Notice2024-12592
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend Rule 903
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
June 10, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 112 (Monday, June 10, 2024)</title>
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[Federal Register Volume 89, Number 112 (Monday, June 10, 2024)]
[Notices]
[Pages 48925-48937]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-12592]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100272; File No. SR-NYSEAMER-2024-34]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Amend Rule 903
June 4, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on May 30, 2024, NYSE American LLC (``NYSE American'' 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 self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 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 Rule 903 (Series of Options Open For
Trading) and to make certain conforming changes. The proposed rule
change is available on the Exchange's website at <a href="http://www.nyse.com">www.nyse.com</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 self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to amend Rule 903 (Series of Options
Open For Trading) to adopt a Monthly Options Series Program; to adopt a
Low-Priced Strike Priced Interval Program; to permit the listing and
trading of five additional classes with Short Term Option Daily
Expirations; to permit Tuesday and Thursday expirations for certain
classes with Short Term Option Daily Expirations; and to permit the
listing of two Wednesday expirations for options on certain ETPs. Each
of the proposed changes would align Exchange rules with already-
approved and implemented rules in place on at least one other options
exchange as noted herein.
Monthly Options Series Program
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'').
This is a competitive filing that is based on a proposal recently
submitted Cboe Exchange, Inc (``CBOE'').\4\
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\4\ See Securities Exchange Act Release No. 98915 (Nov. 13,
2023) 88 FR 81495 (November 17, 2023 (SR-CBOE-2023-049) (Order
Approving a Proposed Rule Change To Adopt Monthly Options Series).
See also Cboe Rules 4.5, 4.11, 8.31, and 8.32.
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Pursuant to proposed Commentary .11 to Rule 903 and Rule
903C(a)(v), 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'').\5\ 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.\6\ The Exchange
[[Page 48926]]
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.\7\ Other expirations in the same
class are not counted as part of the maximum numbers of Monthly Options
Series expirations for a class.\8\ Monthly Options Series will be P.M.-
settled.\9\
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\5\ The Exchange proposes to amend Rule 903(h) to provide that
new Commentary .11 to Rule 903 (which has been in Reserve) will
describe how the Exchange will fix a specific expiration date and
exercise price for Monthly Options Series and that proposed
Commentary .11 to Rule 903 will govern the procedures for opening
Monthly Options Series, respectively. This is consistent with
language in current Rule 903 for other Short Term Options Series and
Quarterly Options Series. Consistent with this proposal, the
Exchange proposes to adopt a definition of Monthly options Series.
See proposed Rule 1.1.
\6\ The Exchange's proposal is based on CBOE's approved rule
change, see supra note 4. The Exchange notes that other options
exchanges have since adopted similar programs. See, e.g., Securities
Exchange Act Release No. 98973 (November 16, 2023) 88 FR 81495
(November 22, 2023) (SR-MIAX-2023-44) (immediately effective filing
to accommodate the listing of Monthly Options Series).
\7\ 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 not 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).
\8\ See proposed Commentary .11(b) to Rule 903 and proposed Rule
903C(a)(v)(2).
\9\ See proposed Commentary .11(c) to Rule 903 and proposed Rule
903C(a)(v)(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.\10\
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 ATP Holder demand,\11\ 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 ATP Holder interest exists for such series,
as expressed by institutional, corporate, ATP Holder or their brokers.
Market Makers trading for their own account will not be considered when
determining ATP Holder 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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\10\ See proposed Commentaries .11(d) to Rule 903 and proposed
Rule 903C(a)(v)(4). The Exchange notes these proposed provisions are
consistent with the initial series provision for the Quarterly
Options Series program in Rule 903C(iv)(4). While different than the
initial strike listing provision for the Quarterly Options Series
program (set forth in Commentary .09(c) to Rule 903), 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 Commentary .09(c)
to Rule 903 to incorporate the same provision for initial series.
The Exchange proposes a technical change to re-number the sub-
paragraphs of Commentary .0(f) into separate paragraphs, which
technical change would add clarity, transparency and internal
consistent to Exchange rules. See proposed Commentary .09(f)-(h).
\11\ An ``ATP'' is an Options Trading Permit issued by the
Exchange for effecting approved securities transactions on the
Exchange. See Rule 900.2NY. An ``ATP Holder'' refers to a natural
person, in good standing who has been issued an ATP and is a
registered broker or dealer pursuant to Section 15 of the Securities
Exchange Act of 1934. Id.
\12\ See proposed Commentary .11(e) to Rule 903.
\13\ See proposed Commentary .11(f) to Rule 903; see also
Commentaries .05 and .06 to Rule 903 (permissible strike prices for
ETF classes); and Commentary .05(a). and .13 (regarding ``$0.50 and
$1 Strike Price Intervals for Options Used to Calculate Volatility
Indexes'') to Rule 903. See also Commentary.04 to Rule 903C
(permissible strike prices index options). The Exchange notes that
there are two Commentaries .13 to Rule 903 and, to correct this
duplicate and avoid confusion, the Exchange proposes to re-locate
the text of Commentary .13 that relate to ``$0.50 and $1 Strike
Price Intervals for Options Used to Calculate Volatility Indexes''
to Commentary .08, which is currently held as Reserved. See proposed
Commentary .08. The Exchange notes that this proposed change is non-
substantive and would add clarity and transparency to Exchange
rules.
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By definition, Monthly Options Series can never expire in the same
week that a standard options series that expires on the third Friday of
a month in the same class expires. The same, however, is not the case
with respect to Short Term Options Series or Quarterly Options Series.
Therefore, to avoid any confusion in the marketplace, the Exchange
proposes to amend Rule 903(h) to provide that the Exchange will not
list a Short Term Options Series in a class on a date on which a
Monthly Options Series or Quarterly Options Series expires.\14\
Similarly, proposed Commentary .11 to Rule 903 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 Terms Options 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 index or ETF if a Quarterly Options Series on that
ETF were to expire on the same date to prevent the listing of series
with concurrent expirations.\15\
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\14\ See proposed Rule 903(h). The Exchange also proposes to
make a non-substantive change throughout Rule 903(h) and Commentary
.10(f) thereto 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.
\15\ 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 Options Series on
the same index, both of which may 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 Options Series on
ETFs are P.M.-settled.
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With respect to Monthly Options Series added pursuant to proposed
Commentary .11(a)-(f) to Rule 903, 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 strike: (i) higher than the highest strike
price with open interest in the put and/or call series for a given
expiration month; and (ii) lower than the lowest strike price with open
interest in the put and/or call series for a given expiration month.
[[Page 48927]]
Notwithstanding this delisting policy, ATP Holders 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, to ensure uniform series delisting of multiply listed Monthly
Options Series.\16\
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\16\ See proposed Commentary .11(g) to Rule 903. Pursuant to
Rule 905, exercise limits for impacted index and ETF classes would
be equal to the applicable position limits.
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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 options
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 Options Price Reporting Authority (``OPRA'')
and the Exchange'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 also proposes to amend Rules 904C(b) and (c) to
provide that positions in Monthly Options Series will be aggregated
with positions in options contracts on the same underlying security or
index.\17\ This is consistent with how position (and exercise) limits
are currently imposed on series with other expirations (Short Term
Options Series and Quarterly Options Series). Therefore, positions in
options within 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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\17\ See proposed Rules 904C(b) (regarding position limits for
broad-based index options) and 904C(c) (regarding position limits
for industry index options). Consistent with the adoption of Monthly
Options series for equity and index options, the Exchange proposes
to adopt the definition of ``Monthly Option Series'' as relates to
index options in proposed Rule 900C(b)(29).
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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,\18\ 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 Options 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.
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\18\ The Exchange notes it currently lists quarterly expirations
on certain ETF options pursuant to Rule 903 Commentary .09.
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Low-Priced Stock Interval Program
Miami International Securities Exchange, LLC (``MIAX'') recently
received approval to amend its Rule 404 to implement a new strike
interval program for stocks that are priced less than $2.50 and have an
average daily trading volume of at least 1,000,000 shares per day for
the 3 preceding calendar months.\19\ At this time, the Exchange
proposes to adopt rules substantively identical to MIAX, which are set
forth in proposed new Commentary .16 to Rule 903, and to make a
conforming change to the table in Commentary .07 of Rule 903 to align
that that table with the proposed rule text.
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\19\ See Securities Exchange Act Release No. 98917 (November 13,
2023), 88 FR 80361 (November 17, 2023) (SR-MIAX-2023-36) (Order
Approving a Proposed Rule Change To Amend Exchange Rule 404, Series
of Option Contracts Open for Trading). Other options exchanges have
since adopted similar programs. See also MIAX Rule 404,
Interpretations and Policies .11 and .12. The Exchange notes that
other options exchanges have since adopted similar programs. See,
e.g., Securities Exchange Act Release No. 99113 (December 7, 2023)
88 FR 86413 (December 7, 2023) (SR-CBOE-2023-065) (immediately
effective filing ``[t]o adopt a Low Priced Stock Strike Price
Interval Program').
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Background
Rule 903 describes the process and procedures for listing and
trading series of options on the Exchange.\20\ Rule 903 provides for a
$2.50 Strike Price Program, where the Exchange may select up to 60
option classes on individual stocks for which the interval of strike
prices will be $2.50 where the strike price is greater than $25.00 but
less than $50.00.\21\ Rule 903 also provides for a $1 Strike Price
Interval Program, where the interval between strike prices of series of
options on individual stocks may be $1.00 or greater provided the
strike price is $50.00 or less, but not less than $1.00.\22\
Additionally, Rule 903 provides for a $0.50 Strike Program.\23\ The
interval of strike prices of series of options on individual stocks may
be $0.50 or greater beginning at $0.50 where the strike price is $5.50
or less, but only for options classes whose underlying security closed
at or below $5.00 in its primary market on the previous trading day and
which have national average daily volume that equals or exceeds 1,000
contracts per day as determined by The Options Clearing Corporation
during the preceding three calendar months. The listing of $0.50 strike
prices is limited to options classes overlying no more than 20
individual stocks (the ``$0.50 Strike Program'') as specifically
designated by the Exchange. The Exchange may list $0.50 strike prices
on any other option classes if those classes are specifically
designated by other securities exchanges that employ a similar $0.50
Strike Program under their respective rules. A stock will remain in the
$0.50 Strike Program until otherwise designated by the Exchange.\24\
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\20\ Per Rule 1.1, ``series of options'' refers to ``all options
contracts of the same class of options having the same expiration
date and expiration price, and the same unit of trading.''
\21\ See Commentary .07 to Rule 903.
\22\ See Commentary .06 to Rule 903.
\23\ See Commentary .13 to Rule 903 (regarding the ``$0.50
Strike Program'').
\24\ Id.
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Proposal To Adopt Low-Priced Stock Interval Program
The Exchange proposes to adopt a new strike interval program for
underlying stocks that are not in the aforementioned $0.50 Strike
Program (or the Short Term Option Series Program) \25\ and that close
below $2.50 and have an average daily trading volume of at least
1,000,000 shares per day for the three (3) preceding calendar
months.\26\ The $0.50 Strike Program considers stocks that have a
closing price at or below $5.00 whereas the Exchange's proposal will
consider
[[Page 48928]]
stocks that have a closing price below $2.50. Currently, there is a
subset of stocks that are not included in the $0.50 Strike Program as a
result of the limitations of that program which provides that the
listing of $0.50 strike prices shall be limited to option classes
overlying no more than 20 individual stocks as specifically designated
by the Exchange and requires a national average daily volume that
equals or exceeds 1,000 contracts per day as determined by The Options
Clearing Corporation during the preceding three calendar months.\27\
Therefore, the Exchange is proposing to implement a new strike interval
program termed the ``Low-Priced Stock Strike Price Interval Program.''
\28\
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\25\ See Commentary .07 to Rule 903.
\26\ See proposed Commentary .11 to Rule 903.
\27\ See Commentary .13 to Rule 903 (regarding the ``$0.50
Strike Program'').
\28\ The Exchange proposes to include a hyphen to the modifier
``Low-Priced.'' See proposed Commentary .16 to Rule 903.
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To be eligible for the inclusion in the Low-Priced Stock Strike
Price Interval Program, an underlying stock must (i) close below $2.50
in its primary market on the previous trading day; and (ii) have an
average daily trading volume of at least 1,000,000 shares per day for
the three (3) preceding calendar months. The Exchange notes that there
is no limit to the number of classes that will be eligible for
inclusion in the proposed program, provided, of course, that the
underlying stocks satisfy both the price and average daily trading
volume requirements of the proposed program.
The Exchange also proposes that after a stock is added to the Low-
Priced Stock Strike Price Interval Program, the Exchange may list $0.50
strike price intervals from $0.50 up to $2.00.\29\ For the purpose of
adding strikes under the Low-Priced Stock Strike Price Interval
Program, the ``price of the underlying stock'' shall be measured in the
same way as ``the price of the underlying security'' as set forth in
Rule 903A(b)(i).\30\ Further, no additional series in $0.50 intervals
may be listed if the underlying stock closes at or above $2.50 in its
primary market. Additional series in $0.50 intervals may not be added
until the underlying stock again closes below $2.50.
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\29\ While the Exchange may list new strikes on underlying
stocks that meet the eligibility requirements of the new program the
Exchange will exercise its discretion and will not list strikes on
underlying stocks the Exchange believes are subject to imminent
delisting from their primary exchange.
\30\ The Exchange notes this is the same methodology used in the
$1 Strike Price Interval Program. See Commentary .06 to Rule 903.
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The Exchange's proposal addresses a gap in strike coverage for low-
priced stocks. The $0.50 Strike Program considers stocks that close
below $5.00 and limits the number of option classes listed to no more
than 20 individual stocks (provided that the open interest criteria is
also satisfied). Whereas, the Exchange's proposal has a narrower focus,
with respect to the underlying's stock price, and is targeted to those
stocks that close below $2.50 and does not limit the number of stocks
that may participate in the program (provided that the average daily
trading volume is also satisfied). The Exchange does not believe that
any market disruptions will be encountered with the addition of these
new strikes. The Exchange represents that it has the necessary capacity
and surveillance programs in place to support and properly monitor
trading in the proposed Low-Priced Stock Strike Price Interval Program.
The Exchange believes that its average daily trading volume
requirement of 1,000,000 shares is a reasonable threshold to ensure
adequate liquidity in eligible underlying stocks as it is substantially
greater than the thresholds used for listing options on equities,
American Depository Receipts (``ADRs''), and broad-based indexes.
Specifically, underlying securities with respect to which put or call
option contracts are approved for listing and trading on the Exchange
must meet certain criteria as determined by the Exchange. One of those
requirements is that trading volume (in all markets in which the
underlying security is traded) has been at least 2,400,000 shares in
the preceding twelve (12) months.\31\ Rule 915(d) provides the criteria
for listing options on ADRs if they meet certain criteria and
guidelines set forth in Rule 915. One of the requirements is that the
average daily trading volume for the security in the U.S. markets over
the three (3) months preceding the selection of the ADR for options
trading is 100,000 or more shares.\32\ Finally, the Exchange may trade
options on a broad-based index pursuant to Rule 19b-4(e) of the Act
provided a number of conditions are satisfied. One of those conditions
is that each component security that accounts for at least one percent
(1%) of the weight of the index has an average daily trading volume of
at least 90,000 shares during the last six-month period.\33\
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\31\ See Commentary .01(3) to Rule 915.
\32\ See Commentary .03 Rule 915 .
\33\ See Commentary .02(a)(7) to Rule 900C .
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Additionally, the Exchange proposes to amend the table in
Commentary .11(e) to Rule 903 (the ``Table'') to insert a new column to
harmonize the Exchange's proposal to the strike intervals for Short
Term Options Series as described in proposed Commentary .16 to Rule
903. The Table is intended to limit the intervals between strikes for
multiply listed equity options within the Short Term Options Series
(``STOS'') Program that have an expiration date more than twenty-one
days from the listing date. Specifically, the Table defines the
applicable strike intervals for options on underlying stocks given the
closing price on the primary market on the last day of the calendar
quarter, and a corresponding average daily volume of the total number
of options contracts traded in a given security for the applicable
calendar quarter divided by the number of trading days in the
applicable calendar quarter.\34\ However, the lowest share price column
is titled ``Less than $25.'' The Exchange now proposes to insert a
column titled ``Less than $2.50'' and to set the strike interval at
$0.50 for each average daily volume tier represented in the Table.
Also, the Exchange proposes to amend the heading of the column
currently titled ``Less than $25,'' to ``$2.50 to less than $25'' as a
result of the adoption of the new proposed column, ``Less than $2.50.''
The Exchange believes this change will remove any potential conflict
between the strike intervals under the STOS Program and those described
herein under the Exchange's proposal.
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\34\ See Securities Exchange Release Act No. 92336 (July 7,
2021), 86 FR 36827 (July 13, 2021) (SR-NYSEAMER-2021-32)
(immediately effective filing to amend Rule 903 to limit Short Term
Options Series intervals).
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The Exchange recognizes that its proposal will introduce new
strikes in the marketplace and further acknowledges that there has been
significant effort undertaken by the industry to curb strike
proliferation. For example, the Exchange filed a proposal focused on
the removal, and prevention of the listing, of strikes which are
extraneous and do not add value to the marketplace (the ``Strike
Interval Proposal'').\35\ The Strike Interval Proposal was intended to
remove repetitive and unnecessary strike listings across the weekly
expiries. Specifically, the Strike Interval Proposal aimed to reduce
the density of strike intervals that would be listed in the later
weeks, by creating limitations for intervals between strikes which have
an expiration date more than twenty-one days from the listing date.\36\
The Strike Interval Proposal took into account OCC customer-cleared
volume, using it as an appropriate proxy for demand. The Strike
Interval Proposal was designed to maintain strikes where there was
customer demand and eliminate strikes
[[Page 48929]]
where there wasn't. At the time of its proposal, the Exchange estimated
that the Strike Interval Proposal would reduce the number of strikes it
listed by 81,000.\37\ The Exchange proposes to amend the Table to
define the strike interval at $0.50 for underlying stocks with a share
price of less than $2.50.\38\ The Exchange believes this amendment will
harmonize the Exchange's proposal with the Strike Interval Proposal
described above.
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\35\ Id.
\36\ Id.
\37\ Id.
\38\ See proposed Commentary .11(e) to Rule 903.
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The Exchange recognizes that its proposal will moderately increase
the total number of option series available on the Exchange. However,
the Exchange's proposal is designed to only add strikes where there is
investor demand,\39\ which will improve market quality.\40\
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\39\ See proposed Commentary .16 to Rule 903, which requires
that an underlying stock have an average daily trading volume of
1,000,000 shares for the three (3) preceding months to be eligible
for inclusion in the Low-Priced Stock Strike Price Interval Program.
\40\ For example, MIAX determined that, as of August 9, 2023,
106 symbols met the criteria of the Low-Priced Stock Program. Of
those symbols 36 are currently in the $1 Strike Price Interval
Program with $1.00 and $2.00 strikes listed. Further, MIAX
determined that this would add the $0.50 and $1.50 strikes for these
symbols for the current expiration terms. The remaining 70 symbols
eligible under MIAX's proposal would have $0.50, $1.00, $1.50, and
$2.00 strikes added to their current expiration terms. Therefore,
for the 106 symbols eligible for the Low-Priced Stock Strike Price
Interval Program on MIAX a total of approximately 3,250 options
would be added. Finally, as of August 16, 2023, MIAX listed
1,090,414 options, therefore the additional options that would be
listed under this proposal would represent a very minor increase of
0.298% in the number of options. See Securities Exchange Act Release
No. 98917 (November 13, 2023), 88 FR 80361, 80362 (November 17,
2023) (SR-MIAX-2023-36) (Order Approving a Proposed Rule Change To
Amend Exchange Rule 404, Series of Option Contracts Open for
Trading).
---------------------------------------------------------------------------
The Exchange does not believe that its proposal contravenes the
industry's efforts to curtail unnecessary strikes. The Exchange's
proposal is targeted to only underlying stocks that close at less than
$2.50 and that also meet the average daily trading volume requirement.
Additionally, because the strike increment is $0.50 there are only a
total of four strikes that may be listed under the program ($0.50,
$1.00, $1.50, and $2.00) for an eligible underlying stock. Finally, if
an eligible underlying stock is in another program (e.g., the $0.50
Strike Program or the $1 Strike Price Interval Program) the number of
strikes that may be added is further reduced if there are pre-existing
strikes as part of another strike listing program. Therefore, the
Exchange does not believe that it will list any unnecessary or
repetitive strikes as part of its program, and that the strikes that
will be listed will improve market quality and satisfy investor demand.
The Exchange further believes that the Options Price Reporting
Authority (``OPRA''), has the necessary systems capacity to handle any
additional messaging traffic associated with this proposed rule change.
The Exchange also believes that ATP Holders will not have a capacity
issue as a result of the proposed rule change. Finally, the Exchange
believes that the additional options will serve to increase liquidity,
provide additional trading and hedging opportunities for all market
participants, and improve market quality.
Expand the STOS Program
Add Wednesday Expirations for Options on Certain ETPs
The Exchange proposes to amend Rule 903, Commentary .10(e) to
expand the STOS Program to permit the listing of two Wednesday
expirations for options on United States Oil Fund, LP (``USO''), United
States Natural Gas Fund, LP (``UNG''), SPDR Gold Shares (``GLD''),
iShares Silver Trust (``SLV''), and iShares 20+ Year Treasury Bond ETF
(``TLT'') (collectively ``Exchange Traded Products'' or ``ETPs''). This
is a competitive filing based on a rule change submitted by Nasdaq ISE,
LLC (``Nasdaq ISE'') and approved by the Commission.\41\
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\41\ See Securities Exchange Act Release No. 98905 (November 13,
2023) (SR-ISE-2023-11) (order approving expansion of Short Term
Option Series Program to permit the listing of Wednesday Expirations
for options on certain ETPs). See also Nasdaq ISE Supplementary
Material to Options 4, Section 5. The Exchange notes that other
options exchanges have since adopted similar rule changes. See,
e.g., Securities Exchange Act Release No. 99035 (November 29, 2023),
88 FR 84367 (December 5, 2023) (SR-Cboe-2023-062) (immediately
effective filing to permit Wednesday expiration for options on
certain ETPs).
---------------------------------------------------------------------------
Currently, as set forth in Rule 903(h), after an option class has
been approved for listing and trading on the Exchange, the Exchange may
open for trading on any Thursday or Friday that is a business day
(``Short Term Option Opening Date'') series of options on that class
that expire at the close of business on each of the next five Fridays
that are business days and are not Fridays on which monthly options
series or Quarterly Options Series expire (``Friday Short Term Option
Expiration Dates''). The Exchange may have no more than a total of five
Friday Short Term Option Expiration Dates (``Short Term Option Weekly
Expirations''). If the Exchange is not open for business on the
respective Thursday or Friday, the Short Term Option Opening Date for
Short Term Option Weekly Expirations will be the first business day
immediately prior to that respective Thursday or Friday. Similarly, if
the Exchange is not open for business on a Friday, the Short Term
Option Expiration Date for Short Term Option Weekly Expirations will be
the first business day immediately prior to that Friday.
Additionally, the Exchange may open for trading series of options
on the symbols provided in Table 1 of Commentary .10(f) to Rule 903
that expire at the close of business on each of the next two Mondays,
Tuesdays, Wednesdays, and Thursdays, respectively, that are business
days and are not business days in which monthly options series or
Quarterly Options Series expire (``Short Term Option Daily
Expirations''). For those symbols listed in Table 1, the Exchange may
have no more than a total of two Short Term Option Daily Expirations
for each of Monday, Tuesday, Wednesday, and Thursday expirations at one
time.
At this time, the Exchange proposes to expand the Short Term Option
Daily Expirations to permit the listing and trading of options on USO,
UNG, GLD, SLV, and TLT expiring on Wednesdays. The Exchange proposes to
permit two Short Term Option Expiration Dates beyond the current week
for each Wednesday expiration at one time. In order to effectuate the
proposed changes, the Exchange would add USO, UNG, GLD, SLV, and TLT to
Table 1 of Commentary .10(f) to Rule 903, which specifies each symbol
that qualifies as a Short Term Option Daily Expiration.\42\
---------------------------------------------------------------------------
\42\ See proposed Commentary .10(f) to Rule 903 (updates to
Table 1).
---------------------------------------------------------------------------
The proposed Wednesday USO, UNG, GLD, SLV, and TLT expirations will
be similar to the current Wednesday Short Term Option Daily Expirations
on SPDR[supreg] S&P 500[supreg] ETF (``SPY''), PowerShares QQQ Trust
(``QQQ''), and iShares Russell 2000 Index Fund (``IWM'') SPY, QQQ, and
IWM, as set forth in Rule 903(h), such that the Exchange may open for
trading on any Tuesday or Wednesday that is a business day (beyond the
current week) series of options on USO, UNG, GLD, SLV, and TLT to
expire on any Wednesday of the month that is a business day and is not
a Wednesday in which standard expiration option series, Monthly Options
Series, or Quarterly Options Series expire (``Wednesday USO
Expirations,'' ``Wednesday UNG Expirations,'' ``Wednesday GLD
Expirations,'' ``Wednesday SLV Expirations,'' and ``Wednesday TLT
Expirations'') (collectively, ``Wednesday
[[Page 48930]]
ETP Expirations'').\43\ In the event Short Term Option Daily
Expirations expire on a Wednesday and that Wednesday is the same day
that a standard expiration option series, Monthly Options Series, or
Quarterly Options Series or expires, the Exchange would skip that
week's listing and instead list the following week; the two weeks would
therefore not be consecutive. Today, Wednesday expirations in SPY, QQQ,
and IWM similarly skip the weekly listing in the event the weekly
listing expires on the same day in the same class as a Quarterly Option
Series.
---------------------------------------------------------------------------
\43\ While the relevant rule text in Commentary .10(f) to Rule
903 also indicates that the Exchange will not list such expirations
on a Wednesday that is a business day in which standard expiration
options series expire, practically speaking this would not occur.
---------------------------------------------------------------------------
The Exchange notes that USO, UNG, GLD, SLV, and TLT Friday
expirations would continue to have a total of five Short Term Option
Expiration Dates, provided those Friday expirations are not Fridays in
which standard expiration option series, Monthly Options Series, or
Quarterly Options Series expire (``Friday Short Term Option Expiration
Dates'').
Like Wednesday SPY, QQQ, and IWM Short Term Option Daily
Expirations within Rule 903(h) and Commentary .10(f) to that Rule, the
Exchange proposes that it may open for trading on any Tuesday or
Wednesday that is a business day series of options on USO, UNG, GLD,
SLV, and TLT that expire at the close of business on each of the next
two Wednesdays that are business days and are not business days in
which standard expiration option series, Monthly Options Series, or
Quarterly Options Series expire.
The interval between strike prices for the proposed Wednesday ETP
Expirations will be the same as those for the current Short Term Option
Series for Friday expirations applicable to the STOS Program.\44\
Specifically, the Wednesday ETP Expirations will have a strike interval
of $0.50 or greater for strike prices below $100, $1 or greater for
strike prices between $100 and $150, and $2.50 or greater for strike
prices above $150.\45\ As is the case with other equity options listed
pursuant to the STOS Program, the Wednesday ETP Expirations series will
be P.M.-settled.
---------------------------------------------------------------------------
\44\ See Commentary .10(e) to Rule 903.
\45\ Id.
---------------------------------------------------------------------------
Pursuant to Rule 903(h), with respect to the STOS Program, 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.
Currently, for each option class eligible for participation in the
STOS Program, the Exchange is limited to opening thirty (30) series for
each expiration date for the specific class.\46\ The thirty (30) series
restriction does not include series that are open by other securities
exchanges under their respective weekly rules; the Exchange may list
these additional series that are listed by other options exchanges.\47\
With the proposed changes, this thirty (30) series restriction would
apply to Wednesday USO, UNG, GLD, SLV, and TLT Short Term Option Daily
Expirations as well. In addition, the Exchange will be able to list
series that are listed by other exchanges, assuming that they file
similar rules with the Commission to list Wednesday ETP Expirations.
---------------------------------------------------------------------------
\46\ See Commentary .07(c) to Rule 903.
\47\ Id.
---------------------------------------------------------------------------
With this proposal, Wednesday ETP Expirations would be treated
similarly to existing Wednesday SPY, QQQ, and IWM Expirations.\48\ With
respect to standard expiration options series, Short Term Option Daily
Expirations will be permitted to expire in the same week in which
standard expiration option series, on the same class expire. Not
listing Short Term Option Daily Expirations for one week every month
because there was a monthly on that same class on the Friday of that
week would create investor confusion.
---------------------------------------------------------------------------
\48\ See proposed Commentary .10(f) to Rule 903. (proving that,
with respect to Wednesday Expirations, the Exchange may open for
trading on any Tuesday or Wednesday that is a business day series of
options on the symbols provided in Table 1 above that expire at the
close of business on each of the next two Wednesdays that are
business days and are not business days on which standard expiration
options series, Monthly Options Series, or Quarterly Options Series
expire'').
---------------------------------------------------------------------------
Further, as with Wednesday SPY, QQQ, and IWM Expirations, the
Exchange would not permit Wednesday ETP Expirations to expire on a
business day in which standard expiration options series, Monthly
Options Series, or Quarterly Options Series expire. Therefore, all
Short Term Option Daily Expirations would expire at the close of
business on each of the next two Wednesdays that are business days and
are not business days in which standard expiration options series,
Monthly Options Series, or Quarterly Options Series expire. The
Exchange believes that it is reasonable to not permit two expirations
on the same day in which a standard expiration option series, Monthly
Options Series, or a Quarterly Options Series would expire because
those options would be duplicative of each other.
The Exchange does not believe that any market disruptions will be
encountered with the introduction of Wednesday ETP Expirations. The
Exchange has the necessary capacity and surveillance programs in place
to support and properly monitor trading in the proposed Wednesday ETP
Expirations. The Exchange currently trades P.M.-settled Short Term
Option Series that expire on Wednesday for SPY, QQQ, and IWM and has
not experienced any market disruptions nor issues with capacity. Today,
the Exchange has surveillance programs in place to support and properly
monitor trading in Short Term Option Series that expire Wednesday for
SPY, QQQ, and IWM.
Add Tuesday and Thursday Expirations for Options on IWM
The Exchange proposes to expand the STOS Program to permit the
listing and trading of options series with Tuesday and Thursday
expirations for options on IWM, specifically permitting two expiration
dates for the proposed Tuesday and Thursday expirations in IWM. This is
a competitive filing based on a rule change submitted by Nasdaq ISE and
approved by the Commission.\49\
---------------------------------------------------------------------------
\49\ See Securities Exchange Act Release No. 99946 (April 11,
2024), 89 FR 27471 (April 17, 2024) (SR-ISE-2024-06) (order
approving expansion of Short Term Option Series Program to permit
the listing of Tuesday and Thursday expirations in IWM). See also
Nasdaq ISE Options 4, Section 5, Supplementary Material .03. The
Exchange notes that other options exchanges have since adopted
similar rule changes. See, e.g., Securities Exchange Act Release No.
99981 (April 17, 2024), 89 FR 30425 (April 23, 2024) (SR-CboeEDGX-
2024-022 (immediately effective filing to permit Tuesday and
Thursday expiration for options on IWM).
---------------------------------------------------------------------------
As noted above, Table 1 in Commentary .10(f) to Rule 903, specifies
each symbol that currently qualifies as a Short Term Option Daily
Expiration.\50\ Today, Table 1 permits the listing and trading of
Monday Short Term Option Daily Expirations and Wednesday Short Term
Option Daily Expirations for IWM. At this time, the Exchange proposes
to expand the Short Term Option Series
[[Page 48931]]
Program to permit the listing and trading of no more than a total of
two IWM Short Term Option Daily Expirations beyond the current week for
each of Monday, Tuesday, Wednesday, and Thursday expirations at one
time.\51\ The listing and trading of Tuesday and Thursday Short Term
Option Daily Expirations would be subject to Rule 903(h).
---------------------------------------------------------------------------
\50\ The Exchange may open for trading on any Thursday or Friday
that is a business day series of options on that class that expire
at the close of business on each of the next five Fridays that are
business days and are not Fridays in which standard expiration
options series, Monthly Options Series, or Quarterly Options Series.
Of these series of options, the Exchange may have no more than a
total of five Short Term Option Expiration Dates. In addition, the
Exchange may open for trading series of options on certain symbols
that expire at the close of business on each of the next two
Mondays, Tuesdays, Wednesdays, and Thursdays, respectively, that are
business days beyond the current week and are not business days in
which standard expiration options series, Monthly Options Series, or
Quarterly Options Series expire (``Short Term Option Daily
Expirations''). See Commentary .10(f) to Rule 903.
\51\ The Exchange proposes to amend the Tuesday and Thursday
expirations for IWM from ``0'' to ``2'' to permit Tuesday and
Thursday expirations for options on IWM listed pursuant to the Short
Term Option Series. See proposed Commentary .10(f) to Rule 903.
---------------------------------------------------------------------------
Today, Tuesday Short Term Option Daily Expirations in SPY and QQQ
may open for trading on any Monday or Tuesday that is a business day
series of options on the symbols provided in Table 1 that expire at the
close of business on each of the next two Tuesdays that are business
days and are not business days in which standard expiration options
series, Monthly Options Series, or Quarterly Options Series expire
(``Tuesday Short Term Option Expiration Date'').\52\
---------------------------------------------------------------------------
\52\ See Commentary .10(f) to Rule 903.
---------------------------------------------------------------------------
Also, today, Thursday Short Term Option Daily Expirations in SPY
and QQQ may open for trading on any Tuesday or Wednesday that is a
business day series of options on the symbols provided in Table 1 that
expire at the close of business on each of the next two Wednesdays that
are business days and are not business days in which standard
expiration options series, Monthly Options Series, or Quarterly Options
Series expire (``Wednesday Short Term Option Expiration Date'').\53\ In
the event that options on IWM expire on a Tuesday or Thursday and that
Tuesday or Thursday is a business day in which standard expiration
options series, Monthly Options Series, or Quarterly Options Series
expire, the Exchange would skip that week's listing and instead list
the following week; the two weeks would therefore not be consecutive.
With this proposal, the Exchange would be able to open for trading
series of options on IWM that expire at the close of business on each
of the next two Mondays, Tuesdays, Wednesdays, and Thursdays,
respectively, that are business days beyond the current week and are
not business days in which standard expiration options series, Monthly
Options Series, or Quarterly Options Series expire.\54\
---------------------------------------------------------------------------
\53\ Id.
\54\ Today, IWM may trade on Mondays and Wednesdays, in addition
to Fridays, as is the case for all options series.
---------------------------------------------------------------------------
The interval between strike prices for the proposed Tuesday and
Thursday IWM Short Term Option Daily Expirations will be the same as
those for Tuesday and Thursday IWM Short Term Option Daily Expirations
in SPY and QQQ, applicable to the Short Term Option Series Program.\55\
Specifically, the Tuesday and Thursday IWM Short Term Option Daily
Expirations will have a $0.50 strike interval minimum. As is the case
with other equity options series listed pursuant to the Short Term
Option Series Program, the Tuesday and Thursday IWM Short Term Option
Daily Expiration series will be P.M.-settled.
---------------------------------------------------------------------------
\55\ See Commentary .10(f) to Rule 903.
---------------------------------------------------------------------------
Pursuant to Commentary .10(f) to Rule 903, with respect to the
Short Term Option Series Program, a Tuesday or Thursday expiration
series shall expire on the first business day immediately prior to that
Tuesday or Thursday, e.g., Monday or Wednesday of that week,
respectively, if the Tuesday or Thursday is not a business day.
Currently, for each option class eligible for participation in the
Short Term Option Series Program, the Exchange is limited to opening
thirty (30) series for each expiration date for the specific class.\56\
The thirty (30) series restriction does not include series that are
open by other securities exchanges under their respective weekly rules;
the Exchange may list these additional series that are listed by other
options exchanges.\57\ This thirty (30) series restriction would apply
to Tuesday and Thursday IWM Short Term Option Daily Expiration series
as well. With this proposal, Tuesday and Thursday IWM Expirations would
be treated the same as Tuesday and Thursday Expirations in SPY and QQQ.
With respect to monthly option series, Short Term Option Daily
Expirations expire in the same week in which monthly option series on
the same class expire.\58\ Further, as is the case today with other
Tuesday and Thursday Short Term Option Daily Expirations, the Exchange
would not permit Tuesday and Thursday Short Term Option Daily
Expirations to expire on a business day in which monthly options series
or Quarterly Options Series expire.\59\ Therefore, all Short Term
Option Daily Expirations would expire at the close of business on each
of the next two Mondays, Tuesdays, Wednesdays, and Thursdays,
respectively, that are business days beyond the current week and are
not business days in which standard expiration options series, Monthly
Options Series, or Quarterly Options Series expire. The Exchange does
not believe that any market disruptions will be encountered with the
introduction of P.M.-settled Tuesday and Thursday IWM Short Term Option
Daily Expirations. The Exchange has the necessary capacity and
surveillance programs in place to support and properly monitor trading
in the proposed Tuesday and Thursday Short Term Option Daily
Expirations. The Exchange currently trades P.M.-settled Short Term
Option Series that expire Tuesday and Thursday for SPY and QQQ and has
not experienced any market disruptions nor issues with capacity. Today,
the Exchange has surveillance programs in place to support and properly
monitor trading in Short Term Option Series that expire Tuesday and
Thursday for SPY and QQQ.
---------------------------------------------------------------------------
\56\ See Commentary .10(a) to Rule 903.
\57\ See Commentary .10(b) to Rule 903.
\58\ See Commentary .10(e) to Rule 903.
\59\ See Commentary .10(f) to Rule 903.
---------------------------------------------------------------------------
Impact of Proposal To Add Tuesday and Thursday Expirations for Options
on IWM
The Exchange notes that listings in the Short Term Option Series
Program comprise a significant part of the standard listing in options
markets. The below table sets forth the percentage of weekly listings
as compared to monthly (standard expiration), quarterly, and Long-Term
Option Series in 2023 in the options industry.\60\ The Exchange notes
that during this time period all options exchanges mitigated weekly
strike intervals.
---------------------------------------------------------------------------
\60\ Per Nasdaq ISE, this information was sourced from The
Options Clearing Corporation (``OCC''). The information includes
time averaged data for all 17 options markets through December 8,
2023. See Securities Exchange Act Release No. 99604 (February 26,
2024), 89 FR 15235 (March 1, 2024) (SR-ISE-2024-06).
Number of Strikes--2023
------------------------------------------------------------------------
Percent of
Expiration total series
(%)
------------------------------------------------------------------------
Monthly................................................. 62.82
Weekly.................................................. 17.22
LEAP.................................................... 17.77
Quarterly............................................... 2.20
------------------------------------------------------------------------
Similar to SPY and QQQ, the Exchange would limit the number of
Short Term Option Daily Expirations for IWM to two expirations for
Tuesday and Thursday expirations while expanding the Short Term Option
Series Program to permit Tuesday, and Thursday expirations for IWM.
Expanding the Short Term Option Series Program to permit the listing of
Tuesday and Thursday expirations in IWM will account for the addition
of 6.77% of
[[Page 48932]]
strikes for IWM.\61\ With respect to the impact to the Short Term
Option Series Program on IWM overall, the impact would be a 20%
increase in strikes.\62\ With respect to the impact to the Short Term
Options Series Program overall, the impact would be a 0.1% increase in
strikes.\63\ ATP Holders will continue to be able to expand hedging
tools because all days of the week would be available to permit ATP
Holders to tailor their investment and hedging needs more effectively
in IWM.
---------------------------------------------------------------------------
\61\ Nasdaq ISE sourced this information, which are estimates,
from LiveVol[supreg]. The information includes data for all 17
options markets as of January 3, 2024. See id.
\62\ Nasdaq ISE sourced this information, which are estimates,
from LiveVol[supreg]. The information includes data for all 17
options markets as of January 3, 2024. See id.
\63\ Nasdaq ISE sourced this information, which are estimates,
from LiveVol[supreg]. The information includes data for all 17
options markets as of January 3, 2024. See id.
Number of Strikes--2023
------------------------------------------------------------------------
Percent of
Expiration total series
(%)
------------------------------------------------------------------------
Monthly................................................. 35.13
Weekly.................................................. 48.30
LEAP.................................................... 12.87
Quarterly............................................... 3.70
------------------------------------------------------------------------
Weeklies comprise 48.30% of the total volume of options
contracts.\64\ The Exchange believes that inner weeklies (first two
weeks) represent high volume as compared to outer weeklies (the last
three weeks) and would be more attractive to market participants. The
introduction of IWM Tuesday and Thursday 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 IWM Tuesday and Thursday expirations will allow
market participants to purchase IWM options based on their timing as
needed and allow them to tailor their investment and hedging needs more
effectively.
---------------------------------------------------------------------------
\64\ This table sets forth industry volume. Weeklies comprise
48.30% of volume while only comprising 17.22% of the strikes. Nasdaq
ISE sourced this information from OCC. The information includes data
for all 17 options markets through December 8, 2023. See Securities
Exchange Act Release No. 99604 (February 26, 2024), 89 FR 15235
(March 1, 2024) (SR-ISE-2024-06).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\65\ Specifically, the Exchange believes that its proposed rule
change is consistent with Section 6(b)(5) \66\ requirements 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 mechanism of a free and open market and a national market
system and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\65\ 15 U.S.C. 78f(b)
\66\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Monthly Options Series Program
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 timings 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 month's end 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 Options Series, which will 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.\67\ 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. As is the case with Quarterly Options Series, no Short Term
Options 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 investors 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 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.
---------------------------------------------------------------------------
\67\ Compare proposed Commentary .11 to Rule 903 with Commentary
.09 to Rule 903.
---------------------------------------------------------------------------
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 Options Series and Quarterly Options
Series). Therefore, options positions within ETF or index option
classes for which Monthly Options Series are listed, regardless of
their expirations, would
[[Page 48933]]
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. As mentioned above, the Exchange currently
trades Quarterly Options Series in certain ETF classes, which expire at
the close of business at the end of three 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 Options 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.
Finally, the Exchange believes that the proposed technical change
to Rule 903, Commentary.09 would add clarity, transparency and internal
consistent to Exchange rules.
Low-Priced Stock Strike Price Interval Program
The Exchange believes the introduction of the Low-Priced Stock
Strike Price Interval Program 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. In
particular, the Exchange believes its proposal promotes just and
equitable principles of trade and removes impediments to and perfects
the mechanisms of a free and open market and a national market system
as the Exchange has identified a subset of stocks that are trading
under $2.50 and do not have meaningful strikes available. For example,
on August 9, 2023, symbol SOND closed at $0.50 and had open interest of
over 44,000 contracts and an average daily trading volume in the
underlying stock of over 1,900,000 shares for the three preceding
calendar months.\68\ Currently the lowest strike listed is for $2.50,
making the lowest strike 400% away from the closing stock price.
Another symbol, CTXR, closed at $0.92 on August 9, 2023, and had open
interest of 63,000 contracts and an average daily trading volume in the
underlying stock of over 1,900,000 shares for the three preceding
calendar months.\69\ Similarly, the lowest strike listed is for $2.50,
making the lowest strike more than 170% away from the closing stock
price. Currently, such products have no at-the-money options, as well
as no in-the-money calls or out-of-the-money puts. The Exchange's
proposal will provide additional strikes in $0.50 increments from $0.50
up to $2.00 to provide more meaningful trading and hedging
opportunities for this subset of stocks. Given the increased
granularity of strikes as proposed under the Exchange's proposal out-
of-the-money puts and in-the-money calls will be created. The Exchange
believes this will allow market participants to tailor their investment
and hedging needs more effectively.
---------------------------------------------------------------------------
\68\ See Yahoo! Finance, <a href="https://finance.yahoo.com/quote/SOND/history?p=SOND">https://finance.yahoo.com/quote/SOND/history?p=SOND</a> (last visited August 10, 2023).
\69\ Id.
---------------------------------------------------------------------------
The Exchange believes its proposal promotes just and equitable
principles of trade and removes impediments to and perfects the
mechanisms of a free and open market and a national market system and,
in general, protects investors and the public interest by adding
strikes that improves market quality and satisfies investor demand. The
Exchange does not believe that the number of strikes that will be added
under the program will negatively impact the market. Additionally, the
proposal does not run counter to any previous efforts to curb strike
proliferation as those efforts focused on the removal and prevention of
extraneous strikes where there was no investor demand. The Exchange's
proposal requires the satisfaction of an average daily trading volume
threshold in addition to the underlying stock closing at a price below
$2.50 to be eligible for the program.
The Exchange believes that the average daily trading volume
threshold of the program ensures that only strikes with investor demand
will be listed and fills a gap in strike interval coverage as described
above. Further, being that the strike interval is $0.50, there are only
a maximum of four strikes that may be added ($0.50, $1.00, $1.50, and
$2.00). Therefore, the Exchange does not believe that its proposal will
undermine any previous efforts to eliminate repetitive and unnecessary
strikes in any fashion.
The Exchange believes that the proposed program's average daily
trading volume threshold promotes just and equitable principles of
trade and removes impediments to and perfects the mechanisms of a free
and open market and a national market system and, in general, protects
investors and the public interest as it is designed to permit only
those stocks with demonstrably high levels of trading activity to
participate in the program. The Exchange notes that the proposed
program's average daily trading volume requirement is substantially
greater than the average daily trading requirement currently in place
on the Exchange for options on equity underlyings,\70\ ADRs,\71\ and
broad-based indexes.\72\
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\70\ See Commentary .01(3) to Rule 915.
\71\ See Commentary .03 to Rule 915.
\72\ See Commentary .02(a)(7) to Rule 900C.
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The Exchange also believes the proposed rule change is consistent
with Section 6(b)(1) of the Act,\73\ which provides that the Exchange
be organized and have the capacity to be able to carry out the purposes
of the Act and to enforce compliance by the Exchange's ATP Holders and
persons associated with its ATP Holders with the Act, the rules and
regulations thereunder, and the rules of the Exchange. The proposed
rule change allows the Exchange to respond to customer demand to
provide meaningful strikes for low priced stocks. The Exchange does not
believe that the proposed rule would create any capacity issue or
negatively affect market functionality. Additionally, the Exchange
represents that it has the necessary systems capacity to support the
new options series and handle additional messaging traffic associated
with this proposed rule change. The Exchange also believes that its ATP
Holders will not experience any capacity issues as a result of this
proposal. In addition, the Exchange represents that it believes that
additional strikes for low priced stocks will serve to increase
liquidity available as well as improve price efficiency by providing
more trading opportunities for all market participants. The Exchange
believes that the proposed rule change will benefit investors by giving
them increased opportunities to execute their investment and hedging
decisions.
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\73\ 15 U.S.C. 78f(b)(1).
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Finally, the Exchange believes its proposal is designed to prevent
[[Page 48934]]
fraudulent and manipulative acts and practices as options may only be
listed on underlyings that satisfy the listing requirements of the
Exchange as described in Rule 915. Specifically, Rule 915 requires that
underlying securities for which put or call option contracts are
approved for listing and trading on the Exchange must be duly
registered (with the Commission) and be an ``NMS stock'' (as defined in
Rule 600 of Regulation NMS under the Act). Further, the underlying
security is characterized by a substantial number of outstanding shares
that are widely held and actively traded. In particular, Rule 915,
provides that absent exceptional circumstances, an underlying security
will not be selected for options transactions unless: (1) there are a
minimum of 7,000,000 shares of the underlying security which are owned
by persons other than those required to report their stock holdings
under Section 16(a) of the Act; (2) there are a minimum of 2,000
holders of the underlying security; (3) the issuer is in compliance
with any applicable requirements of the Act; and (4) trading volume (in
all markets in which the underlying security is traded) has been at
least 2,400,000 shares in the preceding 12 months. The Exchange's
proposal does not impact the eligibility of an underlying stock to have
options listed on it, but rather addresses only the listing of new
additional option classes on an underlying listed on the Exchange in
accordance with the Exchange's listings rules. As such, the Exchange
believes that the listing requirements described in Rule 915 address
potential concerns regarding possible manipulation. Additionally, in
conjunction with the proposed average daily volume requirement
described herein, the Exchange believes any possible market
manipulation is further mitigated.
Expand STOS Program
Add Wednesday Expirations for Options on Certain ETPs
The Exchange believes that the proposal to expand the STOS Program
to allow the Wednesday ETP Expirations (subject to the proposed
limitation of two expirations beyond the current week) is consistent
with the Act for the following reasons. Like Wednesday expirations in
SPY, QQQ, and IWM, the proposed Wednesday ETP Expirations would protect
investors and the public interest by providing the investing public and
other market participants more choice and flexibility to closely tailor
their investment and hedging decisions in these options and allow for a
reduced premium cost of buying portfolio protection, thus allowing them
to better manage their risk exposure.
The Exchange represents that it has an adequate surveillance
program in place to detect manipulative trading in the proposed option
expirations, in the same way that it monitors trading in the current
Short Term Option Series for Wednesday SPY, QQQ and IWM expirations.
The Exchange also represents that it has the necessary system capacity
to support the new expirations. Finally, the Exchange does not believe
that any market disruptions will be encountered with the introduction
of these option expirations. As discussed above, the Exchange believes
that its proposal is a modest expansion of weekly expiration dates for
GLD, SLV, USO, UNG, and TLT given that it will be limited to two
Wednesday expirations beyond the current week. Lastly, the Exchange
believes its proposal will not be a strain on liquidity providers
because of the multi-class nature of GLD, SLV, USO, UNG, and TLT and
the available hedges in highly correlated instruments, as described
above.
The Exchange believes that the proposal is consistent with the Act
as the proposal would overall add a small number of Wednesday ETP
Expirations by limiting the addition of two Wednesday expirations
beyond the current week. The addition of Wednesday ETP Expirations
would remove impediments to and perfect the mechanism of a free and
open market by encouraging Market Makers to continue to deploy capital
more efficiently and improve market quality. The Exchange believes that
the proposal will allow market participants to expand hedging tools and
tailor their investment and hedging needs more effectively in USO, UNG,
GLD, SLV, and TLT as these funds are most likely to be utilized by
market participants to hedge the underlying asset classes.
Similar to Wednesday SPY, QQQ, and IWM expirations, the
introduction of Wednesday ETP Expirations is consistent with the Act as
it will, among other things, expand hedging tools available to market
participants and allow for a reduced premium cost of buying portfolio
protection. The Exchange believes that Wednesday ETP Expirations will
allow market participants to purchase options on USO, UNG, GLD, SLV,
and TLT based on their timing as needed and allow them to tailor their
investment and hedging needs more effectively, thus 9 allowing them to
better manage their risk exposure. Today, the Exchange lists Wednesday
SPY, QQQ, and IWM Expirations.\74\
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\74\ See Commentary .10(f) to Rule 903.
---------------------------------------------------------------------------
The Exchange believes the STOS Program has been successful to date
and that Wednesday ETP 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 STOS Program has expanded the landscape of hedging. There
are no material differences in the treatment of Wednesday SPY, QQQ, and
IWM expirations compared to the proposed Wednesday ETP Expirations.
Given the similarities between Wednesday SPY, QQQ, and IWM expirations
and the proposed Wednesday ETP Expirations, the Exchange believes that
applying the provisions in Commentary .10(f) to Rule 903, that
currently apply to Wednesday SPY, QQQ, and IWM expirations is justified
and will benefit investors and minimize investor confusion by providing
such expirations in a continuous and uniform manner.
Add Tuesday and Thursday Expirations for Options on IWM
The Exchange believes that IWM Tuesday and Thursday Short Term
Daily Expirations will allow market participants to purchase IWM
options based on their timing as needed and allow them to tailor their
investment and hedging needs more effectively. Further, the proposal to
permit Tuesday and Thursday Short Term Daily Expirations for options on
IWM listed pursuant to the Short Term Option Series Program, subject to
the proposed limitation of two nearest expirations, would 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. In particular, the Exchange believes
the Short Term Option Series Program has been successful to date and
that Tuesday and Thursday IWM against market movements stemming from
economic releases or market events that occur throughout the month in
the same way that the Short Term Option Series Program has expanded the
landscape of hedging. Similarly, the Exchange believes Tuesday and
Thursday IWM Short Term Daily Expirations should create greater trading
and hedging opportunities and provide customers the flexibility to
tailor their investment objectives more effectively. The Exchange
currently lists SPY and QQQ
[[Page 48935]]
Tuesday and Thursday Short Term Daily Expirations.\75\
---------------------------------------------------------------------------
\75\ Id.
---------------------------------------------------------------------------
With this proposal, Tuesday and Thursday IWM Expirations would be
treated similar to existing Tuesday and Thursday SPY and QQQ
Expirations and would expire in the same week that standard monthly
options expire on Fridays.\76\ Further, today, Tuesday and Thursday
Short Term Option Daily Expirations do not expire on a business day in
which monthly options series or Quarterly Options Series expire.\77\
Today, all Short Term Option Daily Expirations expire at the close of
business on each of the next two Mondays, Tuesdays, Wednesdays, and
Thursdays, respectively, that are business days and are not business
days in which monthly options series or Quarterly Options Series
expire. There are no material differences in the treatment of Tuesday
and Thursday SPY and QQQ Short Term Daily Expirations as compared to
the proposed Tuesday and Thursday IWM Short Term Daily Expirations.
---------------------------------------------------------------------------
\76\ Id.
\77\ See Rule 903(h).
---------------------------------------------------------------------------
Finally, the Exchange represents that it has an adequate
surveillance program in place to detect manipulative trading in the
proposed Tuesday and Thursday IWM Short Term Daily Expirations, in the
same way that it monitors trading in the current Short Term Option
Series and trading in Tuesday and Thursday 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 Tuesday and Thursday IWM Short Term Daily Expirations.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange notes that the
proposed changes would allow the Exchange to compete on more equal
footing with other options exchanges that have already adopted
substantively identical rules as noted herein. Thus, the Exchange
believes this proposal would encourage competition.
Monthly Options Series Program
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 who wish to trade such options. The Exchange notes the
proposed terms of the 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.\78\ 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. Monthly Options Series will trade on the Exchange in the same
manner as other options in the same class.
---------------------------------------------------------------------------
\78\ See Commentary .09 to Rule 903.
---------------------------------------------------------------------------
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. 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.
The Exchange believes that the proposed rule change may relieve any
burden on, or otherwise promote, competition. Similar to Short Term
Options 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 to provide
positions in Monthly Options Series will be aggregated with positions
in options contracts on the same underlying index or security 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, as 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 Options 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.
Consequently, the Exchange does not believe that the proposed
change implicates competition at all. Additionally, and as stated
above, this proposal to accommodate the listing of options series that
would expire at the close of business on the last business day of a
calendar month is substantively similar to that of at least one other
options exchange.\79\
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\79\ See supra note 4 (regarding SR-CBOE-2023-049).
---------------------------------------------------------------------------
Low-Priced Stock Interval Program
The Exchange does not believe that its proposed rule change will
impose any burden on intramarket competition as the Rules of the
Exchange apply equally to all ATP Holders and all of whom may trade the
new proposed strikes if they so choose. Instead, the Exchange believes
that investors and market participants will significantly benefit from
the availability of finer strike price intervals for stocks priced
below $2.50, which will allow them to tailor their investment and
hedging needs more effectively. The Exchange's proposal is
substantively identical to MIAX Interpretations and Policies .11 and
.12 to Rule 404.\80\
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\80\ See supra note 19 (regarding SR-MIAX-2023-36).
---------------------------------------------------------------------------
The Exchange does not believe that its proposed rule change will
impose any
[[Page 48936]]
burden on intermarket competition, as nothing prevents other options
exchanges from proposing similar rules to list and trade options on low
priced stocks. Rather the Exchange believes that its proposal will
promote intermarket competition, as the Exchange's proposal will result
in additional opportunities for investors to achieve their investment
and trading objectives, to the benefit of investors, market
participants, and the marketplace in general.
Expand STOS Program
Add Wednesday Expirations for Options on Certain ETPs
The Exchange does not believe that its proposed rule change to
permit Wednesday expirations in certain ETPs will impose any undue
burden on competition. In this regard and as indicated above, the
Exchange notes that this proposed rule change is being proposed as a
competitive response to the already-approved rule change submitted by
Nasdaq ISE.\81\
---------------------------------------------------------------------------
\81\ See supra note 41 (regarding SR-ISE-2023-11).
---------------------------------------------------------------------------
While the proposal will expand the Short Term Options Expirations
to allow Wednesday ETP Expirations to be listed on the Exchange, the
Exchange believes that this limited expansion for Wednesday expirations
for options on USO, UNG, GLD, SLV, and TLT will not impose an undue
burden on competition; rather, it will meet customer demand. The
Exchange believes that market participants will continue to be able to
expand hedging tools and tailor their investment and hedging needs more
effectively in USO, UNG, GLD, SLV, and TLT given multi-class nature of
these products and the available hedges in highly correlated
instruments, as described above. Similar to Wednesday SPY, QQQ, and IWM
expirations, the introduction of Wednesday ETP Expirations does not
impose an undue burden on competition. The Exchange believes that it
will, among other things, expand hedging tools available to market
participants and allow for a reduced premium cost of buying portfolio
protection. The Exchange believes that Wednesday ETP Expirations will
allow market participants to purchase options on USO, UNG, GLD, SLV,
and TLT based on their timing as needed and allow them to tailor their
investment and hedging needs more effectively.
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 Wednesday ETP
Expirations. Further, 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.
Add Tuesday and Thursday Expirations for Options on IWM
Similar to SPY and QQQ Tuesday and Thursday Expirations, the
introduction of IWM Tuesday and Thursday Short Term Daily Expirations
does not impose an undue burden on competition. The Exchange believes
that it 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 IWM Tuesday and Thursday
Short Term Daily Expirations will allow market participants to purchase
IWM 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 proposal will impose any burden
on inter-market competition, as nothing prevents other options
exchanges from proposing similar rules to list and trade Short-Term
Option Series with Tuesday and Thursday Short Term Daily Expirations.
The Exchange notes that having Tuesday and Thursday IWM expirations is
not a novel proposal, as SPY and QQQ Tuesday and Thursday Expirations
are currently listed on the Exchange.\82\ Additionally, as noted above,
the Commission recently approved a substantively identical proposal of
another exchange.\83\
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\82\ See Commentary .10(f) to Rule 903.
\83\ See supra note 49 (regarding SR-ISE-2024-06).
---------------------------------------------------------------------------
Further, the Exchange does not believe the proposal will impose any
burden on intramarket competition, as all market participants will be
treated in the same manner under this proposal.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \84\ and Rule
19b-4(f)(6) thereunder.\85\
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\84\ 15 U.S.C. 78s(b)(3)(A)(iii).
\85\ 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, 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.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19-4(f)(6) \86\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\87\ the Commission
may 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. The Exchange states
that waiver of the operative delay would allow the Exchange to
implement, without delay, its proposal to: (i) adopt a Monthly Option
Series Program; (ii) adopt a Low-Priced Strike Priced Interval Program;
(iii) permit the listing and trading of five additional classes with
Short Term Option Daily Expirations, specifically, by permitting the
listing of two Wednesday expirations for options on certain ETPs; and
(iv) permit Tuesday and Thursday expirations on IWM. The Exchange
further states the proposed rule change does not present any new or
novel issues, as at least one other exchange permits each of the
proposed programs and expirations.\88\ Because the proposal does not
raise any new or novel issues, the Commission believes that waiver of
the operative delay is consistent with the protection of investors and
the public interest. Accordingly, the Commission hereby waives the 30-
day operative delay and designates the proposal operative upon
filing.\89\
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\86\ 17 CFR 240.19b-4(f)(6).
\87\ 17 CFR 240.19b-4(f)(6)(iii).
\88\ See supra notes 4, 19, 41, and 49.
\89\ 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).
---------------------------------------------------------------------------
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
[[Page 48937]]
Commission takes such action, the Commission shall institute
proceedings under Section 19(b)(2)(B) \90\ of the Act to determine
whether the proposed rule change should be approved or disapproved.
---------------------------------------------------------------------------
\90\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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#d2a0a7beb7ffb1bdbfbfb7bca6a192a1b7b1fcb5bda4"><span class="__cf_email__" data-cfemail="4230372e276f212d2f2f272c3631023127216c252d34">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2024-34 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-NYSEAMER-2024-34. 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-NYSEAMER-2024-34 and should
be submitted on or before July 1, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\91\
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\91\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-12592 Filed 6-7-24; 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.