SEC Director Signals Options Market Reforms, Touts Industry Growth

Jamie Selway, Director of the Division of Trading and Markets, outlined a series of recent regulatory changes in the U.S. options market and flagged priorities for further reform. 

At a speech before the Options Industry Conference, Mr. Selway touted the SEC's April 14 approval of FINRA's rescission of the Pattern Day Trading Rule, which many in the industry had long criticized as outdated (see prior coverage) and reported a reform of the Options Regulatory Fee set to take effect July 1. 

He also highlighted a recent SEC roundtable on options market structure, where staff presented data illustrating the market's explosive expansion — the number of unique options series has grown 719% since 2012, and zero-day-to-expiry options now account for 28% of volume. From those discussions, Mr. Selway said the Division identified emerging consensus around several potential improvements, including (i) better execution quality disclosure, (ii) curbing the proliferation of options strikes, and (iii) more consistent cross-market policies for breaking erroneous trades.

He also noted the SEC's recent approval of binary options on the Nasdaq-100, pointing to ongoing coordination with the CFTC on harmonizing rules for new products as a driver of future innovation.