Notice2025-08546
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposal To Amend Rules 18.7 (Position Limits) and 18.9 (Exercise Limits)
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Published
May 15, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 93 (Thursday, May 15, 2025)</title>
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[Federal Register Volume 90, Number 93 (Thursday, May 15, 2025)]
[Notices]
[Pages 20731-20734]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-08546]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103014; File No. SR-MEMX-2025-12]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposal To Amend Rules 18.7 (Position
Limits) and 18.9 (Exercise Limits)
May 9, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 6, 2025, MEMX LLC (``MEMX'' or the ``Exchange'') filed with
the Securities and Exchange Commission (the ``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Exchange filed the proposal as
a ``non-controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing with the Commission a proposed rule change
to amend Rules 18.7 and 18.9 (Position Limits and Exercise Limits,
respectively). The text of the proposed rule change is provided in
Exhibit 5 and is available on the Exchange's website at <a href="https://info.memxtrading.com/regulation/rules-and-filings/">https://info.memxtrading.com/regulation/rules-and-filings/</a>.
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 Rules 18.7 (Position Limits) and
18.9 (Exercise Limits) in order to specifically describe these limits
in the rule text, which more closely aligns with the rules of other
options exchanges and provides additional clarity and consistency in
the Exchange's rules.\5\
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\5\ See, e.g., Cboe Options Exchange (``Cboe'') Rule 8.30,
Position Limits, and Rule 8.42, Exercise Limits; MIAX Options
Exchange (``MIAX'') Rule 307, Position Limits, and Rule 309,
Exercise Limits; Nasdaq ISE, LLC (``ISE'') Options 9, Section 13,
Position Limits, and Section 15, Exercise Limits; BOX Options
Exchange (``BOX'') Rule 3120, Position Limits, and Rule 3140,
Exercise Limits.
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Currently, Exchange Rule 18.7, Position Limits, and Rule 18.9,
Exercise Limits provide that Options Members may not exceed the
applicable position and exercise limits, respectively, fixed from time
to time by the Exchange for any options contract traded on MEMX
Options. The Exchange provided a notice to Members upon the launch of
MEMX Options that provided the specific position limits applicable to
options trading on the Exchange, which are those calculated and
disseminated by the Options Clearing Corporation (``OCC'').\6\ The
Exchange is now proposing to amend Rules 18.7 and 18.9 by codifying
these specific position and exercise limits in the rule text so that
the entirety of the applicable information related to position and
exercise limits is available in the text of the rules themselves,
providing more clarity to Exchange Members. The Exchange notes that it
is not proposing to make any changes to the position and exercise
limits applicable to its Members, it is simply adding additional detail
to the applicable rules. Further, each of the newly proposed provisions
are substantively identical to the rules of other options exchanges,
including Cboe, ISE, MIAX and BOX, as more fully described below. As
such, the Exchange believes that the proposed changes will add clarity
and uniformity to the rules related to position and
[[Page 20732]]
exercise limits amongst options exchanges.
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\6\ See Regulatory Notice 23-12, available at: <a href="https://info.memxtrading.com/wp-content/uploads/2023/09/RegNotice-23-12-Options-Position-Limits.pdf">https://info.memxtrading.com/wp-content/uploads/2023/09/RegNotice-23-12-Options-Position-Limits.pdf</a>, which informed Exchange members of the
specific position limits applicable to options trading on MEMX
Options, pursuant to Rule 18.7, as those position limits calculated
and disseminated by the OCC, published daily and which can be found
at: <a href="https://www.theocc.com/market-data/market-data-reports/series-and-trading-data/position-limits">https://www.theocc.com/market-data/market-data-reports/series-and-trading-data/position-limits</a>.
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Position and exercise limits are designed to limit the number of
options contracts traded in an underlying security that an investor,
acting alone or in concert with other directly or indirectly, may
control. These limits are intended to address potential manipulative
schemes and adverse market impact surrounding the use of options, such
as disrupting the market in the security underlying the options. The
potential manipulative schemes and adverse market impact are balanced
against the potential of setting the limits so low as to discourage
participation in the options market. Position and exercise limits do
not limit the total number of options that may be held, but rather,
they limit the number of positions a single customer may hold or
exercise at one time.
The current position (and exercise limit) structure which the
Exchange is proposing to codify into Rules 18.7 and 18.9 incorporates
five categories of limits ranging from 25,000 to 250,000 contracts,
based on two criteria: (1) the securities trading volume over the prior
six months and (2) the number of shares outstanding. More specifically,
proposed Rule 18.7(a) \7\ provides in relevant part, that no Options
Member may: (1) control an aggregate position in an options contract
traded on the Exchange in excess of 25,000 or 50,000 or 75,000 or
200,000 or 250,000 options contracts (whether long or short), of the
put type and the call type on the same side of the market respecting
the same underlying security, combining for purposes of this position
limit long positions in put options with short positions in call
options, and short positions in put options with long positions in call
options, or such other number of options contracts as may be fixed from
time to time by the Exchange as the position limit for one or more
classes or series of options; or (2) exceed the applicable position
limit fixed from time to time by another exchange for an options
contract not traded on the Exchange, when the Options Member is not a
member of the other exchange on which the transaction was effected.
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\7\ The Exchange is also proposing to insert the phrase ``Except
with the prior permission of an Exchange Official or his designee,
to be confirmed in writing'' at the beginning of Rules 18.7 and
18.9, in order to conform to the rules of other exchanges, including
Cboe Rule 8.30 and 8.42(a), MIAX Rules 307(a) and 309(a), BOX Rule
3120(a) and 3140(a), and ISE Options 9, Sections 13(a) and 15(a).
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Proposed Rule 18.7(c) provides that reasonable notice shall be
given for each new position limit fixed by the Exchange and proposed
Rules 18.7(d)(1)-(5) specify the criteria for each position limit. For
example, proposed Rule 18.7(d)(5) indicates that to be eligible for the
250,000 option contract limit, either the most recent six (6) month
trading volume of the underlying security must have totaled at least
100 million shares or the most recent six-month trading volume of the
underlying security must have totaled at least seventy-five (75)
million shares and the underlying security must have at least 300
million shares currently outstanding.
Proposed Rule 18.7(e) contains standard language regarding the
Exchange's bi-annual review of the status of underlying securities to
determine which limit should apply. Proposed Rule 18.7(f) defines the
situations in which a Member would be considered to ``control'' a
position for purposes of compliance with the rule. Lastly, the Exchange
is proposing to adopt Interpretations and Policies to Rule 18.7.
Interpretation and Policy .01 contains a table denoting the specific
position limits that apply to 21 underlying securities, including, for
example, the Invesco QQQ Trust Series 1 (``QQQ'') and the iShares
Russell 2000 ETF (``IWM''), notwithstanding the criteria specified in
Rule 18.7(d). Again, this provision is identical to other options
exchanges,\8\ and codifies into Rule 18.7 what the Exchange currently
relies upon with respect to options position limits on these specific
securities. Interpretation and Policy .02 indicates that positions in
Short Term Option Series, Monthly Options Series, and Quarterly Options
Series shall be aggregated with positions in options contracts on the
same underlying security.\9\
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\8\ To the extent other options exchanges have received
Commission approval to list and trade options on certain securities
that the Exchange has not yet done so, there are additional position
limits identified in the corresponding tables of those other
exchanges. See, e.g., MIAX Rule 307, Interpretation and Policy .01
which contains the same position limits proposed in the Exchange's
table with the addition of four securities, the Fidelity Ethereum
Fund, Bitwise Ethereum Fund, Grayscale Ethereum Trust, and the
Grayscale Ethereum Mini Trust, all recently approved to list and
trade options upon in April 2025. See Securities Exchange Act
Release No. 102821 (April 11, 2025), 90 FR 16339 (April 17, 2025)
(SR-MIAX-2025-20), and Securities Exchange Act Release No. 102846
(April 11, 2025), 90 FR 16272 (April 17, 2025) (SR-MIAX-2025-21).
The Exchange is in the process of completing similar proposals to
list and trade options on the same securities and will similarly
propose to amend the table in Rule 18.7, Interpretation and Policy
.01 related to the position and exercise limits of options on these
securities in connection with that rule filing.
\9\ This provision is identical to Cboe Rule 8.30,
Interpretation and Policy .09.
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With respect to Rule 18.9, Exercise Limits, the Exchange is
proposing to make the same changes conforming the rule to that of other
options exchanges, which include among other additions: (1) replacing
the general language in 18.9(a)(1) which states that no Options Member
shall have `` . . . exceeded the applicable exercise limit fixed from
time to time by the Exchange for any options contract traded on MEMX
Options'' with the more specific language: `` . . . have exercised
within any five (5) consecutive business days aggregate long positions
in any class of options traded on the Exchange in excess of 25,000, or
50000 or 75,000 or 200,000 or 250,000 option contracts or such other
number of option contracts as may be fixed from time to time by the
Exchange as the exercise limit for that class of options; (2) proposed
Rule 18.9(b) indicating that reasonable notice shall be given of each
new exercise limit fixed by the Exchange by posting notice thereof by
the Exchange; \10\ (3) proposed Rule 18.9(c) indicating that Limits
shall be determined in the manner described in Rule 18.7; and (4),
proposed Rule 18.9, Interpretation and Policy .01 which provides the
applicable exercise limits for the same 20 securities identified in the
table in proposed Rule 18.7, Interpretation and Policy .01.
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\10\ The Exchange is also proposing to make a minor, non-
substantive change to current Rule 18.9(b), which will be re-named
Rule 18.9(d), by replacing the word ``Market Maker'' with
``Member'', in order to conform to the rules of other options
exchanges. See, e.g., ISE Options 9, Section 15(c) and MIAX Rule
309(d).
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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.\11\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \12\ 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.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \13\ requirement that
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the rules of an exchange not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ Id.
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In particular, the Exchange believes that the proposed modification
of Rules 18.7 and 18.9 to list the specific position and exercise
limits applicable to Options Members would better align the Exchange's
rules with other options exchanges, thereby protecting investors by
providing more clarity and consistency with respect to position and
exercise limits that are standard to all options exchanges. The
Exchange further believes that the proposed change would remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, protect investors and the
public interest, and add clarity, transparency and consistency to the
Exchange's rules. The Exchange believes that market participants would
benefit from the increased clarity, thereby reducing potential
confusion. In addition, the proposed changes would align Rule 2.4 [sic]
with the equivalent rules of other options exchanges, including Cboe,
BOX, ISE and MIAX,\14\ as described above.
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\14\ See supra note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act as the proposed rule changes
provide greater clarity regarding the position and exercise limits
applicable to Options Members as the limits are effectively not
changing under this proposal, they are simply being codified in the
rules. Further, the rules of the Exchange apply equally to all Members
of the Exchange and all Members of the Exchange are required to adhere
to the position and exercise limits established by the Exchange's
rules.
The Exchange does not believe that the proposal to amend Rules 18.7
and 18.9 will impose any burden on intermarket competition as the
proposal is not competitive in nature, it is designed to codify
specific position and exercise limits within the Exchange's rules which
are identical to that of other options exchanges, creating uniformity
amongst options exchanges with respect to rules related to position and
exercise limits.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change is filed for immediate effectiveness
pursuant to Section 19(b)(3)(A) of Act \15\ and Rule 19b-4(f)(6) \16\
thereunder. The Exchange designates that the proposed rule change
effects a change that (i) does not significantly affect the protection
of investors or the public interest; (ii) does not impose any
significant burden on competition; and (iii) by its terms, does not
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest. Additionally, the
Exchange has given 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.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \17\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay period so that the Exchange
may conform to the rules of other exchanges without delay since the
proposed changes are not novel or unique. The proposal will provide
clarity with respect to rules related to position and exercise limits
to market participants and does not raise any novel issues. For these
reasons, the Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest and designates the proposed rule change to be operative upon
filing with the Commission.\18\
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\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of this 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.\19\ If the
Commission takes such action, the Commission shall institute
proceedings to determine whether the proposed rule change should be
approved or disapproved.
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\19\ 15 U.S.C. 78s(b)(3)(C).
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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#4032352c256d232f2d2d252e3433003325236e272f36"><span class="__cf_email__" data-cfemail="9eecebf2fbb3fdf1f3f3fbf0eaeddeedfbfdb0f9f1e8">[email protected]</span></a>. Please include
file number SR-MEMX-2025-12 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-MEMX-2025-12. 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
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identifiable information in submissions; you should submit only
information that you wish to make available publicly. We may redact in
part or withhold entirely from publication submitted material that is
obscene or subject to copyright protection. All submissions should
refer to file number SR-MEMX-2025-12 and should be submitted on or
before June 5, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2025-08546 Filed 5-14-25; 8:45 am]
BILLING CODE 8011-01-P
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