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Notice2022-26442

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Definition of Short Term Option Series

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Published

December 6, 2022

Issuing agencies

Securities and Exchange Commission

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<title>Federal Register, Volume 87 Issue 233 (Tuesday, December 6, 2022)</title>
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[Federal Register Volume 87, Number 233 (Tuesday, December 6, 2022)]
[Notices]
[Pages 74685-74688]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-26442]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96412; File No. SR-NASDAQ-2022-066]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Definition of Short Term Option Series

November 30, 2022.
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 November 18, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' 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 amend certain rule text within General 2,
Organization and Administration. Additionally, the Exchange proposes to
amend The Nasdaq Options Market LLC (``NOM'') rules at Options 1,
General Provisions; Options 4A, Options Index Rules; and Options 10,
Doing Business with the Public.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules">https://listingcenter.nasdaq.com/rulebook/nasdaq/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.

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 the description of the term ``Short
Term Option Series'' within NOM Options 1, Section 1, Definitions, to
conform the term to Nasdaq ISE, LLC's (``ISE'') term of Short Term
Option Series which was recently amended.\3\ The Exchange also proposes
to amend certain rule text within NOM Options 4A, Section 12, Terms of
Index Options Contracts, related to the Short Term Option Series
Program. Finally, the Exchange propose certain other non-substantive
amendments. Each change is described below.
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\3\ See Securities Exchange Act Release No. 96281 (November 9,
2022), 87 FR 68769 (November 16, 2022) (SR-ISE-2022-18) (Order
Granting Approval of a Proposed Rule Change to Amend the Short Term
Option Series Program).
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Short Term Option Series
Options 1, Section 1(a)(57) describes the term ``Short Term Option
Series'' as follows:

The term ``Short Term Option Series'' means 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.

ISE's Options 4 rules were recently amended to expand the Short
Term Option Series program to permit the listing and trading of options
series with Tuesday and Thursday expirations for options on SPY and QQQ
listed pursuant to the Short Term Option Series Program.\4\ In
conjunction with that change, ISE amended its definition of Short Term
Option Series, within Options 1, Section 1(a)(49), to accommodate the
listing of options series that expire on Tuesdays and Thursdays.\5\
Specifically, the Exchange added Tuesday and Thursday to the permitted
expiration days, which currently include Monday, Wednesday, and Friday,
that it may open for trading.
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\4\ See note 3 above. NOM's Options 4 Rules are incorporated by
reference to ISE's Options 4 Rules.
\5\ See note 3 above.
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At this time, the Exchange proposes to amend the term ``Short Term
Option Series'' at Options 1, Section 1(a)(57) to provide,

The term ``Short Term Option Series'' means 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, Tuesday, Wednesday, Thursday, 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.

Today, NOM's listing rules permit the listing and trading of
options series with Tuesday and Thursday expirations for options on SPY
and QQQ listed

[[Page 74686]]

pursuant to the Short Term Option Series Program.\6\
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\6\ NOM's Options 4 Rules are incorporated by reference to ISE's
Options 4 Rules and therefore the approval of ISE's Options 4 rules
permit the listing and trading of options series with Tuesday and
Thursday expirations for options on SPY and QQQ on NOM.
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\7\ See Securities Exchange Act Release Nos. 72699 (July 29,
2014), 79 FR 45506 (August 5, 2014) (SR-NASDAQ-2014-074) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating
to Short Term Option Series).
\8\ Id.
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Today, Options 4A, Section 12(h)(1)(A) provides,

The Exchange may select up to thirty (30) currently listed
option classes on which Short Term Option Series may be opened on
any Short Term Option Opening Date. In addition to the 30 option
class restriction, the Exchange may also list Short Term Option
Series on any option classes that are selected by other securities
exchanges that employ a similar program under their respective
rules. For each index option class eligible for participation in the
Short Term Option Series Program, the Exchange may open up to 30
Short Term Option Series on index options for each expiration date
in that class. The Exchange may also open Short Term Option Series
that are opened by other securities exchanges in option classes
selected by such exchanges under their respective short term option
rules.

At this time, the Exchange proposes to amend Options 4A, Section
12(h)(1)(A) to increase the number of currently listed options classes
on which Short Term Option Series may be opened on any Short Term
Option Opening Date from thirty to fifty options classes for index
options. Additionally, the Exchange proposes to amend the number of
Short Term Option Series the Exchange may open on index options for
each expiration date in that class from twenty to thirty. These
amendments would align the limitations within Options 4A, Section
12(h)(1)(A) with those currently within Supplementary .03 to Options 4,
Section 5. The Exchange also proposes to add certain titles before
Options 4A, Section 12(h)(1)(A)-(E) to indicate the subject matter of
the paragraphs. Those non-substantive amendments are intended to bring
clarity to the rule text.
As noted above, this amendment will not result in a greater number
of listings in the Short Term Option Series Program because the amount
of options classes that may participate in the Short Term Option Series
Program is aggregated between equity options and index options and is
not apportioned between equity and index options. Amending Options 4A,
Section 12(h)(1)(A) to conform to the limitations provided within
Supplementary .03 to Options 4, Section 5 will avoid confusion by
making clear the aggregate limitations within equity and index options
for listing Short Term Option Series. Today, ISE, Nasdaq Phlx LLC
(``Phlx'') and Cboe Exchange, Inc. (``Cboe'') have similar limitations
within their equity and index Short Term Option Series Program.\9\
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\9\ See ISE and Phlx Options 4A, Section 12(b)(4) and Cboe
Exchange, Inc. Rules 4.5 and 4.13. See also Securities Exchange Act
Release No. 95077 (June 9, 2022), 87 FR 36188 (June 15, 2022)
(Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Amend Options 4A, Section 12, Terms of Index Options
Contracts).
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Other Non-Substantive Amendments
The Exchange proposes to make other amendments to reserve certain
sections of the Rulebook. These sections contain content in other
Nasdaq affiliated rulebooks. To harmonize the section numbers across
the Nasdaq affiliated markets, the Exchange proposes to reserve General
2, Sections 23 and 24 as well as Options 10, Sections 26 and 27. These
amendments are non-substantive.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\11\ 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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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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Short Term Option Series
The Exchange's proposal to amend the term ``Short Term Option
Series'' at Options 1, Section 1(a)(57) to reflect the recent change
\12\ to NOM's listing rules to permit the listing and trading of
options series with Tuesday and Thursday expirations for options on SPY
and QQQ listed pursuant to the Short Term Option Series Program is
consistent with the Exchange Act. This proposal will align the
description of Short Term Option Series within Options 1, Section
1(a)(57) to the expirations permitted within the Short Term Option
Series Program within Supplementary .03 to Options 4, Section 5.
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\12\ See note 3 above.
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Options 4A, Section 12
In 2014, NOM amended the Short Term Option Series Program for
equity options within Chapter IV, Section 6 (currently Options 4,
Section 5) to change the number of currently listed option classes on
which Short Term Option Series may be opened on any Short Term Option
Opening Date from thirty to fifty options classes.\13\ Further, NOM
also amended the number of Short Term Option Series that the Exchange
may open for each expiration date in that class from twenty to
thirty.\14\ At that time, the Exchange neglected to update the index
options rules to make similar changes to the Short Term Option Series
Program given that the amount of options classes that may participate
in the Short Term Option Series Program is aggregated between equity
options and index options and is not apportioned between equity and
index options. Amending Options 4A, Section 12(h)(1)(A) to conform to
the limitations provided within Supplementary .03 to Options 4, Section
5 will avoid confusion by making clear the aggregate limitations within
equity and index options for listing Short Term Option Series. Also,
aligning the limitations within Options 4A, Section 12(h)(1)(A) with
those currently within Supplementary .03 to Options 4, Section 5 will
not result in a greater number of listings in the Short Term Option
Series Program because the amount of options classes that may
participate in the Short Term Option Series Program is aggregated
between equity options and index options and is not apportioned between
equity and index options. Today, ISE, Phlx and Cboe have similar
limitations within their equity and

[[Page 74687]]

index Short Term Option Series Program.\15\
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\13\ See note 6 above.
\14\ See note 6 above.
\15\ See note 8 above.
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Other Non-Substantive Amendments
The Exchange's proposal to make other amendments to reserve certain
sections of the Rulebook, namely General 2, Sections 23 and 24 as well
as Options 10, Sections 26 and 27, to harmonize section numbers across
the Nasdaq affiliated markets are non-substantive.

B. Self-Regulatory Organization's Statement on Burden on Competition

The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
Short Term Option Series
The Exchange's proposal to amend the term ``Short Term Option
Series'' at Options 1, Section 1(a)(57) to reflect the recent change
\16\ to NOM's listing rules to permit the listing and trading of
options series with Tuesday and Thursday expirations for options on SPY
and QQQ listed pursuant to the Short Term Option Series Program does
not impose an undue burden on competition, rather this proposal will
align the description of Short Term Option Series within Options 1,
Section 1(a)(57) to the expirations permitted within the Short Term
Option Series Program within Supplementary .03 to Options 4, Section 5.
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\16\ See note 3 above.
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Options 4A, Section 12
Amending Options 4A, Section 12(h)(1)(A) to conform to the
limitations provided within Supplementary .03 to Options 4, Section 5
will avoid confusion by making clear the aggregate limitations within
equity and index options for listing Short Term Option Series. Also,
aligning the limitations within Options 4A, Section 12(h)(1)(A) with
those currently within Supplementary .03 to Options 4, Section 5 will
not result in a greater number of listings in the Short Term Option
Series Program because the amount of options classes that may
participate in the Short Term Option Series Program is aggregated
between equity options and index options and is not apportioned between
equity and index options. Today, ISE, Phlx and Cboe has similar
limitations within its equity and index Short Term Option Series
Program.\17\
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\17\ See note 8 above.
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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

The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\
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)(iii) of the Act \20\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\21\ The Exchange has stated that the Options 4
listing rules were recently amended to expand the Short Term Option
Series program to permit the listing and trading of options series with
Tuesday and Thursday expirations for options on SPY and QQQ listed
pursuant to the Short Term Option Series Program,\22\ and that waiver
of the 30-day operative delay will allow the Exchange to conform the
definition of a Short Term Option Series to the Options 4 listing
rules. The Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest because the proposed rule change does not raise any new or
novel issues. Accordingly, the Commission hereby waives the operative
delay and designates the proposed rule change operative upon
filing.\23\
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\18\ 15 U.S.C. 78s(b)(3)(A)(iii).
\19\ 17 CFR 240.19b-4(f)(6).
\20\ 15 U.S.C. 78s(b)(3)(A)(iii).
\21\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-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.
\22\ See supra note 4.
\23\ 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 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#453730292068262a2828202b3136053620266b222a33"><span class="__cf_email__" data-cfemail="a4d6d1c8c189c7cbc9c9c1cad0d7e4d7c1c78ac3cbd2">[email&#160;protected]</span></a>. Please include
File Number SR-NASDAQ-2022-066 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-NASDAQ-2022-066. 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

[[Page 74688]]

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-NASDAQ-2022-066, and should be submitted
on or before December 27, 2022.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-26442 Filed 12-5-22; 8:45 am]
BILLING CODE 8011-01-P

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