Notice2025-21643
Joint Industry Plan; Notice of Filing of Proposed Amendment To Add Paragraph (c) to Section 6 of the Plan for the Purpose of Developing and Implementing Procedures Designed To Facilitate the Listing and Trading of Standardized Options To Create a Forum for Discussion Concerning Plan Matters
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Published
December 1, 2025
Issuing agencies
Securities and Exchange Commission
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<title>Federal Register, Volume 90 Issue 228 (Monday, December 1, 2025)</title>
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[Federal Register Volume 90, Number 228 (Monday, December 1, 2025)]
[Notices]
[Pages 55203-55206]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-21643]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104268; File No. 4-443]
Joint Industry Plan; Notice of Filing of Proposed Amendment To
Add Paragraph (c) to Section 6 of the Plan for the Purpose of
Developing and Implementing Procedures Designed To Facilitate the
Listing and Trading of Standardized Options To Create a Forum for
Discussion Concerning Plan Matters
November 25, 2025.
Pursuant to Section 11A of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 608 thereunder,\2\ notice is hereby given that
on November 13, 2025, Cboe BZX Exchange, Inc., Cboe C2 Exchange, Inc.,
Cboe EDGX Exchange, Inc., and Cboe Exchange, Inc., on behalf of the
Sponsors \3\ of the Plan for the Purpose of Developing and Implementing
Procedures Designed to Facilitate the Listing and Trading of
Standardized Options Submitted Pursuant to Section 11A(a)(3)(B) of the
Securities Exchange Act of 1934 (``Options Listing Procedures Plan,''
``Plan,'' or ``OLPP''),\4\ filed with the Securities and Exchange
Commission (``Commission'') a proposed amendment to the OLPP
(``Amendment'').\5\ The Amendment proposes to add a provision to the
OLPP authorizing the OLPP Sponsors to act jointly to discuss issues
within the scope of the Plan, authority which is intended to facilitate
both discussions among the Sponsors and, as appropriate, discussions
among the Sponsors and other industry participants, concerning ways to
achieve and enhance a fair and orderly market for options trading.
Examples of matters that are within the scope of the Plan, and which
may be the subject of
[[Page 55204]]
such discussions include, but are not limited to, procedures for the
listing of standardized options; adjustments to the terms of options
contracts; criteria related to permissible classes of options overlying
equity securities and series' strike prices, expiration terms, and
trading increments; and limiting or reducing the number of listed
option series to mitigate quote message traffic, to enhance market
quality, and to otherwise address capacity issues. As discussed below,
the proposed Amendment also includes a number of provisions governing
how the discussions that are the subject of the Amendment will take
place, including a provision requiring that an observer from the
Commission must be present during any discussions that take place
pursuant to the Amendment.
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\1\ 15 U.S.C. 78k-1.
\2\ 17 CFR 242.608.
\3\ The Sponsors of the OLPP are: BOX Exchange LLC; Cboe BZX
Exchange, Inc.; Cboe C2 Exchange, Inc.; Cboe EDGX Exchange, Inc.;
Cboe Exchange, Inc.; MEMX LLC; Miami International Securities
Exchange LLC; MIAX Emerald, LLC; MIAX Pearl, LLC; MIAX Sapphire,
LLC; Nasdaq BX, Inc.; Nasdaq GEMX, LLC; Nasdaq ISE, LLC; Nasdaq MRX,
LLC; Nasdaq PHLX LLC; The Nasdaq Stock Market LLC; NYSE American
LLC; NYSE Arca, Inc.; and The Options Clearing Corporation.
\4\ OLPP is a national market system plan approved by the
Commission pursuant to Section 11A of the Act and Rule 608
thereunder. See Securities Exchange Act Release No. 44521 (July 6,
2001), 66 FR 36809 (July 13, 2001). The full text of the OLPP is
available at <a href="https://www.theocc.com/getmedia/198bfc93-5d51-443c-9e5b-fd575a0a7d0f/options_listing_procedures_plan.pdf">https://www.theocc.com/getmedia/198bfc93-5d51-443c-9e5b-fd575a0a7d0f/options_listing_procedures_plan.pdf</a>.
\5\ The Sponsors previously filed an amendment on October 31,
2024. See Securities Exchange Act Release No. 101640 (Nov. 15,
2024), 89 FR 92238 (Nov. 21, 2024) (``Notice''). On February 19,
2025, the Sponsors withdrew that amendment.
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The Commission is publishing this notice to solicit comments from
interested persons on the proposed amendment. Set forth below in
Section I, which is being published substantially as filed by the
Sponsors, is the statement of the purpose and summary of the Amendment,
along with information pursuant to Rule 608(a) under the Act.
I. Requirements Pursuant to Rule 608(a)
1. Text of Amendment
This Amendment proposes to add paragraph (c) to Section 6 of the
Plan. The text of the proposed amendment is in Exhibit I, which is set
forth in Section II, below.
2. Purpose of Amendment
For many years, the Sponsors and industry members have recognized
the need for a forum for discussions to take place among the Sponsors,
and potentially with other industry participants, to identify issues
facing the options trading industry and to explore possible solutions.
The discussions that have taken place in the past have often been on an
impromptu and such discussions may have involved one or more of the
Sponsors, market maker members of the national securities exchanges,
the staff of the Commission, and the members of various industry
working groups (such as the Listed Options Market Structure Working
Group).
One example of the type of issue that the Sponsors might discuss
among themselves, and perhaps with other industry participants, are the
``quote mitigation'' concerns that have been voiced by industry
participants, including concerns about proliferation of listed options
strike prices and the resulting potential negative effects on investors
and on the market makers that are obligated to quote in all of the
listed series. In particular, industry participants have raised
concerns about the proper balance between the need to provide investors
with a sufficient number of strikes to meet their investment purposes,
while also ensuring that the number of listed strikes does not become
so large that market makers, who are required to quote continuously in
a significant number of existing strikes, are unduly burdened by having
to expend significant amounts of their finite capital to continuously
quote strikes for which there is minimal or no investor interest in
trading. Indeed, while investors need to have a choice of appropriately
granular strikes to satisfy their investment needs, some industry
participants have questioned whether the increase in the number of
strikes might harm investors, particularly in series with lower
investor interest in trading, because those investors might become
confused about the differences in investment characteristics between
the various strikes and ultimately could be unable to close out
positions in illiquid series in an effective manner. Finally, industry
participants also have questioned whether the proliferation of strikes
might harm overall market quality and widen spreads because market
makers are forced to deploy their limited capital in a less efficient
manner due to the fact that they have to expend some of their capital
to fulfill their obligation to continuously quote strikes for which
there is minimal or no investor interest in trading. Rather than
address the quote mitigation issues in a wholistic manner and engaging
in the types of discussions that are the subject of the proposed
Amendment, some of the quote mitigation issues have been addressed in a
piecemeal fashion through a number of amendments to both the Plan and
to the rules of the Sponsors. For example, in 2009, the Sponsors
proposed a ``quote mitigation strategy'' amendment to the Plan, with a
goal of reducing the amount of quote traffic that had resulted from the
Penny Pilot Program that is in the Plan. See Joint Industry Plan;
Notice of Filing of Amendment No. 3 to the Plan for the Purpose of
Developing and Implementing Procedures Designed To Facilitate the
Listing and Trading of Standardized Options, Release No. 34-60362, 74
FR 37266 (July 22, 2009). When proposing that amendment, the Sponsors
highlighted that the Penny Pilot Program resulted ``in an explosion of
quote traffic'' and that the proposed ``uniform listing standards to
the range of options series exercise (or strike) prices available for
trading'' was a quote mitigation strategy designed to ``reduce the
number of options series available for trading, which will in turn
lessen the rate of increase in quote traffic.'' Id., 74 FR at 37266 and
n.4.
When it approved the 2009 amendment to the Plan, the Commission
concluded that the amendment ``should reduce the number of options
series available for trading, and thus should reduce increases in the
options quote message traffic because market participants will not be
submitting quotes in those series.'' See Joint Industry Plan, Order
Approving Amendment No. 3 to the Plan for the Purpose of Developing and
Implementing Procedures Designed To Facilitate the Listing and Trading
of Standardized Options, Release No. 34-60531, entered on August 19,
2009, 74 FR 43173, 43174 (Aug. 26, 2009).
Another example of an effort by a Sponsor to address a quote
mitigation issue occurred in 2020, when Nasdaq BX, Inc. (``BX'')
proposed a rule that sought to limit ``Short Term Options Series''
intervals between strikes which are available for quoting and trading
on that exchange. See Self-Regulatory Organizations; Nasdaq BX, Inc.;
Notice of Filing of Proposed Rule Change To Amend Options 4, Section 5,
To Limit Short Term Options Series Intervals Between Strikes Which are
Available for Quoting and Trading on BX, Release No. 34-90384, 85 FR
73113 (Nov. 9, 2020). In its filing, BX noted that its proposal ``to
reduce the number of strikes in the furthest weeklies, where there
exist wider markets and therefore lower market quality'' was an
``initial attempt at reducing strikes and [that BX] anticipates filing
additional proposals to continue reducing strikes.'' Id., 85 FR at
73117 and n.23. BX also noted that reducing the number of listed weekly
options would encourage market makers to deploy their capital more
efficiently and improve displayed market quality. Id. at 73119.
Finally, BX represented that (1) its proposal was a reaction to
comments that it received from industry members ``with respect to the
increasing number of strikes that are required to be quoted by market
makers in the options industry'' and (2) reducing the number of strikes
would ``allow Lead Market Makers and Market Makers to expend their
capital in the options market in a more efficient manner'' because, as
the number of strikes listed across options exchanges increases, market
makers ``must expend [more] capital to ensure that they have the
appropriate infrastructure to meet their quoting obligations on all
options markets in
[[Page 55205]]
which they are assigned in options series.'' Id.
When it approved BX's 2020 rule filing, the Commission noted that
it had received several comments expressing support for the proposed
rule change. See Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice
of Filing of Amendment No. 1 and Order Granting Accelerated Approval of
Proposed Rule Change, as Modified by Amendment No. 1, To Amend
Options4, Section 5, To Limit Short Term Options Series Intervals
Between Strikes That Are Available for Quoting and Trading on BX,
Release No. 34-91125, entered February 12, 2021, 86 FR 10375, 10376
(Feb. 19, 2021). The Commission also found that:
More efficient and better calibrated strike increment rules can
have a positive impact on options markets, as it can provide
certainty, minimize confusion, and promote more efficient use of
resources among market makers that are obligated to continuously
quote such series, all while still offering customers the choice to
meet their investment needs.
Id., 86 FR at 10377. Finally, the Commission noted that the
approved rule ``may serve as a starting point to a broader initiative
to revisit, harmonize, and update the panoply of strike listing rules
more broadly.'' Id.
Following the Commission's approval of BX's 2020 rule filing, other
exchanges, including Cboe Exchange, Inc. (``Cboe''), followed suit by
promulgating similar amendments to their rules. See, e.g., Self-
Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend Rule 4.5
(Series of Option Contracts Open for Trading) in Connection With
Limiting the Number of Strikes Listed for Short Term Option Series
Which Are Available for Quoting and Trading on the Exchange, Release
No. 34-91456, 86 FR 18090 (April 1, 2021). In its filing, Cboe noted
that limiting the number of weekly strikes in which market makers are
required to quote would allow those market makers to expend their
capital in the options market in a more efficient manner, which could
improve overall market quality, while still providing market
participants with access to sufficient strike intervals to meet their
investment objectives. Id., 86 FR at 18093-94. Cboe also noted that the
removal of strikes found in clusters whose characteristics closely
resemble one another would protect the investors and the general public
by removing unnecessary choices of an options series, which could
result in improved market quality. Id. at 18094.
In 2024, one of the Sponsors, Cboe, compiled statistics related to
a quote mitigation issue by comparing the increase in the average
number of multiple listed options series listed per day in the months
of June 2020 and June 2024. Cboe also examined the reduction in the
average percentage of series traded per day during those two months and
the reduction in average percentage of series with open interest per
day. That analysis suggests that there are still significant quote
mitigation issues in the options markets that could be the subject of
the type of discussions that the proposed Amendment would authorize.
Specifically, Cboe's analysis revealed that the average series
listed per day increased by 27% in June 2024, when compared to June
2020, with an average of 1,406,632 series listed per day in 2024 and
1,107,980 series listed per day in June 2020. Cboe's analysis also
revealed, however, that the average percentage of series that traded
per day decreased from 18% in June 2020 to 10% in June 2024 and that
the average percentage of series with open interest per day decreased
from 53% to 47% during those same comparison months. In other words, as
the average number of series listed per day continues to increase, more
series appear to have minimal or no investor interest in trading and
therefore are less liquid--a dynamic that the Sponsors believe may
worsen quote quality because market makers are required to expend their
capital to quote in the expanding number of series that are listed.
The quote mitigation issues discussed above are one example of the
types of issues that that have led the Sponsors to conclude that the
options industry would benefit from the Plan being amended to
explicitly authorize the Sponsors to act jointly to discuss matters
that fall within the scope of the Plan, including discussions that
could take place at industry group meetings where industry participants
could provide their views, with a goal of identifying existing issues
that fall within the scope of the Plan and potential solutions to those
issues. The proposed Amendment is consistent with Rule 608(a)(3)(A) of
Regulation National Market System, which authorizes self-regulatory
organizations (like the Sponsors) to act jointly in preparing and
filing any amendment to a national market system plan. 17 CFR
242.608(a)(3)(A). If, as a result of their discussions, the Sponsors
determine that it is appropriate to address an issue within the scope
of the Plan by proposing one or more amendments to the Plan, the
Amendment would authorize the Sponsors to act jointly to prepare and
file such an amendment with the Commission pursuant to Rule 608(b) of
Regulation NMS. 17 CFR 608(b). In addition, if the Sponsors determine
to address any identified issues by amending their rules, the Amendment
would authorize the Sponsors to act jointly to make one or more rule
filings pursuant to Section 19(b) of the Exchange Act and Rule 19b-4
thereunder. 15 U.S.C. 78s(b); 17 CFR 240.19b-4.
To provide appropriate levels of transparency about discussions
that might take place pursuant to the proposed Amendment and Commission
participation, the Amendment also includes a number of subsections
governing (1) when the discussions will take place, (2) who can and who
must be present during any discussions, (3) the agenda for any
discussions, and (4) a requirement that minutes be prepared. In
particular, the Amendment would allow the Sponsors to hold discussions
as frequently as they deem appropriate, with the requirement that an
agenda be prepared prior to a discussion taking place. If any Sponsor
objects to the inclusion of a discussion item on an agenda, that item
would be removed from the agenda and it would not be discussed.
When a discussion takes place, the Amendment requires that (1) one
or more representatives of each Sponsor must attend, (2) legal counsel
for each Sponsor must attend (who may also serve as the Sponsor's
representative), and (3) one or more Commission staff observers must
attend. The Amendment also provides that the discussions may be held as
part of a broader industry group meeting and that the Sponsors may
invite additional observers to attend, provided, however, that if a
Sponsor objects to an invitation of an additional observer, that
observer would not be permitted to attend the discussion. Finally, as
noted above, minutes must be taken with respect to each discussion and
each Sponsor would have the opportunity to review and approve those
minutes.
3. Manner of Implementation of Amendment
The proposed amendment will be added to the Plan following
Commission approval of the amendment pursuant to Rule 608(b)(1) and
(b)(2) of Regulation NMS.
4. Phases of Development and Implementation
Not applicable.
[[Page 55206]]
5. Impact on Competition
The Sponsors believe that the proposed amendment will impose no
burdens on competition that are not necessary or appropriate in
furtherance of the Act.
6. Written Understandings or Agreements Among Plan Members
Not applicable.
7. Approval of Proposed Amendment
Each Sponsor approved the submission of the Amendment and has
executed a signed copy of the Amendment.
8. Exhibits
I. Proposed amendments to Section 6 of the Plan.
9. Description of Operation of Facility Contemplated by the Proposed
Amendment
Not applicable.
10. Terms and Conditions of Access
Not applicable.
11. Method of Determination and Imposition, and Amount of, Fees and
Charges
Not applicable.
12. Method and Frequency of Processor Evaluation
Not applicable.
13. Dispute Resolution
The Plan does not include provisions regarding the method by which
disputes arising in connection with the operation of the plan will be
resolved.
II. Text of the Proposed Amendment to the OLPP (Exhibit I)
Language proposed to be added to Section 6 of the Plan as new
Section 6(c):
(c) The Plan Sponsors are authorized to act jointly to discuss
matters within the scope of the Plan for the purpose of considering
whether to file proposed Plan amendments or rule filings to promote
uniform procedures and standards related to multiply listed options
overlying equity securities to facilitate their continued effective
trading on multiple exchanges. Matters within the scope of the Plan
that may be the subject of such discussions include, but are not
limited to: procedures for the listing of standardized options; options
adjustments; criteria related to permissible classes of options
overlying equity securities and series' strikes, expirations, and
trading increments; and the reduction of the number of listed option
series to mitigate quote message traffic and otherwise address capacity
issues. Such discussions will be subject to the following:
(1) The Sponsors may hold discussions pursuant to this paragraph
(c) as frequently as they deem necessary and appropriate. Any Sponsor
may request such discussions be held, and the Sponsors may determine to
hold such discussions as part of broader industry group meetings.
(2) An agenda regarding any discussions held pursuant to this
paragraph (c) must be prepared and distributed at least two business
days in advance of such discussions to all persons specified in
subparagraph (3) below. Any Sponsor may object to the inclusion of any
proposed agenda item, in which case that item would be removed from the
agenda.
(3)
(A) The following persons must be present during any discussions
held pursuant to this paragraph (c):
(i) one or more representatives of each Sponsor;
(ii) legal counsel for each exchange Sponsor (who may also serve as
the representative required in subparagraph (i) above); and
(iii) one or more Commission staff observers.
(B) The Sponsors may invite additional observers, including
representatives of industry members and/or industry groups, to attend
such discussions (or portions thereof) if the Sponsors deem appropriate
for certain agenda items. Any Sponsor may object to the invitation of
any additional observer, in which case that observer would not be
permitted to attend such discussions.
(4) One Sponsor representative must take minutes of any discussions
held pursuant to this paragraph (c) and provide each Sponsor with an
opportunity to review and approve such minutes.
(5) Following any discussions held pursuant to this paragraph (c),
the Sponsors are authorized to act jointly for purposes of determining
whether to file with the Commission one or more proposed amendments to
the Plan or one or more rule filings pursuant to Rule 19b-4 under the
Exchange Act for the purposes set forth in the introductory language of
this paragraph (c).
III. Solicitation of Comments
The Commission seeks comment on the Amendment. Interested persons
are invited to submit written data, views and arguments concerning the
foregoing, including whether the proposed amendment is necessary or
appropriate in the public interest, for the protection of investors and
the maintenance of fair and orderly markets, to remove impediments to,
and perfect the mechanisms of, a national market system, or otherwise
in furtherance of the purposes of 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#e092958c85cd838f8d8d858e9493a0938583ce878f96"><span class="__cf_email__" data-cfemail="4e3c3b222b632d2123232b203a3d0e3d2b2d60292138">[email protected]</span></a>. Please include
file number 4-443 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 submission should refer to file number 4-443. 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 filing will be available for inspection and copying at
the principal offices of the Sponsors. 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 4-443 and should be submitted on or before
December 22, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(85).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-21643 Filed 11-28-25; 8:45 am]
BILLING CODE 8011-01-P
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