Equity Retail Trade Transparency; SEC Updates; MX2 Options Launch

Equity Retail Trade Transparency; SEC Updates; MX2 Options Launch

Equities Exchange Highlights

Retail accounted for 43% of MEMX add volume year-to-date through September. In Q4, MEMX MEMOIR Depth and Top of Book market data feeds will include a retail identifier to all resting orders attested as retail upon entry. This transparency will help other participants interact with retail flow to further improve fill rates, while giving customers the option to opt out via order entry.

On September 14, the SEC approved an amendment to the Consolidated Tape Association (CTA) Plan that caps an exchange’s quote-based revenue allocation to five times its trade-based allocation. The change is designed to prevent exchanges with disproportionately high quoting and minimal trading activity from receiving an outsized share of consolidated market data revenue. The amendment addresses extreme cases, but the SEC and SIP Operating Committee continue to actively review the market data allocation formula as broader market-structure reforms develop.

On September 17, the SEC convened a roundtable to discuss preparations for expanded overnight equity exchange trading and market data coverage on December 6. An SEC Memorandum analyzed trading activity during the overnight trading session (8pm to 4am) based on data in August 2026:

• Low volume: Overnight trading remains relatively small, representing about 0.9% of share volume and 0.8% of dollar volume.
• Growing rapidly: Despite the small base, overnight volume has grown significantly, up 359% year over year in shares.
• Broad coverage: Overnight trading is not limited to a handful of securities: 4,208 stocks traded on an average day, 8,335 traded at least once during August, and 1,814 traded every trading day.
• More concentrated: Overnight liquidity is substantially more concentrated than during regular hours. The top 10 stocks accounted for 43.4% of overnight share volume versus 10.3% during regular hours.
• Different trading pattern: Overnight activity does not exhibit the familiar regular-session U-shaped volume curve (aka liquidity smile). Instead, it follows a “more subtle S-shape” with higher activity early and lighter activity toward the end. The SEC found 21.2% of overnight ATS share volume occurred between 8pm and 9pm. The SEC also noted that the pronounced spike in activity around 9pm is influenced by batch reporting effects. This raises an interesting issue around the proposed SIP maintenance window (8pm to 9pm), which overlaps with a meaningful amount of overnight ATS activity.
• Significant foreign participation: The SEC says foreign-account activity was “notably elevated” and represented a larger share of activity than in other trading sessions. CAT analysis in Q2 2026 showed that foreign accounts were 37% of share volume and 24% of dollar volume during overnight hours.
• ATS overnight activity: According to Rosenblatt Securities, overnight ATS average daily volume in August 2026 was 93.7 million on Blue Ocean, 12.6 million on Bruce, ~2.4 million on IBKR Eos, and ~1.5 million on MOON.

Options Exchange Highlights

MX2 Options

Customer priority, pro-rata trading on MX2 Options began on September 14. The symbol rollout was implemented in several tranches beginning with 10 symbols on September 14, then ramping to approximately 500 symbols per day with all symbols trading by September 30. 10 dedicated Lead Market Makers (LMMs) are providing continuous liquidity in over 3,600 option symbols. From September 14 through September 30, MX2 executed 446,956 trades in over 1.65 million contracts (single count) in 1,285 symbols, including over $871 million in notional traded. On September 30, MX2 market share was 0.43% of total and 0.76% of regular electronic trading.

In addition to dedicated LMM quoting, MX2 offers attractive customer rebates with no volume tier requirement. Customers removing liquidity receive a rebate of $0.48 per contract in Penny options and $0.92 per contract in Non-Penny options. These rates are comparable, or exceed, the top-tier rebates offered by many competing exchanges, which typically require customers to meet a volume threshold to qualify for their highest rates. 

Customers adding liquidity receive a rebate of $0.28 per contract in Penny options and $0.65 per contract in Non-Penny options — well above the $0.00 baseline offered by several competing exchanges and competitive with the maximum tiered rebates available elsewhere only after reaching significant volume levels.

MEMX Options

MEMX Options continues to see growth in volume and market share. Average daily contracts traded grew 21% year-over-year to 2.7 million. Market share improved to 4.3% of total and 8.1% of regular electronic in September. Strong quote performance has been a key contributor to growth.