading day to the timing of the issuer's disclosure for the relevant reporting period, allowing the rule text to identify the operative event for determining the final trading session without requiring market participants to infer that result from a separate settlement classification. The Exchange believes this approach more directly describes the operation of securities event contracts and reduces the potential for investor confusion that may result from applying traditional A.M.- and P.M.-settlement terminology to contracts that do not settle based on opening or closing market prices. Proposed Interpretation and Policy .03 to Rule 30.5 provides that, if the applicable underlying financial metric is not reported or otherwise unavailable on the expiration date (and will not be reported), settlement would occur as specified in the contract terms. Requiring the published contract terms to address this unusual circumstance is designed to provide market participants with advance notice of the applicable alternative settlement procedure and avoid an ad hoc determination after trading has occurred. The precise procedure may vary depending on the metric and the requirements of the Clearing Corporation, but in all cases would be specified in the contract terms before the series is listed. Proposed Interpretation and Policy .03 to Rule 30.5 further provides that, if an applicable underlying financial metric is restated after the expiration date and settlement of a securities event contract, the settlement value would not change. In other words, the value of the applicable underlying financial metric as reported by the issuer on the applicable expiration date would be final, and the amount paid (or not paid) at settlement would not change, regardless of whether the issuer later restates the metric. The Exchange believes this finality is necessary to provide certainty to market participants and the Clearing Corporation and to avoid reopening settled contracts based on information that becomes available only after the contract has expired. Proposed Rule 30.6—Exercise Price Proposed Rule 30.6(a) provides that the Exchange may list securities event contracts with or without an exercise price, depending on the contract type. When an exercise price is required pursuant to the contract terms, the Exchange may list multiple contracts in the same class with exercise prices that correspond to an appropriate range of potential settlement values. For contracts that do not reference a specific exercise price, the Exchange would publish sufficient information in the contract terms such that market participants can understand when a particular contract offered will be in-the-money or out-of-the-money at expiration. Proposed Rule 30.6(b) provides that, for each securities event contract that has an exercise price, the exercise price would be fixed at an amount equal to a value of the underlying financial metric divided by a scaling factor. Because the value of certain financial metrics may be very large ( e.g., billions of dollars), the proposed scaling factor would permit the Exchange to express the corresponding exercise price in a manageable and readily understandable format. Scaling would change only how the metric threshold is displayed; it would not change the economic value represented by the exercise price or the comparison used to determine whether the contract is in-the-money. Proposed Rule 30.6(b)(1) would establish the applicable scaling factor based on the value of the underlying financial metric most recently reported by the issuer in a periodic report filed with the Commission as of the time the applicable class is listed, as follows: • If the most recently reported value is greater than or equal to one trillion, the exercise price would equal that value divided by one trillion. For example, an exercise price of 27.00 is equivalent to a value of the applicable underlying financial metric of 27,000,000,000,000.00. • If the most recently reported value is greater than or equal to one billion but less than one trillion, the exercise price would equal that value divided by one billion. For example, an exercise price of 112.00 is equivalent to a value of the applicable underlying financial metric of 112,000,000,000.00. • If the most recently reported value is greater than or equal to one million but less than one billion, the exercise price would equal that value divided by one million. For example, an exercise price of 900.00 is equivalent to a value of the applicable underlying financial metric of 900,000,000.00. • If the most recently reported value is greater than or equal to one thousand but less than one million, the exercise price would equal that value divided by one thousand. For example, an exercise price of 42.00 is equivalent to a value of the applicable underlying financial metric of 42,000.00. • If the most recently reported value is less than one thousand, the exercise price would equal that value and would not be divided by a scaling factor. For example, an exercise price of 774.00 is equivalent to a value of the applicable underlying financial metric of 774.00. The Exchange would apply a different scaling factor to newly listed securities event contract series for a new expiration only after the value of the underlying financial metric in the issuer's periodic reports filed with the Commission has a value in a different scaling tier for four consecutive reporting periods or if the Exchange deems it necessary in the interests of a fair and orderly market. Application of a different scaling factor would not affect the exercise prices of any series of the securities event contracts previously opened. For example, if the Exchange begins listing a new class of securities event contracts and the most recently disclosed value of the underlying financial metric for the issuer at the time of that listing was for the third quarter of 2026 and was $892,000, the exercise prices for that class of securities event contracts would be scaled by 1,000, and thus exercise prices of 895, 995, and 1005, would represent $895,000, $995,000, and 1,005,000, respectively. If the issuer discloses a metric value of $1,020,000 in its fourth quarter 2026 periodic report, the Exchange would continue to list exercise prices scaled by 1,000. If the issuer then discloses metric values of $1,112,000, $1,237,000, and $1,064,000 for the first, second, and third quarters, respectively, of 2027, the Exchange would begin scaling the exercise prices by 1,000,000 for the fourth quarter 2027 expirations (or for the first quarter 2028 expirations if the Exchange had already listed fourth quarter 2027 expirations prior to the disclosure of the third quarter 2027 metric value). The Exchange believes this approach would promote consistency in the presentation of exercise prices and avoid changing the scale based on a temporary movement across a tier boundary, while allowing the Exchange to update the scale to reflect sustained changes in the issuer's reported metric. The fair-and-orderly-market exception would permit the Exchange to make an earlier change if continued use of the existing scale became impractical, misleading, or otherwise inconsistent with orderly trading. The Exchange would announce in a notice to Members if the scaling factor applied to a securities event contract changes (for example, the metrics will be scaled in billions rather than in millions). Proposed Rule 30.6(b)(2) provides that the Exchange may list securities event contract series with exercise prices representing negative values of the underlying financial metric. It is possible for a financial metric to have a negative value, such as earnings per share where the issuer reports a loss per share. For these series, the exercise price would equal the absolute value of the underlying financial metric and would be scaled in the same manner as a positive value, as described above. For example, if an issuer's earnings per share in the last reporting period was −$3.58 (and thus was a loss per share), a securities event contract for such issuer with an exercise price of 3.58 would reflect an expected loss of $3.58 per share. The Exchange would incorporate into symbology for securities event contracts whether the value of the exercise price is positive or negative, including if the Exchange lists securities event contract series with both positive and negative exercise prices. Whether a symbol reflects a positive or negative value would be available on contract specifications for the specific securities event contract on the Exchange's public website. Proposed Interpretation and Policy .01 to Rule 30.6 provides that appropriate exercise prices for securities event contracts that have an exercise price may vary due to differences among issuers, contract types, and other factors. In determining which exercise prices to offer, the Exchange would consider information published by the issuer; market expectations that are relevant to the event question, such as information contained in research reports published by analysts covering the underlying security; the implied probabilities indicated by transactions in securities event contracts that have already been listed on a particular event question; and customer demand. The Exchange believes consideration of these factors is reasonably designed to support the listing of exercise prices that are responsive to market interest and within a range that is likely to be meaningful to market participants. The Exchange's exercise price selection framework differs from the approach in the Cboe KPI Proposal, which would adapt a strike-interval and listing-range framework developed from conventions applicable to traditional options and would anchor initial listings to a band around the issuer's most recently reported financial metric. The Exchange believes that framework is not well suited to securities event contracts. Traditional equity-option strike grids are generally designed around the price of a continuously traded underlying security. The current market price provides a near-current reference point, and the strike intervals reflect market experience and assumptions concerning expected movements and volatility in stock prices. An issuer's financial metric, by contrast, is reported periodically and generally is not continuously observable. The most recently reported metric may be several weeks or months old and may become increasingly stale as the next reporting date approaches. During that period, issuer guidance, analyst reports, industry data, market conditions, and other public information may cause prevailing expectations for the next value to differ materially from the prior reported value. A rigid listing range centered on the previous quarter's value therefore may omit exercise prices that reflect the market's current view and may concentrate listings around thresholds that are no longer economically meaningful. The assumptions embedded in traditional stock-price strike intervals also do not necessarily correspond to expected movements in issuer-reported metrics. Revenues may exhibit seasonality, margins may move within relatively narrow ranges, production values may change in discrete increments, subscriber measures may respond to product cycles, and cash flows may be comparatively irregular. The expected distribution and volatility of those values may differ substantially both from stock-price behavior and from one metric to another. The Exchange believes that importing a strike grid developed for a different product and reference interest could constrain the market before sufficient experience exists to determine appropriate listing conventions for securities event contracts. The Exchange therefore believes its principles-based, contract-specific methodology is more appropriately tailored to the unique characteristics of securities event contracts and provides a reasonable framework for establishing exercise prices that reflect the particular metric, event question, and reporting context of each contract. The proposed factors permit exercise prices to reflect information and market expectations relating to the particular metric and event question, customer demand, and actual trading experience from previously listed contracts on the same event question as such product develops. This flexibility is not unbounded, however, as the Exchange would remain obligated under the rule to list exercise prices that correspond to an appropriate range of potential settlement values and, in administering the rule, the Exchange would exercise its discretion in a manner consistent with the maintenance of fair and orderly markets. The Exchange believes this approach is more likely to produce economically useful contract series, promote meaningful price discovery, and respond to legitimate investor demand than a framework anchored primarily to a potentially stale historical value and strike conventions developed for traditional options. Proposed Rule 30.7—Entering Positions Proposed Rule 30.7 establishes the trading mechanics for entering positions in securities event contracts. Proposed Rule 30.7(a) provides that Users seeking to enter a position must enter a bid to purchase either a yes contract or a no contract, and that to successfully establish a position, that order must be paired with a contraside no contract or yes contract, respectively, that references the same underlying event question, expiration date, and exercise price. Proposed Rule 30.7(b) provides that acceptable bid prices for securities event contracts range from $0.01 and $0.99, subject to a minimum pricing increment of $0.01, and the Exchange would execute a transaction in a securities event contract when the combined bids for the paired yes contract and no contract sum to $1. Proposed Interpretation and Policy .01 to Rule 30.7 provides that the Exchange would not accept offers to sell securities event contracts. Instead, Users that wish to exit an established position in a yes contract or no contract would enter a bid to purchase the associated no contract or yes contract, respectively. Proposed Interpretation and Policy .02 to Rule 30.7 provides that securities event contracts must be paid in full when the User enters the position pursuant to the Rules of the Clearing Corporation. The Exchange believes the proposed long-only yes/no contract structure provides a transparent and efficient framework for trading complementary outcomes of a single event question. Because the paired bids for a yes contract and associated no contract must sum to the $1 exercise settlement amount, execution prices directly reflect the market's relative valuation of the two possible outcomes. For example, a User that purchases a yes contract at $0.60 would be paired with a User that purchases the associated no contract at $0.40. At expiration, one of the two contracts would receive the $1 exercise settlement amount and the other would not receive a payout. A holder seeking to offset the economic exposure (or close out) of an existing position would do so by purchasing the complementary contract rather than entering a sell order. As a result, trading is organized around a single event question and its two complementary outcomes rather than around separate categories of option contracts. This structure differs from the framework proposed for binary KPI options in the Cboe KPI Proposal, under which call and put contracts referencing the same event question may each be purchased or sold. The Exchange believes the yes/no structure is more directly tailored to the binary nature of securities event contracts because it presents the two possible outcomes of a single event question as complementary components of one market rather than as separate call and put markets. Securities event contracts are designed to answer a single question regarding whether a specified event condition is satisfied. The Exchange believes a corresponding yes contract and no contract more naturally reflect those two possible outcomes than a framework that applies trad