Notice2021-21996
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Permit Monday and Wednesday Expirations for Options Listed Pursuant to the Short Term Option Series Program on the iShares Russell 2000 ETF (“IWM”)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 8, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 193 (Friday, October 8, 2021)</title>
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[Federal Register Volume 86, Number 193 (Friday, October 8, 2021)]
[Notices]
[Pages 56321-56325]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-21996]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93252; File No. SR-PEARL-2021-47]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Permit Monday
and Wednesday Expirations for Options Listed Pursuant to the Short Term
Option Series Program on the iShares Russell 2000 ETF (``IWM'')
October 4, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 1, 2021, MIAX PEARL, LLC (``MIAX Pearl'' or the
``Exchange'') filed with the
[[Page 56322]]
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Policy .02 (Short Term Option Series
Program) of Exchange Rule 404, Series of Option Contracts Open for
Trading, to permit Monday and Wednesday expirations for options listed
pursuant to the Short Term Option Series Program (``Program'') on the
iShares Russell 2000 ETF (``IWM'').
The text of the proposed rule change is available on the Exchange's
website at <a href="http://www.miaxoptions.com/rule-filings/pearl">http://www.miaxoptions.com/rule-filings/pearl</a> at MIAX
Pearl's principal office, and at the Commission's Public Reference
Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Policy .02 (Short Term Option Series
Program) of Exchange Rule 404, Series of Option Contracts Open for
Trading, to permit Monday and Wednesday expirations for options listed
pursuant to the Short Term Option Series Program (``Program'') on the
iShares Russell 2000 ETF (``IWM''). This is a competitive filing that
is based on a proposal recently submitted by Nasdaq Phlx LLC (``Phlx'')
and approved by the Securities and Exchange Commission
(``Commission'').\3\
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\3\ See Securities Exchange Act Release No. 93157 (September 28,
2021) (Approving SR-PHLX-2021-43).
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A Short Term Option Series is a series in an option class that is
approved for listing and trading on the Exchange in which the series is
opened for trading on any Monday, Tuesday, Wednesday, Thursday or
Friday that is a business day and that expires on the Monday, Wednesday
or Friday of the next business week, or, in the case of a series that
is listed on a Friday and expires on a Monday, is listed one business
week and one business day prior to that expiration.\4\ The Exchange is
proposing to amend Policy .02 of Exchange Rule 404 to permit the
listing of options series that expire on Mondays and Wednesdays in IWM.
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\4\ The term ``Short Term Option Series'' is a series in an
option class that is approved for listing and trading on the
Exchange in which the series is opened for trading on any Monday,
Tuesday, Wednesday, Thursday or Friday that is a business day and
that expires on the Monday, Wednesday or Friday of the next business
week, or, in the case of a series that is listed on a Friday and
expires on a Monday, is listed one business week and one business
day prior to that expiration. If a Tuesday, Wednesday, Thursday or
Friday is not a business day, the series may be opened (or shall
expire) on the first business day immediately prior to that Tuesday,
Wednesday, Thursday or Friday, respectively. For a series listed
pursuant to this section for Monday expiration, if a Monday is not a
business day, the series shall expire on the first business day
immediately following that Monday. See Exchange Rule 100.
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Monday Expirations
As proposed, with respect to Monday IWM Expirations within Policy
.02 of Rule 404, the Exchange may open for trading on any Friday or
Monday that is a business day series of options on IWM to expire on any
Monday of the month that is a business day and is not a Monday in which
Quarterly Options Series on the same class expire (``Monday IWM
Expirations''), provided that Monday IWM Expirations that are listed on
a Friday must be listed at least one business week and one business day
prior to the expiration. The Exchange may list up to five consecutive
Monday IWM Expirations at one time; the Exchange may have no more than
a total of five Monday IWM Expirations.
Wednesday Expirations
As proposed, with respect to Wednesday IWM Expirations within
Policy .02, the Exchange may open for trading on any Tuesday or
Wednesday that is a business day series of options on IWM to expire on
any Wednesday of the month that is a business day and is not a
Wednesday in which Quarterly Options Series on the same class expire
(``Wednesday IWM Expirations''). The Exchange may list up to five
consecutive Wednesday IWM Expirations at one time; the Exchange may
have no more than a total of five Wednesday IWM Expirations.
Monday and Wednesday Expirations
The interval between strike prices for the proposed Monday and
Wednesday IWM Expirations will be the same as those for the current
Short Term Option Series for Wednesday and Friday expirations
applicable to the Program.\5\ Specifically, the Monday and Wednesday
IWM Expirations will have a $0.50 strike interval minimum.\6\ As is the
case with other equity options series listed pursuant to the Program,
the Monday and Wednesday IWM Expirations series will be P.M.-settled.
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\5\ See Policy .02(e) of Exchange Rule 404.
\6\ Id.
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Pursuant to Policy .02 of Rule 404, with respect to the Program, if
Monday is not a business day the series shall expire on the first
business day immediately following that Monday. This procedure differs
from the expiration date of Wednesday expiration series that are
scheduled to expire on a holiday. Pursuant to Policy .02 of Rule 404, a
Wednesday expiration series shall expire on the first business day
immediately prior to that Wednesday, e.g., Tuesday of that week, if the
Wednesday is not a business day. For purposes of IWM, however, the
Exchange believes that it is preferable to require Monday expiration
series in this scenario to expire on the Tuesday of that week rather
than the previous business day, e.g., the previous Friday, since the
Tuesday is closer in time to the scheduled expiration date of the
series than the previous Friday, and therefore may be more
representative of anticipated market conditions. Monday SPY and QQQ
expirations \7\ are treated in this manner today. Cboe Exchange, Inc.
(``Cboe'') uses the same procedure for options on the S&P 500 index
(``SPX''), Mini-SPX Index Options (``XSP''), Russell 2000 Index
(``RUT'') and Mini-Russell 2000 Index Options (``MRUT'') and with
Monday expirations that are listed pursuant to its Nonstandard
Expirations Pilot Program and that are scheduled to expire on a
holiday.\8\ Also Nasdaq Phlx \9\ and Nasdaq ISE, LLC (``ISE'') \10\
also use the same procedure for options on the Nasdaq-100[supreg]
(``NDX'') with Monday expirations that are listed pursuant to its
Nonstandard Expirations Pilot Programs, respectively.
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\7\ See Policy .02 of Exchange Rule 404.
\8\ See Cboe Rule 4.13(e)(1).
\9\ See Phlx Options 4A, Section 12(b)(5).
\10\ See ISE Supplementary Material .07 to Options 4A, Section
12.
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Currently, for each option class eligible for participation in the
Program,
[[Page 56323]]
the Exchange is limited to opening thirty (30) series for each
expiration date for the specific class.\11\ The thirty (30) series
restriction does not include series that are open by other securities
exchanges under their respective short term options rules; the Exchange
may list these additional series that are listed by other
exchanges.\12\ This thirty (30) series restriction would apply to
Monday and Wednesday IWM Expiration series as well. In addition, the
Exchange will be able to list series that are listed by other
exchanges, assuming they file similar rules with the Commission to list
IWM options expiring on Mondays and Wednesdays.
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\11\ See Policy .02 of Exchange Rule 404.
\12\ See Exchange Rule 404A(b)(6).
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Finally, the Exchange is amending Policy .02(b) to Rule 404, which
addresses the listing of Short Term Option Series that expire in the
same week as monthly or quarterly options series. Currently, that rule
states that no Short Term Option Series may expire in the same week in
which monthly option series on the same class expire (with the
exception of Monday and Wednesday SPY and QQQ Expirations) or, in the
case of Quarterly Options Series, on an expiration that coincides with
an expiration of Quarterly Options Series on the same class.\13\ As
with Monday and Wednesday SPY and QQQ Expirations, the Exchange is
proposing to permit Monday and Wednesday IWM Expirations to expire in
the same week as monthly options series on the same class. The Exchange
believes that it is reasonable to extend this exemption to Monday and
Wednesday IWM Expirations because Monday and Wednesday IWM Expirations
and standard monthly options will not expire on the same trading day,
as standard monthly options expire on Fridays. Additionally, the
Exchange believes that not listing Monday and Wednesday IWM Expirations
for one week every month because there was a monthly IWM expiration on
the Friday of that week would create investor confusion.
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\13\ See Policy .02(b) of Exchange Rule 404.
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The Exchange does not believe that any market disruptions will be
encountered with the introduction of P.M.-settled Monday and Wednesday
IWM Expirations. The Exchange has the necessary capacity and
surveillance programs in place to support and properly monitor trading
in the proposed Monday and Wednesday IWM Expirations. The Exchange
currently trades P.M.-settled Short Term Option Series that expire
Monday and Wednesday for SPY and QQQ and has not experienced any market
disruptions nor issues with capacity. The Exchange currently has
surveillance programs in place to support and properly monitor trading
in Short Term Option Series that expire Monday and Wednesday for SPY
and QQQ.
Similar to SPY and QQQ, the introduction of Monday and Wednesday
IWM Expirations will, among other things, expand hedging tools
available to market participants and continue the reduction of the
premium cost of buying protection. The Exchange believes that Monday
and Wednesday IWM Expirations will allow market participants to
purchase IWM based on their timing as needed and allow them to tailor
their investment and hedging needs more effectively.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \14\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \15\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanisms of a free and open market and a national market
system and, in general, to protect investors and the public interest by
providing the investing public and other market participants more
flexibility to closely tailor their investment and hedging decisions in
IWM options, thus allowing them to better manage their risk exposure.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes the Program has been
successful to date and that Monday and Wednesday IWM Expirations should
simply expand the ability of investors to hedge risk against market
movements stemming from economic releases or market events that occur
throughout the month in the same way that the Program has expanded the
landscape of hedging. Similarly, the Exchange believes Monday and
Wednesday IWM Expirations should create greater trading and hedging
opportunities, as well as flexibility that will provide Members with
the ability to tailor their investment objectives more effectively.
The Exchange currently lists Monday and Wednesday SPY and QQQ
Expirations.\16\ Also, Cboe currently permits Monday and Wednesday
expirations for other options with a weekly expiration, such as options
on SPX, XSP, RUT, and MRUT pursuant to its Nonstandard Expirations
Pilot Program.\17\ Phlx \18\ and ISE \19\ currently permit Monday and
Wednesday expirations for other options with a weekly expiration on NDX
pursuant to their Nonstandard Expirations Pilot Programs.
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\16\ See Policy .02 of Exchange Rule 404.
\17\ Supra note 8.
\18\ Supra note 9.
\19\ Supra note 10.
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With the exception of Monday expiration series that are scheduled
to expire on a holiday, there are no material differences in the
treatment of Monday and Wednesday IWM Expirations for Short Term Option
Series. The Exchange believes that it is consistent with the Act to
treat Monday expiration series that expire on a holiday differently
than Wednesday or Friday expiration series, since the proposed
treatment for Monday expiration series will result in an expiration
date that is closer in time to the scheduled expiration date of the
series, and therefore may be more representative of anticipated market
conditions. Monday SPY and QQQ expirations are treated in this manner
today.\20\ Cboe \21\ uses the same procedure for SPX, XSP, RUT, and
MRUT options with Monday expirations that are scheduled to expire on a
holiday, as do Phlx \22\ and ISE \23\ for NDX options with Monday
expirations that are listed pursuant to their Nonstandard Expirations
Pilot Programs, respectively.
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\20\ See Policy .02(b) of Exchange Rule 404.
\21\ Supra note 8.
\22\ Supra note 9.
\23\ Supra note 10.
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Given the similarities between Monday and Wednesday SPY and QQQ
Expirations and the proposed Monday and Wednesday IWM Expirations, the
Exchange believes that applying the provisions in Policy .02(b) of Rule
404, which currently apply to Monday and Wednesday SPY and QQQ
Expirations, to Monday and Wednesday IWM Expirations is justified. For
example, the Exchange believes that allowing Monday and Wednesday IWM
Expirations and monthly IWM expirations in the same week will benefit
investors and minimize investor confusion by providing Monday and
Wednesday IWM Expirations in a continuous and uniform manner. The
Exchange also believes that it is appropriate to amend Policy .02(b) of
[[Page 56324]]
Rule 404 to clarify that no Short Term Option Series may expire on the
same day as an expiration of Quarterly Options Series on the same
class, same as SPY and QQQ.
The Exchange represents that it has an adequate surveillance
program in place to detect manipulative trading in Monday and Wednesday
expirations, including Monday and Wednesday IWM Expirations, in the
same way that it monitors trading in the current Short Term Option
Series and trading in Monday and Wednesday SPY and QQQ Expirations. The
Exchange also represents that it has the necessary systems capacity to
support the new options series. Finally, the Exchange does not believe
that any market disruptions will be encountered with the introduction
of Monday and Wednesday IWM Expirations.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. In this regard and as
indicated above, the Exchange notes that the rule change is being
proposed as a competitive response to a filing submitted by Phlx.\24\
The Exchange also notes that having Monday and Wednesday IWM
Expirations is not a novel proposal, as Monday and Wednesday SPY and
QQQ Expirations are currently listed on the Exchange.\25\ Cboe uses the
same procedure for SPX, XSP, RUT, and MRUT options with Monday
expirations that are listed pursuant to its Nonstandard Expirations
Pilot Program and that are scheduled to expire on a holiday,\26\ as do
Phlx \27\ and ISE \28\ for NDX options with Monday expirations that are
listed pursuant to their Nonstandard Expirations Pilot Programs,
respectively.
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\24\ Supra note 3.
\25\ Supra note 12.
\26\ Supra note 9.
\27\ Supra note 10.
\28\ Supra note 11.
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The Exchange does not believe the proposal will impose any burden
on intra-market competition, as all market participants will be treated
in the same manner under this proposal. Additionally, the Exchange does
not believe the proposal will impose any burden on inter-market
competition, as nothing prevents the other options exchanges from
proposing similar rules to list and trade Short-Term Option Series with
Monday and Wednesday expirations.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \29\ and Rule 19b-
4(f)(6) thereunder.\30\
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\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \31\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The
Commission notes that it recently approved Phlx's substantially similar
proposal to list and trade Monday IWM Expirations and Wednesday IWM
Expirations.\32\ The Exchange stated that waiver of the operative delay
is consistent with the protection of investors and the public interest
as it would encourage fair competition among exchanges by allowing MIAX
Pearl to compete effectively with Phlx by having the ability to list
and trade the same Monday and Wednesday IWM Expirations that Phlx is
able to list and trade. For these reasons, the Commission believes that
the proposed rule change presents no novel issues and that waiver of
the 30-day operative delay is consistent with the protection of
investors and the public interest, and will allow the Exchange to
remain competitive with other exchanges. Accordingly, the Commission
hereby waives the operative delay and designates the proposed rule
change operative upon filing.\33\
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\31\ 17 CFR 240.19b-4(f)(6)(iii).
\32\ See supra note 3.
\33\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#c7b5b2aba2eaa4a8aaaaa2a9b3b487b4a2a4e9a0a8b1"><span class="__cf_email__" data-cfemail="bccec9d0d991dfd3d1d1d9d2c8cffccfd9df92dbd3ca">[email protected]</span></a>. Please include
File Number SR-PEARL-2021-47 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-PEARL-2021-47. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official
[[Page 56325]]
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change. Persons submitting comments are cautioned that we do
not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
PEARL-2021-47 and should be submitted on or before October 29, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-21996 Filed 10-7-21; 8:45 am]
BILLING CODE 8011-01-P
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