SEC Approval of Cboe Rule Change to Reduce Minimum Trading Increment for Options on Cboe Magnificent 10 Index
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The SEC has granted accelerated approval to Cboe Exchange to amend Rule 5.4. The minimum price increment for all series of options on the Cboe Magnificent 10 Index (MGTN options) will change from the standard increments to $0.01 for series trading below $3.00 and $0.05 for series trading at or above $3.00. This change is conditioned on Nasdaq-100 Micro Index (XND) options maintaining penny increments. The Exchange argues this will narrow bid-ask spreads, increase liquidity, provide more precise pricing, and allow MGTN options to better compete with penny-priced options on individual Magnificent 10 stocks and related ETFs such as QQQ.
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Key Changes
- Minimum increment for MGTN options changed to $0.01 for series trading below $3.00
- Minimum increment for MGTN options changed to $0.05 for series trading at or above $3.00
- Change is effective only as long as XND options maintain $0.01 increment
+ 3 more changes with Pro