Notice2021-23924
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Exchange's Nonstandard Expirations Pilot Program
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
November 3, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 210 (Wednesday, November 3, 2021)</title>
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[Federal Register Volume 86, Number 210 (Wednesday, November 3, 2021)]
[Notices]
[Pages 60679-60681]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-23924]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93449; File No. SR-ISE-2021-23]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Extend the
Exchange's Nonstandard Expirations Pilot Program
October 28, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on October 20, 2021, Nasdaq ISE, LLC (``ISE'' or ``Exchange'')
filed with the 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 extend the pilot period for the Exchange's
nonstandard expirations pilot program, currently set to expire on
November 4, 2021.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/ise/rules">https://listingcenter.nasdaq.com/rulebook/ise/rules</a>, at the
principal office of the Exchange, 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.
[[Page 60680]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
ISE filed a rule change for the listing and trading on the
Exchange, on a twelve month pilot basis, of p.m.-settled options on
broad-based indexes with nonstandard expirations dates \3\
(``Program''). The Program permits both Weekly Expirations and End of
Month (``EOM'') expirations similar to those of the a.m.-settled broad-
based index options, except that the exercise settlement value of the
options subject to the pilot are based on the index value derived from
the closing prices of component stocks. This pilot was extended various
times with the last extension through November 4, 2021.\4\
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\3\ See Securities Exchange Act Release No. 82612 (February 1,
2018), 83 FR 5470 (February 7, 2018) (approving SR-ISE-2017-111)
(Order Approving a Proposed Rule Change To Establish a Nonstandard
Expirations Pilot Program).
\4\ See Securities Exchange Act Release Nos. 85030 (February 1,
2019), 84 FR 2633 (February 7, 2019) (SR-ISE-2019-01); 85672 (April
17, 2019), 84 FR 16899 (April 23, 2019) (SR-ISE-2019-11); 87380
(October 22, 2019), 84 FR 57786 (October 28, 2019) (SR-ISE-2019-28);
88681 (April 17, 2020), 85 FR 22775 (April 23, 2020) (SR-ISE-2020-
17); 90265 (October 23, 2020), 85 FR 68605 (October 29, 2020) (SR-
ISE-2020-34); and 91486 (April 6, 2021), 86 FR 19048 (April 12,
2021) (SR-ISE-2021-06).
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Supplementary Material .07(a) to Options 4A, Section 12 provides
that the Exchange may open for trading Weekly Expirations on any broad-
based index eligible for standard options trading to expire on any
Monday, Wednesday, or Friday (other than the third Friday-of-the-month
or days that coincide with an EOM expiration). Weekly Expirations are
subject to all provisions of Options 4A, Section 12 and are treated the
same as options on the same underlying index that expire on the third
Friday of the expiration month. Unlike the standard monthly options,
however, Weekly Expirations are p.m.-settled.
Pursuant to Supplementary Material .07(b) to Options 4A, Section 12
the Exchange may open for trading EOM expirations on any broad-based
index eligible for standard options trading to expire on the last
trading day of the month. EOM expirations are subject to all provisions
of Options 4A, Section 12 and treated the same as options on the same
underlying index that expire on the third Friday of the expiration
month. However, the EOM expirations are p.m.-settled.
The Exchange now proposes to amend Supplementary Material .07(c) to
Options 4A, Section 12 so that the duration of the Program for these
nonstandard expirations will be through May 4, 2022. The Exchange
continues to have sufficient systems capacity to handle p.m.-settled
options on broad-based indexes with nonstandard expirations dates and
has not encountered any issues or adverse market effects as a result of
listing them. Additionally, there is continued investor interest in
these products. The Exchange will continue to make public on its
website any data and analysis it submits to the Commission under the
Program.
The Exchange will be submitting a rule change to request that the
Program become permanent. In lieu of submitting any additional annual
reports, the Exchange would provide additional information requested by
the Commission in connection with the permanency rule change for this
Program. The Exchange would continue to provide the Commission with
ongoing data unless and until the Program is made permanent or
discontinued.
The Exchange believes that the proposed extension of the Program
will not have an adverse impact on capacity.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\5\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\6\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed rule change will protect
investors and the public interest by providing the Exchange, the
Commission and investors the benefit of additional time to analyze
nonstandard expiration options. In particular, the Exchange believes
that the Program has been successful to date. The Exchange has not
encountered any problems with the Program. By extending the Program,
investors may continue to benefit from a wider array of investment
opportunities. Additionally, both the Exchange and the Commission may
continue to monitor the potential for adverse market effects of p.m.-
settlement on the market, including the underlying cash equities
market, at the expiration of these options.
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 not necessary or appropriate in
furtherance of the purposes of the Act. Options with nonstandard
expirations would be available for trading to all market participants.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the 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 \7\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f)(6). In addition, Rule19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of 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 \9\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \10\ 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 asked the Commission to waive the 30-day operative delay so that it
may immediately extend the Program prior to the current expiration date
so that the pilot may continue uninterrupted. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest as it will allow the
Program to continue uninterrupted, thereby avoiding investor confusion
that could result from a temporary interruption in the Program.
Accordingly, the Commission hereby waives the operative delay and
[[Page 60681]]
designates the proposed rule change operative upon filing.\11\
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\9\ 17 CFR 240.19b-4(f)(6).
\10\ 17 CFR 240.19b-4(f)(6)(iii).
\11\ For purposes only of waiving the 30-day operative delay,
the Commission also has 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#acded9c0c981cfc3c1c1c9c2d8dfecdfc9cf82cbc3da"><span class="__cf_email__" data-cfemail="0371766f662e606c6e6e666d7770437066602d646c75">[email protected]</span></a>. Please include
File Number SR-ISE-2021-23 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-ISE-2021-23. 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 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-ISE-2021-23, and should be submitted on
or before November 24, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-23924 Filed 11-2-21; 8:45 am]
BILLING CODE 8011-01-P
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