The Securities and Exchange Commission (SEC) has received a proposal from BOX Exchange LLC to amend Rule 5055 to allow for cash settlement of certain customized FLEX Equity Options where the underlying security is an Exchange-Traded Fund (ETF). This amendment aims to broaden investment options and potentially shift some over-the-counter market trading onto the exchange. To ensure stability, the cash settlement will only apply to ETFs that meet specific liquidity criteria. The SEC has waived the typical 30-day waiting period for the rule to take effect, citing that similar proposals have already been approved for other exchanges.
Simple Explanation
Imagine a store where people buy and sell toys. Now, BOX Exchange LLC wants to make a new rule that would let people buy and sell special toy coupons using money instead of trading actual toys. This idea will only happen if the toys (called ETFs) are popular enough, like the top 50 favorite ones, to make sure everything goes smoothly.