ASX participants, vendors and users are advised of proposed changes to Equity Options transacted on ASX Trade. The proposals cover additions to the ETO Trade Cancellation policy as well as ASX’s policy for setting Special Size (Block) levels.

The following proposals have come from market feedback in conjunction with internal analysis conducted by ASX.

This market notice is to allow ALL market users the opportunity to share their views on the proposals for ASX to consider before making any final decision regarding implementation. ASX requests that users please respond in writing to the proposals by Friday 21 November 2025.

ETO Trade Cancellation:

ASX is proposing to introduce two new additions to the ETO Trade Cancellation policy. The new additions aim to address issues that have been raised by market participants which have arisen in certain market conditions. Outside the situations described below, the current ETO cancellation policy will continue to apply.

1)      If the underlying of a given option contract is not available for trading (E.g. after the cash market post close session), then the following ETR levels will be set around an option Fair Value (FV):

·         If the delta hedge of the trade is less than special size (as denoted by ASIC’s MIR), ASX will use a spread of the greater of:

a.       the MM requirements (current range), or

b.       1% of the underlying share value

·         If the delta hedge of the given option trade meets special size, ASX will use a spread of the greater of:

a.       the MM requirements (current range) x 2, or

b.       2% of the underlying share value

Note: For the avoidance of doubt, ASX has determined that during the Opening and Closing auction periods, the underlying is considered available for trading (for the purposes of hedging). As such, the above calculation does not apply during auction periods.

2)      ETR range on ratio TMCs:

·         The premium to be used will be the higher of:

a.       the Net Traded amount for either the combo, or

b.       the individual leg value (calculated including the TMC ratio amount).

·         The ETO Class Schedule to be applied to calculate the range around Fair Value (FV) will be >Spot+7.

The aim of the above two mentioned proposals is to increase the Extreme Trading Range (ETR) in situations whereby ASX believes the current policy results in ranges that are too narrow.

Special Size (Block) Trade reporting of ETOs:

In April 2014, ASX introduced the current policy around how Special Size (Block) levels were set for Equity ETO Classes. The current policy has two ways that a trade can meet the Special Size thresholds, namely:

1.       By premium value (set by ASICs MIR on the underlying), or

2.       By number of contracts (15 times the minimum Market Maker quote size subject to a minimum $50k premium).

When ASX originally set the number of contracts required, six ETO Classes were capped to a set number of contracts - linked at the time to a $5 million notional value.

Market conditions have changed significantly over the last 10 years, overall market value has increased by approximately 65%, and there are two fewer market makers providing liquidity for Equity Options. ASX has received feedback from institutional users that a notional cap should be introduced for the calculation of Special Size (Block) transactions as current levels are too high for some ETO Classes.

To reflect the changes in market conditions over the past 10 years and considering market feedback from institutional users, ASX proposes to set the following notional value caps when determining the number of contracts required for an Equity option:

-       Top 20 ETO Classes: Notional cap of $7.5 million

-       20+ ETO Classes: Notional cap of $5 million

Based on current market conditions, this would result in the following changes being made:

ASX determines the Top 20 ETO Classes each year by ranking each ETO Class on adjusted volume from the previous year.

If the proposed changes proceed, ASX will review and adjust the Special Size (Block) levels of ETO classes on a semi-annual basis to adhere to the notional caps.

As part of its analysis of Special Size (Block) levels, ASX considered the current level set for XJO index options. Special Size (Block) requirements for XJO options align with the notional value of the SPI future. ASX is aware that the market share of XJO option Special Size (Block) transactions has been declining over the past few years, potentially due to the increase in notional required as markets trended upwards.

ASX will be releasing a separate consultation paper on equity futures in the next month whereby the Block size level for SPI futures will be covered. At this stage, there is no proposal to change the current Special Size (Block) level for XJO options.

You can view the recent market share of Special Size (Block) Crossings accross index and single stock options here. 

What do I need to do by when?

ETO users should review the above proposals and send feedback / commentary via email to options@asx.com.au by Friday 21 November 2025.

If you would like to discuss the above proposals in further detail, please contact Gregory Pill to arrange a suitable time.

Need more information?

Issued by

Gregory Pill – Head of Equity Derivative Products & Multi Asset Market Making

Contact information

Gregory Pill
+61 (02)  9227 0696
greg.pill@asx.com.au

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