Notice2023-28950
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Rules To Accommodate the Listing of Options Series That Would Expire at the Close of Business on the Last Business Day of a Calendar Month (“Monthly Options Series”)
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
January 4, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 3 (Thursday, January 4, 2024)</title>
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[Federal Register Volume 89, Number 3 (Thursday, January 4, 2024)]
[Notices]
[Pages 490-495]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-28950]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99252; File No. SR-MEMX-2023-37]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Rules To Accommodate the Listing of Options Series That
Would Expire at the Close of Business on the Last Business Day of a
Calendar Month (``Monthly Options Series'')
December 28, 2023.
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 December 20, 2023, MEMX LLC (``MEMX'' 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 Exchange filed the proposal as
a ``non-controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 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 is filing with the Commission a proposed rule change
to amend its Rules to accommodate the listing of options series that
would expire at the close of business on the last business day of a
calendar month (``Monthly Options Series''). The text of the proposed
rule change is provided in Exhibit 5.
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 491]]
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 its Rules to accommodate the listing
of options series that would expire at the close of business on the
last business day of a calendar month (``Monthly Options Series'').
Pursuant to proposed Rules 19.5, Interpretation and Policy .08(a) and
29.11(k)(1),\5\ the Exchange may list Monthly Options Series for up to
five currently listed option classes that are either index options or
options on exchange-traded funds (``ETFs'').\6\ In addition, the
Exchange may also list Monthly Options Series on any options classes
that are selected by other securities exchanges that employ a similar
program under their respective rules.\7\ The Exchange may list 12
expirations for Monthly Options Series. Monthly Options Series need not
be for consecutive months; however, the expiration date of a
nonconsecutive expiration may not be beyond what would be considered
the last expiration date if the maximum number of expirations were
listed consecutively.\8\ Other expirations in the same class are not
counted as part of the maximum numbers of Monthly Options Series
expirations for a class.\9\ Monthly Options Series will be P.M.-
settled.\10\
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\5\ The proposed rule change defines the term ``Monthly Options
series'' in Rule 29.2(k) (and re-letters current paragraphs (k)
through (o) to be (l) through (p)) as a series in an options class
that is approved for listing and trading on the Exchange in which
the series is opened for trading on any business day and that
expires at the close of business on the last business day of a
calendar month.
\6\ The Exchange proposes to amend Rule 19.5(a) and (b) to
provide that proposed Rule 19.5, Interpretation and Policy .08 will
describe how the Exchange will fix a specific expiration date and
exercise price for Monthly Options Series and will govern the
procedures for opening Monthly Options Series, respectively. The
proposed change to Rule 19.5(a) is consistent with language in
current Rule 19.5(a) for other Short Term Option Series and
Quarterly Options Series. The proposed rule change also makes a non-
substantive correction to pluralize the term ``policy'' (to become
``policies'') to be consistent with the terminology in the Rules.
Additionally, the proposed rule change adds to Rule 19.5(b) that
Interpretation and Policies .04 and .05 will govern the procedures
for opening Quarterly Options Series and Short Term Option Series,
respectively (as well as adding exception language to the beginning
of that paragraph). This is merely a clarification, as Rule 19.5,
Interpretations and Policies .04 and .05 clearly govern the opening
procedures for those options listing programs. This proposed change
is also consistent with Cboe Exchange, Inc. (``Cboe Options'') Rule
4.5(b), which has similar options listing programs.
\7\ The Securities and Exchange Commission (the ``Commission'')
recently approved a Cboe Options proposed rule change to adopt a
substantively identical Monthly Options Series program. See
Securities Exchange Act Release No. 98915 (November 13, 2023) (SR-
CBOE-2023-049) (``Cboe Options Approval Order'').
\8\ The Exchange notes this provision considers consecutive
monthly listings. In other words, as other expirations (such as
Quarterly Options Series) are not counted as part of the maximum,
those expirations would not be considered when considering when the
last expiration date would be if the maximum number were listed
consecutively. For example, if it is January 2024 and the Exchange
lists Quarterly Options Series in class ABC with expirations in
March, June, September, December, and the following March, the
Exchange could also list Monthly Options Series in class ABC with
expirations in January, February, April, May, July, August, October,
and November 2024 and January and February of 2025. This is because,
if Quarterly Options Series, for example, were counted, the Exchange
would otherwise never be able to list the maximum number of Monthly
Options Series. This is consistent with the listing provisions for
Quarterly Options Series, which permit calendar quarter expirations.
The need to list series with the same expiration in the current
calendar year and the following calendar year (whether Monthly or
Quarterly expiration) is to allow market participants to execute
one-year strategies pursuant to which they may roll their exposures
in the longer-dated options (e.g., January 2025) prior to the
expiration of the nearer-dated option (e.g., January 2024).
\9\ See proposed Rules 19.5, Interpretation and Policy .08(b)
and 29.11(k)(2).
\10\ See proposed Rules 19.5, Interpretation and Policy .08(c)
and 29.11(k)(3).
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The strike price of each Monthly Options Series will be fixed at a
price per share, with at least two, but no more than five, strike
prices above and at least two, but no more than five, strike prices
below the value of the underlying index or price of the underlying
security at about the time that a Monthly Options Series is opened for
trading on the Exchange. The Exchange will list strike prices for
Monthly Options Series that are reasonably related to the current price
of the underlying security or current index value of the underlying
index to which such series relates at about the time such series of
options is first opened for trading on the Exchange. The term
``reasonably related to the current price of the underlying security or
index value of the underlying index'' means that the exercise price is
within 30% of the current underlying security price or index value.\11\
Additional Monthly Options Series of the same class may be open for
trading on the Exchange when the Exchange deems it necessary to
maintain an orderly market, to meet customer demand, or when the market
price of the underlying security moves substantially from the initial
exercise price or prices. To the extent that any additional strike
prices are listed by the Exchange, such additional strike prices will
be within 30% above or below the closing price of the underlying index
or security on the preceding day. The Exchange may also open additional
strike prices of Monthly Options Series that are more than 30% above or
below the current price of the underlying security, provided that
demonstrated customer interest exists for such series, as expressed by
institutional, corporate, or individual customers or their brokers.
Market-Makers trading for their own account will not be considered when
determining customer interest under this provision. The opening of the
new Monthly Options Series will not affect the series of options of the
same class previously opened.\12\ The interval between strike prices on
Monthly Options Series will be the same as the interval for strike
prices for series in that same options class that expire in accordance
with the normal monthly expiration cycle.\13\
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\11\ See proposed Rules 19.5, Interpretation and Policy .08(d)
and 29.11(k)(4). The Exchange notes these proposed provisions are
consistent with the initial series provision for the Quarterly
Options Series program in Rule 29.11(g)(3). While different than the
initial strike listing provision for the Quarterly Options Series
program in current Rule 19.5, Interpretation and Policy .04(b), the
Exchange believes the proposed provision is appropriate, as it
contemplates classes that may have strike intervals of $5 or
greater. For consistency, the Exchange also proposes to amend Rule
19.5, Interpretation and Policy .04(b) to incorporate the same
provision for initial series.
\12\ See proposed Rules 19.5, Interpretation and Policy .08(e)
and 29.11(k)(5).
\13\ See proposed Rules 19.5, Interpretation and Policy .08(f)
and 29.11(k)(6); see also Rule 19.5(d), (f), (g) and Interpretations
and Policies .01-.03 and .06 (permissible strike prices for ETF
classes) and Rule 29.11(c) (permissible strike prices for index
options).
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By definition, Monthly Options Series can never expire in the same
week as a standard expiration series (which expire on the third Friday
of a month) in the same class expires. The same, however, is not the
case with regards to Short Term Option Series \14\ or Quarterly Options
Series. Therefore, to avoid any confusion in the marketplace, the
Exchange proposes to amend Rules 19.5, Interpretation and Policy .05
(introductory paragraph), (b), and (h) and 29.11(h) (introductory
paragraph) and (2) to provide the Exchange will not list a Short Term
Option Series in a class on a date on which a Monthly Options Series or
Quarterly Options
[[Page 492]]
Series expires.\15\ Similarly, proposed Rules 19.5, Interpretation and
Policy .08(b) and 29.11(k)(2) provide that no Monthly Options Series
may expire on a date that coincides with an expiration date of a
Quarterly Options Series in the same index or ETF class. In other
words, the Exchange will not list a Short Term Option Series on an
index or ETF if a Monthly Options Series on that index or ETF were to
expire on the same date, nor will the Exchange list a Monthly Options
Series on an ETF or index if a Quarterly Options Series on that index
or ETF were to expire on the same date to prevent the listing of series
with concurrent expirations.\16\
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\14\ The proposed rule change clarifies in Rule 29.11(a)(3) that
index options have expiration months and weeks, which expirations
may occur in consecutive weeks as specified in Rule 29.11(h). This
is merely a clarification, as Rule 29.11(h) currently permits weekly
expirations. This language is consistent with Cboe Options Rule
4.13(a)(2). Additionally, the proposed rule change adds to rule
29.11(a)(3) that index options may expire more than 12 months out as
specified elsewhere in the Rule. This is consistent with current
Rule 29.11(b), which permits long term index options to expire
between 12 and 180 months after issuance, as well as proposed Rule
29.11(k)(2), as discussed above.
\15\ The Exchange also proposes to make a non-substantive change
to Rules 19.5, Interpretation and Policy .05 and 29.11(h) to change
current references to ``monthly options series'' to ``standard
expiration options series'' (i.e., series that expire on the third
Friday of a month), to eliminate potential confusion. The current
references to ``monthly options series'' are intended to refer to
those series that expire on the third Friday of a month, which are
generally referred to in the industry as standard expirations. The
proposed rule change also adds a heading to Rule 19.5,
Interpretation and Policy .05 for consistency with other
Interpretations and Policies in that Rule.
\16\ The Exchange notes this would not prevent the Exchange from
listing a P.M.-settled Monthly Options Series on an index with the
same expiration date as an A.M.-settled Short Term Option Series on
the same index, both of which may expire on a Friday. In other
words, the Exchange may list a P.M-settled Monthly Options Series on
an index concurrent with an A.M.-settled Short Term Option Series on
that index and both of which expire on a Friday. The Exchange
believes this concurrent listing would provide investors with yet
another hedging mechanism and is reasonable given these series would
not be identical (unlike if they were both P.M-settled). This could
not occur with respect to ETFs, as all Short Term Option Series on
ETFs are P.M.-settled.
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With respect to Monthly Options Series added pursuant to proposed
Rules 19.5, Interpretation and Policy .08(a) through (f) and
29.11(k)(1) through (6), the Exchange will, on a monthly basis, review
series that are outside a range of five strikes above and five strikes
below the current price of the underlying index or security, and delist
series with no open interest in both the put and the call series having
a: (i) strike higher than the highest strike price with open interest
in the put and/or call series for a given expiration month; and (ii)
strike lower than the lowest strike price with open interest in the put
and/or call series for a given expiration month. Notwithstanding this
delisting policy, customer requests to add strikes and/or maintain
strikes in Monthly Options Series in series eligible for delisting will
be granted. In connection with this delisting policy, if the Exchange
identifies series for delisting, the Exchange will notify other options
exchanges with similar delisting policies regarding eligible series for
delisting and will work with such other exchanges to develop a uniform
list of series to be delisted, so as to ensure uniform series delisting
of multiply listed Monthly Options Series.\17\
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\17\ See proposed Rules 19.5, Interpretation and Policy .08(g)
and 22.11(k)(7).
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The Exchange believes that Monthly Options Series will provide
investors with another flexible and valuable tool to manage risk
exposure, minimize capital outlays, and be more responsive to the
timing of events affecting the securities that underlie option
contracts. The Exchange believes limiting Monthly Options Series to
five classes will ensure the addition of these new series will have a
negligible impact on the Exchange's and the Options Price Reporting
Authority's (``OPRA's'') quoting capacity. The Exchange represents it
has the necessary systems capacity to support new options series that
will result from the introduction of Monthly Options Series.
The Exchange notes that Rules 18.7 and 29.5 through 29.7 regarding
position limits will apply to Monthly Options Series. These Rules
provide that the position limits fixed by MEMX Options \18\ and Cboe
Options \19\ apply to options contracts traded on MEMX Options, which
would include Monthly Options Series.\20\ As noted above, Cboe Options
recently received Commission approval to adopt a substantively
identical Monthly Options Series Program as the one proposed in this
rule filing.\21\ Pursuant to those recently approved Cboe Options
rules, Monthly Options Series will be aggregated with positions in
options contracts on the same underlying security or index.\22\ This is
consistent with how position (and exercise) limits are currently
imposed on series with other expirations (Short Term Option Series and
Quarterly Options Series). Therefore, positions in options within a
class of index or ETF options, regardless of their expirations, would
continue to be subject to existing position (and exercise) limits. The
Exchange believes this will address potential manipulative schemes and
adverse market impacts surrounding the use of options.
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\18\ See MEMX Rule 18.7.
\19\ See MEMX Rule 29.5.
\20\ The Exchange issued Regulatory Notice 23-12 on September
14, 2023 which clarified its specific position limits applicable to
options on the Exchange are those calculated and disseminated by the
Options Clearing Corporation (``OCC''). See: <a href="https://info.memxtrading.com/wp-content/uploads/2023/09/RegNotice-23-12-Options-Position-Limits.pdf">https://info.memxtrading.com/wp-content/uploads/2023/09/RegNotice-23-12-Options-Position-Limits.pdf</a>.
\21\ See Cboe Options Approval Order.
\22\ See id.; see also Cboe Options Rules 8.30, Interpretation
and Policy .09 (regarding position limits for options on stocks and
ETFs), 8.31(e) (regarding position limits for broad-based index
options), 8.32(f) (regarding position limits for industry index
options), 8.33(c) (regarding position limits for micro and narrow-
based indexes), and 8.34(c) (regarding position limits for
individual stock or ETF based volatility index options). Pursuant to
Cboe Options Rule 8.42 (and Exchange Rules 18.9 and 29.9), exercise
limits for impacted index and ETF classes would be equal to the
applicable position limits.
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The Exchange also represents its current surveillance programs will
apply to Monthly Options Series and will properly monitor trading in
the proposed Monthly Options Series. The Exchange currently lists
Quarterly Options Series in certain ETF classes, which expire at the
close of business at the end of four calendar months (i.e., the end of
each calendar quarter), and has not experienced any market disruptions
nor issues with capacity. The Exchange's surveillance programs
currently in place to support and properly monitor trading in these
Quarterly Options Series, as well as Short Term Option Series and
standard expiration series, will apply to the proposed Monthly Options
Series. The Exchange believes its surveillances continue to be designed
to deter and detect violations of its Rules, including position and
exercise limits and possible manipulative behavior, and these
surveillances will apply to Monthly Options Series that the Exchange
determines to list for trading. Ultimately, the Exchange does not
believe the proposed rule change raises any unique regulatory concerns
because existing safeguards--such as position and exercise limits (and
the aggregation of options overlying the same index or ETF) and
reporting requirements--would continue to apply.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the Securities Exchange Act of 1934 (the ``Act'') and the rules
and regulations thereunder applicable to the Exchange and, in
particular, the requirements of Section 6(b) of the Act.\23\
Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \24\ requirements that the rules of
an exchange be 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 mechanism of a free and
[[Page 493]]
open market and a national market system, and, in general, to protect
investors and the public interest. Additionally, the Exchange believes
the proposed rule change is consistent with the Section 6(b)(5) \25\
requirement that the rules of an exchange not be designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
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\23\ 15 U.S.C. 78f(b).
\24\ 15 U.S.C. 78f(b)(5).
\25\ Id.
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In particular, the Exchange believes the introduction of Monthly
Options Series will remove impediments to and perfect the mechanism of
a free and open market and a national market system by expanding
hedging tools available to market participants. The Exchange believes
the proposed monthly expirations will allow market participants to
transact in the index and ETF options listed pursuant to the proposed
rule change based on their timing as needed and allow them to tailor
their investment and hedging needs more effectively. Further, the
Exchange believes the availability of Monthly Options Series would
protect investors and the public interest by providing investors with
more flexibility to closely tailor their investment and hedging
decisions in these options, thus allowing them to better manage their
risk exposure.
The Exchange believes the Quarterly Options Series Program has been
successful to date and the proposed Monthly Options Series program
simply expands the ability of investors to hedge risk against market
movements stemming from economic releases or market events that occur
at months' ends in the same way the Quarterly Options Series Program
has expanded the landscape of hedging for quarter-end news. Monthly
Options Series will also complement Short Term Option Series, which
allow investors to hedge risk against events that occur throughout a
month. The Exchange believes the availability of additional expirations
should create greater trading and hedging opportunities for investors,
as well as provide investors with the ability to tailor their
investment objectives more effectively.
The Exchange notes the proposed terms of Monthly Options Series,
including the limitation to five index and ETF option classes, are
substantively the same as the current terms of Quarterly Options
Series.\26\ Quarterly Options Series expire on the last business day of
a calendar quarter, which is the last business day of every third
month. The proposed Monthly Options Series would fill the gaps between
Quarterly Options Series expirations by permitting series to expire on
the last business day of every month, rather than every third month.
The proposed Monthly Options Series may be listed in accordance with
the same terms as Quarterly Options Series, including permissible
strikes.\27\ As is the case with Quarterly Options Series, no Short
Term Option Series may expire on the same day as a Monthly Options
Series. Similarly, as proposed, no Monthly Options Series may expire on
the same day as a Quarterly Options Series. The Exchange believes
preventing listing series with concurrent expirations in a class will
eliminate potential investor confusion and thus protect investors and
the public interest. Given that Quarterly Options Series the Exchange
currently lists are essentially Monthly Options Series that can expire
at the end of only certain calendar months, the Exchange believes it is
reasonable to list Monthly Options Series in accordance with the same
terms, as it will promote just and equitable principles of trade. The
Exchange believes limiting Monthly Options Series to five classes will
ensure the addition of these new series will have a negligible impact
on the Exchange's and OPRA's quoting capacity. The Exchange represents
it has the necessary systems capacity to support new options series
that will result from the introduction of Monthly Options Series.
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\26\ Compare proposed Rules 19.5, Interpretation and Policy .08
and 29.11(k) to Rules 19.5, Interpretation and Policy .04 and
29.11(g), respectively.
\27\ The Exchange notes the proposed maximum number of
expirations is consistent with the maximum number of expirations
permitted for end-of-month series in index classes. See Rule
29.11(j)(2) (which references Rule 29.11(a)(3), which permits up to
12 standard monthly expirations on the majority of index options
currently listed on the Exchange).
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The Exchange further believes the proposed rule change regarding
the treatment of Monthly Options Series with respect to determining
compliance with position and exercise limits is designed to prevent
fraudulent and manipulative acts and practices and promote just and
equitable principles of trade. Monthly Options Series will be
aggregated with options overlying the same ETF or index for purposes of
compliance with position (and exercise) limits, which is consistent
with how position (and exercise) limits are currently imposed on series
with other expirations (Short Term Option Series and Quarterly Options
Series).\28\ Therefore, options positions within ETF or index option
classes for which Monthly Options Series are listed, regardless of
their expirations, would continue to be subject to existing position
(and exercise) limits. The Exchange believes this will address
potential manipulative schemes and adverse market impacts surrounding
the use of options. The Exchange also represents its current
surveillance programs will apply to Monthly Options Series and will
properly monitor trading in the proposed Monthly Options Series. The
Exchange currently trades Quarterly Options Series in certain ETF
classes, which expire at the close of business at the end of four
calendar months (i.e., the end of each calendar quarter), and has not
experienced any market disruptions nor issues with capacity. The
Exchange's surveillance programs currently in place to support and
properly monitor trading in these Quarterly Options Series, as well as
Short Term Option Series and standard expiration series, will apply to
the proposed Monthly Options Series. The Exchange believes its
surveillances continue to be designed to deter and detect violations of
its Rules, including position and exercise limits and possible
manipulative behavior, and these surveillances will apply to Monthly
Options Series that the Exchange determines to list for trading.
Ultimately, the Exchange does not believe the proposed rule change
raises any unique regulatory concerns because existing safeguards--such
as position and exercise limits (and the aggregation of options
overlying the same ETF or index) and reporting requirements--would
continue to apply.
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\28\ See Cboe Options Approval Order; see also Cboe Options
Rules 8.30, Interpretation and Policy .09 (regarding position limits
for options on stocks and ETFs), 8.31(e) (regarding position limits
for broad-based index options), 8.32(f) (regarding position limits
for industry index options), 8.33(c) (regarding position limits for
micro narrow-based indexes), and 8.34(c) (regarding position limits
for individual stock or ETF based volatility index options).
Pursuant to Cboe Options Rule 8.42 (and Exchange Rules 18.9 and
29.9), exercise limits for impacted index and ETF classes would be
equal to the applicable position limits.
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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. The Exchange does not
believe the proposed rule change to list Monthly Options Series will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as any Monthly
Options Series the Exchange lists for trading will be available in the
same manner for all market participants
[[Page 494]]
who wish to trade such options. The Exchange notes the proposed terms
of Monthly Options Series, including the limitation to five index and
ETF option classes, are substantively the same as the current terms of
Quarterly Options Series.\29\ Quarterly Options Series expire on the
last business day of a calendar quarter, which is the last business day
of every third month, making the concept of Monthly Options Series in a
limited number of index and ETF options not novel. The proposed Monthly
Options Series will fill the gaps between Quarterly Options Series
expirations by permitting series to expire on the last business day of
every month, rather than every third month. The proposed Monthly
Options Series may be listed in accordance with the same terms as
Quarterly Options Series, including permissible strikes.\30\ Monthly
Options Series will trade on the Exchange in the same manner as other
options in the same class.
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\29\ See Rules 19.5, Interpretation and Policy .04 and 29.11(g).
\30\ See supra note 27.
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The Exchange does not believe the proposed rule change to list
Monthly Options Series will impose any burden on intermarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act, as nothing prevents other options exchanges from
proposing similar rules.\31\ As discussed above, the proposed rule
change would permit listing of Monthly Options Series in five index or
ETF options, as well as any other classes that other exchanges may list
under similar programs. To the extent that the availability of Monthly
Options Series makes the Exchange a more attractive marketplace to
market participants at other exchanges, market participants are free to
elect to become market participants on the Exchange.
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\31\ As noted above, at least one other options exchange
recently adopted a substantively identical Monthly Options Series
program. See Cboe Options Approval Order.
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The Exchange believes that the proposed rule change may relieve any
burden on, or otherwise promote, competition. Similar to Short Term
Option Series and Quarterly Options Series, the Exchange believes the
introduction of Monthly Options Series will not impose an undue burden
on competition. The Exchange believes that it will, among other things,
expand hedging tools available to market participants. The Exchange
believes Monthly Options Series will allow market participants to
purchase options based on their timing as needed and allow them to
tailor their investment and hedging needs more effectively.
The Exchange does not believe the proposed rule change regarding
aggregation of positions for purposes of determining compliance with
position (and exercise) limits will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act, because it will apply in the same manner to all
market participants. The Exchange proposes to apply position (and
exercise) limits to Monthly Options Series in the same manner it
applies position limits to series with other expirations (Short Term
Option Series and Quarterly Options Series). Therefore, positions in
options in a class of ETF or index options, regardless of their
expirations, would continue to be subject to existing position (and
exercise) limits. Additionally, the Exchange does not believe this
proposed rule change will impose any burden on intermarket competition
that is not necessary or appropriate in furtherance of the purposes of
the Act, because it will address potential manipulative schemes and
adverse market impacts surrounding the use of options.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
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 \32\ and Rule 19b-4(f)(6) thereunder.\33\
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 \34\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\35\
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\32\ 15 U.S.C. 78s(b)(3)(A)(iii).
\33\ 17 CFR 240.19b-4(f)(6).
\34\ 15 U.S.C. 78s(b)(3)(A)(iii).
\35\ 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.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \36\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \37\ 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 Exchange may list Monthly Options Series immediately, which
the Exchange believes will benefit investors by promoting competition
in Monthly Options Series. The Exchange notes that its proposal is
substantively identical to the proposal submitted by Cboe Exchange,
Inc. for its Monthly Options Series program.\38\ 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. Accordingly, the
Commission hereby waives the operative delay and designates the
proposed rule change operative upon filing.\39\
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\36\ 17 CFR 240.19b-4(f)(6).
\37\ 17 CFR 240.19b-4(f)(6)(iii).
\38\ See Cboe Monthly Approval Order, supra note 7.
\39\ 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#86f4f3eae3abe5e9ebebe3e8f2f5c6f5e3e5a8e1e9f0"><span class="__cf_email__" data-cfemail="abd9dec7ce86c8c4c6c6cec5dfd8ebd8cec885ccc4dd">[email protected]</span></a>. Please include
file number SR-MEMX-2023-37 on the subject line.
[[Page 495]]
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-MEMX-2023-37. 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="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-MEMX-2023-37 and should be
submitted on or before January 25, 2023.
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\40\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\40\
Christina Z. Milnor,
Assistant Secretary.
[FR Doc. 2023-28950 Filed 1-3-24; 8:45 am]
BILLING CODE 8011-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.