Notice2024-16109
Self-Regulatory Organizations; MIAX PEARL LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 404, Series of Option Contracts Open for Trading To Amend the Strike Interval for Options on SPDR® Gold Shares
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
July 23, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 89 Issue 141 (Tuesday, July 23, 2024)</title>
</head>
<body><pre>
[Federal Register Volume 89, Number 141 (Tuesday, July 23, 2024)]
[Notices]
[Pages 59792-59795]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-16109]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100549; File No. SR-PEARL-2024-30]
Self-Regulatory Organizations; MIAX PEARL LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 404, Series of Option Contracts Open for Trading To Amend the
Strike Interval for Options on SPDR[supreg] Gold Shares
July 17, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 9,
[[Page 59793]]
2024, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend the strike interval for
options on SPDR[supreg] Gold Shares (``GLD'').
The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-equities/pearl-equities/rule-filings">https://www.miaxglobal.com/markets/us-equities/pearl-equities/rule-filings</a>, at MIAX Pearl's principal office, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend paragraph (g) of Rule 404, Series of
Option Contracts Open for Trading and Interpretation and Policy .10 of
Rule 404.\3\ Specifically, the Exchange proposes to amend paragraph (g)
to allow for the interval between strike prices of series of options on
Exchange-Traded Fund Shares \4\ of SPDR[supreg] Gold Shares or ``GLD''
to be $1 or greater where the strike price is greater than $200.
Additionally, the Exchange proposes to amend Interpretation and Policy
.10 to include SPDR[supreg] Gold Trust (``GLD'').
---------------------------------------------------------------------------
\3\ The Exchange notes that its affiliate exchange, MIAX
Options, has submitted a substantively identical proposal.
\4\ See Exchange Rule 402(i).
---------------------------------------------------------------------------
Currently, Rule 404(g) provides that
The interval between strike prices of series of options on
Exchange-Traded Fund Shares approved for options trading pursuant to
Rule 402(i) shall be fixed at a price per share which is reasonably
close to the price per share at which the underlying security is
traded in the primary market at or about the same time such series
of options is first open for trading on the Exchange, or at such
intervals as may have been established on another options exchange
prior to the initiation of trading on the Exchange.
And Rule 404, Interpretation and Policy .10, provides that
Notwithstanding any other provision regarding the interval of
strike prices of series of options on Exchange-Traded Fund Shares in
this rule, the interval of strike prices on SPDR S&P 500 ETF
(``SPY''), iShares S&P 500 Index ETF (``IVV''), Invesco QQQ Trust
(``QQQ''), iShares Russell 2000 Index Fund (``IWM''), and the SPDR
Dow Jones Industrial Average ETF (``DIA'') options will be $1 or
greater.
At this time, the Exchange proposes to amend paragraph (g) of Rule
404 to add rule text related to the interval between strike prices of
series of options on Exchange-Traded Fund Shares to provide that the
interval will be $1 or greater where the strike price is $200 or less
and $5.00 or greater where the strike price is greater than $200.
Today, other exchanges, including Cboe Exchange, Inc. (``Cboe'') and
Nasdaq ISE, LLC (``ISE'') permit the interval between strike prices of
series of options on Exchange-Traded Fund Shares to be $1 or greater
where the strike price is $200 or less and $5.00 or greater where the
strike price is greater than $200.\5\ Today, the Exchange may fix the
interval between strike prices of series of options on Exchange-Traded
Fund Shares at such intervals as may have been established on another
options exchange prior to the initiation of trading on the Exchange.
The Exchange proposes to adopt the language used by Cboe and ISE to
provide a strike interval for Exchange-Traded Fund Shares in the event
a different interval is not elected at a price per share which is
reasonably close to the price per share at which the underlying
security is traded in the primary market at or about the same time such
series of options is first open for trading on the Exchange, or at such
intervals as may have been established on another options exchange
prior to the initiation of trading on the Exchange.
---------------------------------------------------------------------------
\5\ See Cboe Rule 4.5 at Interpretation and Policy .07(a); see
also ISE Options 4, Section 5(d) and 5(e).
---------------------------------------------------------------------------
Further, current Rule 404, Interpretation and Policy .10 allows for
the interval between strike prices of series of options on Exchange-
Traded Fund Shares of the SPDR S&P 500 ETF (``SPY''), iShares Core S&P
500 ETF (``IVV''), PowerShares QQQ Trust (``QQQ''), iShares Russell
2000 Index Fund (``IWM''), and the SPDR Dow Jones Industrial Average
ETF (``DIA'') to be $1 or greater where the strike price is greater
than $200.
At this time, the Exchange proposes to modify the interval setting
regime to be $1 or greater where the strike price is greater than $200
for GLD options, similar to SPY, IVV, QQQ, IWM and DIA. The Exchange
believes that the proposed rule change would make GLD options easier
for investors and traders to use and more tailored to their investment
needs.
GLD is an Exchange-Traded Fund Share designed to closely track the
price and performance of the price of gold bullion. GLD is widely
quoted as an indicator of gold stock prices and is a significant
indicator of overall economic health. Investors use GLD to diversify
their portfolios and benefit from market trends. Additionally, GLD is a
leading product in its asset class that trades within a ``complex''
where, in addition to the underlying security, there are multiple
instruments available for hedging such as, COMEX Gold Futures; Gold
Daily Futures; iShares GOLD Trust; SPDR GOLD Minishares Trust; Aberdeen
Physical Gold Trust; and GraniteShares Gold Shares.
Accordingly, the Exchange believes that offering a wider base of
GLD options affords traders and investors important hedging and trading
opportunities, particularly in the midst of current price trends. The
Exchange believes that not having the proposed $1 strike price
intervals above $200 in GLD significantly constricts investors' hedging
and trading possibilities. The Exchange therefore believes that by
having smaller strike intervals in GLD, investors would have more
efficient hedging and trading opportunities due to the lower $1
interval ascension. The proposed $1 interval above the $200 strike
price, will result in having at-the-money series based upon the
underlying ETF moving less than 1%. The Exchange believes that the
proposed strike setting regime is in line with the slower movements of
broad-based indices. Considering the fact that $1 intervals already
exist below the $200 price point and that GLD have consistently
inclined in price toward the $200 level, the Exchange believes that
continuing to maintain the current $200 level (above which intervals
increase 500% to $5), may have a negative effect on investing, trading
and hedging opportunities, and volume. The Exchange believes that the
investing, trading, and hedging opportunities available with GLD
options far outweighs any potential negative impact of allowing GLD
options to trade in
[[Page 59794]]
more finely tailored intervals above the $200 price point.
The proposed strike setting regime would permit strikes to be set
to more closely reflect the increasing value in the underlying and
allows investors and traders to roll open positions from a lower strike
to a higher strike in conjunction with the price movements of the
underlying ETF. Under the current rule, the next higher available
series would be $5 away above a $200 strike price, the ability to roll
such positions would be impaired. Accordingly, to move a position from
a $200 strike to a $205 strike under the current rule, an investor
would need for the underlying product to move 2.5%, and would not be
able to execute a roll up until such a large movement occurred. The
Exchange believes that with the proposed rule change, the investor
would be in a significantly safer position of being able to roll his
open options position from a $200 to a $201 strike price, which is only
a 0.5% move for the underlying. As a result, the proposed rule change
will allow the Exchange to better respond to customer demand for GLD
strike price more precisely aligned with the smaller, longer-term
incremental increases in the underlying ETF. The Exchange believes that
the proposed rule change, like the other strike price programs
currently offered by the Exchange, will benefit investors by providing
investors the flexibility to more closely tailor their investment and
hedging decisions using GLD options. Moreover, by allowing series of
GLD options to be listed in $1 intervals between strike prices over
$200, the proposal will moderately augment the potential total number
of options series available on the Exchange. However, the Exchange
believes it and the Options Price Reporting Authority (``OPRA'') have
the necessary systems capacity to handle any potential additional
traffic associated with this proposed rule change. The Exchange also
believes that Members \6\ will not have a capacity issue due to the
proposed rule change. In addition, the Exchange represents that it does
not believe that this expansion will cause fragmentation of liquidity,
but rather, believes that finer strike intervals will serve to increase
liquidity available as well as price efficiency by providing more
trading opportunities for all market participants.
---------------------------------------------------------------------------
\6\ The term ``Member'' means an individual or organization that
is registered with the Exchange pursuant to Chapter II of the
Exchange's Rules for the purposes of trading on the Exchange as an
``Electronic Exchange Member'' or ``Market Maker.'' Members are
deemed ``members'' under the Exchange Act. See Exchange Rule 100.
---------------------------------------------------------------------------
The Exchange notes that the proposed rule change is substantively
identical to the proposed rule changes recently filed by ISE.\7\
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 100447 (June 28,
2024) (SR-ISE-2024-17).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the 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.\8\ Specifically, the Exchange believes the proposed rules changes
are consistent with Section 6(b)(5) \9\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In particular, the proposed rule change will allow investors to
more easily use GLD options. Moreover, the proposed rule change would
allow investors to better trade and hedge positions in GLD options
where the strike price is greater than $200, and ensure that investors
in both options are not at a disadvantage simply because of the strike
price.
The Exchange believes the proposed rule change is consistent with
Section 6(b)(1) of the Act, which provides that the Exchange be
organized and have the capacity to be able to carry out the purposes of
the Act and the rules and regulations thereunder, and the rules of the
Exchange. The proposal allows the Exchange to respond to customer
demand to allow GLD options to trade in $1 intervals above a $200
strike price. The Exchange does not believe that the proposed rule
would create additional capacity issues or affect market functionality.
As noted above, ETF options trade in wider $5 intervals above a $200
strike price, whereby options at or below a $200 strike price trade in
$1 intervals. This creates a situation where contracts on the same
option class effectively may not be able to execute certain strategies
such as, for example, rolling to a higher strike price, simply because
of the $200 strike price above which options intervals increase by
500%. This proposal remedies the situation by establishing an exception
to the current ETF interval regime for GLD options to allow such
options to trade in $1 or greater intervals at all strike prices.
The Exchange believes that the proposed rule change, like other
strike price programs currently offered by the Exchange, will benefit
investors by giving them increased flexibility to more closely tailor
their investment and hedging decisions. By way of example, GLD is a
leading product in its asset class and it trades within a ``complex''
where, in addition to the underlying security, there are multiple
instruments available for hedging such as, COMEX Gold Futures; Gold
Daily Futures; iShares GOLD Trust; SPDR GOLD Minishares Trust; Aberdeen
Physical Gold Trust; and GraniteShares Gold Shares.
With regard to the impact of this proposal on system capacity, the
Exchange believes it and OPRA have the necessary systems capacity to
handle any potential additional traffic associated with this proposed
rule change. The Exchange believes that its Members will not have a
capacity issue as a result of this proposal.
Finally, the Exchange notes the proposed rule change is
substantively the same as a rule change proposed by ISE which the
Securities and Exchange Commission (the ``Commission'') recently
approved.\10\
---------------------------------------------------------------------------
\10\ See supra note 7.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, the Exchange
believes that the proposed rule change will result in additional
investment options and opportunities to achieve the investment and
trading objectives of market participants seeking efficient trading and
hedging vehicles, to the benefit of investors, market participants, and
the marketplace in general. Specifically, the Exchange believes that
GLD options investors and traders will significantly benefit from the
availability of finer strike price intervals above a $200 price point.
In addition, the interval setting regime the Exchange proposes to apply
to GLD options is currently applied to SPY, IVV, QQQ, IWM and DIA
options, which are similarly popular and widely traded ETF products and
track indexes at similarly high price levels. Thus, the
[[Page 59795]]
proposed strike setting regime for GLD options will allow options on
this an actively traded ETF with index levels at corresponding price
levels to trade pursuant to the same strike setting regime. This will
permit investors to employ similar investment and hedging strategies
for each of these options.
The Exchange does not believe the proposal will impose any burden
on intermarket competition, as nothing prevents other options exchanges
from proposing similar rules to make a finer strike price intervals
above a $200 price point available for GLD options. The Exchange notes
that the proposed rule change is not a novel proposal, as the
Commission recently approved a substantively identical proposal of
another exchange.\11\
---------------------------------------------------------------------------
\11\ Id.
---------------------------------------------------------------------------
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
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
Because the foregoing proposed rule change does not: (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A)(iii) of the Act \14\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\15\
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. According to
the Exchange, the proposed rule change is a competitive response to a
filing submitted by ISE that recently was approved by the
Commission.\18\ The Exchange has stated that waiver of the 30-day
operative delay would permit the Exchange to implement the proposal in
close time proximity to competitor exchanges. The Commission believes
that the proposed rule change presents no novel issues and that waiver
of the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission hereby
waives the 30-day operative delay and designates the proposed rule
change as operative upon filing.\19\
---------------------------------------------------------------------------
\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ See supra note 7.
\19\ 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 Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f082859c95dd939f9d9d959e8483b0839593de979f86"><span class="__cf_email__" data-cfemail="abd9dec7ce86c8c4c6c6cec5dfd8ebd8cec885ccc4dd">[email protected]</span></a>. Please include
file number SR-PEARL-2024-30 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-PEARL-2024-30. 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-PEARL-2024-30 and should be
submitted on or before August 13, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
---------------------------------------------------------------------------
\20\ 17 CFR 200.30-3(a)(12), (59).
---------------------------------------------------------------------------
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-16109 Filed 7-22-24; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on July 23, 2024.
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.