Notice2026-03451
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change of Amendments To Facilitate the Transfer and Trading of Options That Overlie the MSCI EAFE Index and the MSCI Emerging Markets Index
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
February 23, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 35 (Monday, February 23, 2026)</title>
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[Federal Register Volume 91, Number 35 (Monday, February 23, 2026)]
[Notices]
[Pages 8538-8543]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03451]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104862; File No. SR-NYSEARCA-2026-13]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change of Amendments To
Facilitate the Transfer and Trading of Options That Overlie the MSCI
EAFE Index and the MSCI Emerging Markets Index
February 18, 2026.
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 February 6, 2026, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE
Arca'') 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)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes amendments to facilitate the transfer and
trading of options that overlie the MSCI EAFE Index (``EAFE options'')
and the MSCI Emerging Markets Index (``EM options'') based on the rules
of Chicago Board Options Exchange, Inc. (``CBOE'') governing the
listing and trading of such options. EAFE options and EM options would
be P.M., cash-settled contracts with European-style exercise. 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 Exchange proposes amendments to Rule 5.12-O (Designations of
the Index Broad-Based Index Options), Rule 5.15-O (Position Limits for
Broad-Based Index Options), Rule 5.19-O (Terms of Index Option
Contracts), Rule 5.20-O (Trading Sessions), Rule 5.22-O (Disclaimers),
Rule 5.35-O (Position Limits for FLEX Options), and Rule 6.4-O (Series
of Options Open for Trading). The proposed changes are based on CBOE
Rules 24.1, 24.2, 24.6, 24.9, 24A.7, and 24B.7 \5\ and are intended to
facilitate the transfer to the Exchange of EAFE options and EM options
currently listed and traded on CBOE.\6\ EAFE options and EM options
each are P.M., cash-settled contracts (in U.S. dollars) with European-
style exercise.
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\5\ See CBOE Rules 24.1, 24.2, 24.6, 24.9, 24A.7, and 24B.7;
Securities Exchange Act Release No. 74681 (April 8, 2015), 80 FR
20032 (April 14, 2015) (SR-CBOE-2015-023) (Order Granting
Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1, to List and Trade Options on the MSCI EAFE Index
and on the MSCI Emerging Markets Index).
\6\ A press release on January 7, 2026, announced that options
on MSCI indexes would be listed on the Exchange and its affiliate
NYSE American LLC, including the MSCI Emerging Markets Index, MSCI
EAFE Index, MSCI ACWI Index, MSCI World Index, and MSCI USA Index,
in early 2026 subject to regulatory approval. See <a href="https://ir.theice.com/press/news-details/2026/The-New-York-Stock-Exchange-Enters-Agreement-with-MSCI-to-Become-the-U-S--Options-Listing-Venue-for-Benchmark-Indexes-in-Early-2026/default.aspx">https://ir.theice.com/press/news-details/2026/The-New-York-Stock-Exchange-Enters-Agreement-with-MSCI-to-Become-the-U-S--Options-Listing-Venue-for-Benchmark-Indexes-in-Early-2026/default.aspx</a>.
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MSCI EAFE Index Design, Methodology and Dissemination
The MSCI EAFE Index (Europe, Australasia, Far East) is a free
float-adjusted market capitalization index launched in 1969 and
calculated by MSCI Inc. (``MSCI'') designed to measure the equity
market performance of developed markets, excluding the U.S. and
Canada.\7\ The MSCI EAFE Index consists of large and midcap components,
currently has 694 constituents and ``covers approximately 85% of the
free float-adjusted market capitalization in each country.'' \8\
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\7\ The MSCI EAFE Index consists currently of the following 21
developed market country indexes: Australia, Austria, Belgium,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel,
Italy, Japan, the Netherlands, New Zealand, Norway, Portugal,
Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
\8\ See MSCI EAFE Index fact sheet (dated November 28, 2025)
available at <a href="https://www.msci.com/documents/10199/56aada01-e1e4-492a-858c-430b34e2676d">https://www.msci.com/documents/10199/56aada01-e1e4-492a-858c-430b34e2676d</a>.
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The MSCI EAFE Index is calculated in U.S. dollars on a real-time
basis from the open of the first market on which the components are
traded to the closing of the last market on which the components are
traded. The MSCI EAFE Index is based on the MSCI Global Investable
Market Indexes (``GIMI'') Methodology, which is similar to the
methodology used to calculate the value of other benchmark market-
capitalization weighted indexes.\9\ The level of the MSCI EAFE Index
reflects the free float-adjusted market value of the component stocks
relative to a particular base date and is computed by dividing the
total market value of the companies in the MSCI EAFE Index by the index
divisor.
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\9\ Summary and comprehensive information about the GIMI
methodology may be reviewed at <a href="https://www.msci.com/indexes/index-resources/index-methodology">https://www.msci.com/indexes/index-resources/index-methodology</a>.
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MSCI monitors and maintains the MSCI EAFE Index. Adjustments to the
MSCI EAFE Index are made on a daily basis with respect to corporate
events and dividends. MSCI reviews the MSCI EAFE Index quarterly
(February, May, August and November) with the objective of reflecting
the evolution of the underlying equity markets and segments on a timely
basis, while seeking to achieve index continuity and stability.\10\
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\10\ See MSCI GIMI Methodology, available via <a href="https://www.msci.com/indexes/index-resources/index-methodology">https://www.msci.com/indexes/index-resources/index-methodology</a>.
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Real-time data is distributed approximately every 15 seconds while
the index is being calculated using MSCI's real-time calculation engine
to Bloomberg L.P. (``Bloomberg''), FactSet Research Systems, Inc.
(``FactSet'') and Thomson Reuters (``Reuters''). End of day data is
distributed daily to clients through MSCI as well as through major
quotation vendors, including Bloomberg, FactSet, and Reuters.
The Exchange notes that the iShares MSCI EAFE exchange traded fund
(``ETF''), which tracks the MSCI EAFE
[[Page 8539]]
Index, is an actively traded product listed on NYSE Arca. The Exchange
also lists options overlying that ETF (``EFA options'') and those
options are actively traded as well. MSCI EAFE Index Future (``EAFE
Futures'') contracts are listed for trading on the Intercontinental
Exchange, Inc. (``ICE'') \11\ and other derivatives contracts on the
MSCI EAFE Index are listed for trading in Europe.
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\11\See MSCI EAFE Index Future contract specifications located
at <a href="https://www.theice.com/products/31196848/MSCI-EAFE-Index-Future">https://www.theice.com/products/31196848/MSCI-EAFE-Index-Future</a>.
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MSCI Emerging Markets Index Design, Methodology and Dissemination
The MSCI Emerging Markets Index (``MSCI EM Index''), launched in
1988, is a free float-adjusted market capitalization index that is
designed to measure equity market performance of emerging markets.\12\
The MSCI EM Index consists of large and midcap components, currently
has 1,196 constituents and ``covers approximately 85% of the free
float-adjusted market capitalization in each country.'' \13\
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\12\ The MSCI EM Index consists currently of the following 24
emerging market country indexes: Brazil, Chile, China, Colombia,
Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea,
Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar,
Russia, South Africa, Taiwan, Thailand, Turkey and United Arab
Emirates.
\13\ See MSCI EM Index fact sheet (dated November 28, 2025),
available at <a href="https://www.msci.com/documents/10199/10c3f32f-4565-4a92-aa1c-edf6f3a4e03f">https://www.msci.com/documents/10199/10c3f32f-4565-4a92-aa1c-edf6f3a4e03f</a>.
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The MSCI EM Index is calculated in U.S. dollars on a real-time
basis from the open of the first market on which the components are
traded to the closing of the last market on which the components are
traded. The MSCI EM Index is also based on the MSCI GIMI
Methodology.\14\ The level of the MSCI EM Index reflects the free
float-adjusted market value of the component stocks relative to a
particular base date and is computed by dividing the total market value
of the companies in the MSCI EM Index by the index divisor.
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\14\ See MSCI GIMI Methodology, available via <a href="https://www.msci.com/indexes/index-resources/index-methodology">https://www.msci.com/indexes/index-resources/index-methodology</a>.
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MSCI also monitors and maintains the MSCI EM Index. Adjustments to
the MSCI EM Index are made daily with respect to corporate events and
dividends. MSCI reviews the MSCI EM Index quarterly (February, May,
August and November) with the objective of reflecting the evolution of
the underlying equity markets and segments on a timely basis, while
seeking to achieve index continuity and stability.\15\
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\15\ See MSCI EM Index fact sheet (dated November 28, 2025),
available at <a href="https://www.msci.com/documents/10199/10c3f32f-4565-4a92-aa1c-edf6f3a4e03f">https://www.msci.com/documents/10199/10c3f32f-4565-4a92-aa1c-edf6f3a4e03f</a>.
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Real-time data is distributed approximately every 15 seconds using
MSCI's real-time calculation engine to Bloomberg, FactSet and Reuters.
End of day data is distributed daily to clients through MSCI as well as
through major quotation vendors, including Bloomberg, FactSet, and
Reuters.
The Exchange notes that the iShares MSCI Emerging Markets ETF is an
actively traded product listed on NYSE Arca. NYSE Arca also lists
options overlying that ETF (``EEM options'') and those options are
actively traded as well. MSCI Emerging Markets Index Future (``EM
Futures'') contracts are listed for trading on ICE \16\ and other
derivatives contracts on the MSCI EM Index are listed for trading in
Europe.
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\16\See MSCI EM Index Future contract specifications located at
<a href="https://www.theice.com/products/31196851/MSCI-Emerging-Markets-Index-Future">https://www.theice.com/products/31196851/MSCI-Emerging-Markets-Index-Future</a>.
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Contract Specifications
The contract specifications for options on the MSCI EAFE Index are
set forth in Exhibit 3-1. The contract specifications for options on
the MSCI EM Index are set forth in Exhibit 3-2.
Generally, the proposed trading rules for EAFE options and EM
options would be the same.
The MSCI EAFE Index and the MSCI EM Index are each a broad-based
index, as defined in Rule 5.10-O(b)(23), for the purpose of determining
which of the Exchange's rules apply to options on such indices and, as
noted, the options for each are P.M.-settled with European-style
exercise provisions settled in cash.\17\
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\17\ The Exchange proposes to amend Rule 5.19-O(4) to provide
for European-style exercise of EAFE options and EM options, with
P.M. settlement.
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Trading of EAFE options and EM options will be subject to the
trading halt procedures applicable to index options traded on the
Exchange \18\ and will continue to be quoted and traded in U.S.
dollars.\19\ Accordingly, all Exchange and The Options Clearing
Corporation (``OCC'') members will continue to be able to accommodate
trading, clearance and settlement of EAFE options and EM options
without alteration.
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\18\ See Rule 5.20-O(c).
\19\ See Rule 5.19-O(a)(1).
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The contract multiplier for EAFE options and EM options would be
$100. EAFE options and EM options would be quoted in index points and
one point would equal $100. The minimum tick size for series trading
below $3 would be 0.05 ($5.00) and at or above $3, will be 0.10
($10.00).
Initially, the Exchange would list in-, at- and out-of-the-money
strike prices. Additional series may be opened for trading as the
underlying index level moves up or down.\20\ The minimum strike price
interval for EAFE option series and EM option series would be 2.5
points if the strike price is less than 200. When the strike price is
200 or above, strike price intervals would be no less than 5
points.\21\ New series of index option contracts may be added up to,
but not on or after, the fourth business day prior to expiration for an
option contract expiring on a business day, or, in the case of an
option contract expiring on a day that is not a business day, the fifth
business day prior to expiration.\22\ Consistent with existing Rule
5.19-O, the Exchange will list Monthly Option series that expire at the
close of business on the last trading day of the month and regular
monthly options that expire on the third Friday of the month. In
addition, as provided for in Rule 6.4-O, the Exchange will list Short
Term options that expire on the Friday of each week, provided that
Short Term options will not be listed if an existing third Friday
expiration or Monthly Option expiration would coincide with the
expiration of a Short Term option.
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\20\ See Rule 5.19-O(c)(4). The rule sets forth the criteria for
listing additional series of the same class as the current value of
the underlying index moves. Generally, additional series must be
``reasonably related'' to the current index value, which means that
strike prices must be within 30% of the current index value. Series
exceeding the 30% range may be listed based on demonstrated customer
interest.
\21\ See proposed Rule 5.19-O(c)(5).
\22\ See Rule 5.19-O(c)(2).
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In order to ensure continuity with existing expirations listed by
CBOE, the Exchange proposes to amend existing Rule 5.19-O to allow for
the listing of up to twelve near-term expiration months with a third
Friday expiration date.\23\ Additionally, the Exchange proposes an
amendment to Rule 5.19-O to permit the listing of up to ten expirations
in Long-Term Index Option Series (``LEAPS'') on the EAFE index and the
EM index with expirations between 12 and 180 months.\24\ Both EAFE and
EM index options would be eligible for all other expirations permitted
for other broad-based indexes, e.g., Short Term Option Series and
Quarterly Option Series.\25\
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\23\ See proposed amendment to Rule 5.19-O(a)(3)(A). The
Exchange is proposing to allow the listing of up to twelve
expiration months at any one time for EAFE options and EM options.
\24\ See proposed amendment to Rule 5.19-O(b)(1).
\25\ See, e.g., Rules 5.19-O(b) (Index LEAPS Options Series);
6.4-O, Commentary .07 (Short Term Option Series); and 6.1-O,
Commentary .08 (Quarterly Option Series). The Exchange proposes to
amend Commentary .07 to Rule 6.4-O to provide that, notwithstanding
the provisions of Commentary .07(a), Short Term Option Series on the
MSCI EAFE Index and the MSCI EM Index will be P.M.-settled and that
the Exchange may have up to 12 Short Term Weekly Expirations in such
series, consistent with how EAFE options and EM options currently
trade.
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[[Page 8540]]
The Exchange proposes that the minimum quoting increment for EAFE
options and EM options will be $0.05 for series trading below $3, and
$0.10 for series trading at or above $3, consistent with Rule 6.72-O.
Trading hours for EAFE options and EM options would be from 9:30
a.m. to 4:00 p.m. (New York time).\26\ Additionally, the last trading
day for expiring EAFE options series and EM options series would be the
business day prior to the expiration date of the specific series.\27\
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\26\ See proposed Rule 5.20-O, Commentary .01.
\27\ See proposed Rule 5.20-O, Commentary .02.
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Initial and Continued Listing Criteria
The MSCI EAFE Index and the MSCI EM Index each meet the definition
of a broad-based index as set forth in Rule 5.10-O(b)(23).\28\ In
addition, the Exchange proposes to incorporate specific initial and
continued listing criteria for options on the MSCI EAFE Index and on
the MSCI EM Index based on CBOE Rules 24.1, 24.2, 24.6, 24.9, 24A.7,
and 24B.7, as follows. New Commentary .01(a) to Rule 5.12-O
(Designation of the Index Broad-Based Index Options) would provide that
the Exchange may list for trading EAFE options and EM options if each
of the following conditions is satisfied:
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\28\ Rule 5.10-O(b)(23) defines a broad-based index to mean an
index designed to be representative of a stock market as a whole or
of a range of companies in unrelated industries.
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(1) The index is broad-based, as defined in 5.10-O(b)(23);
(2) Options on the index are designated as P.M.-settled index
options;
(3) The index is capitalization-weighted, price-weighted, modified
capitalization-weighted or equal dollar-weighted;
(4) The index consists of 500 or more component securities;
(5) All component securities of the index have a market
capitalization of greater than $100 million;
(6) No single component security accounts for more than fifteen
percent (15%) of the weight of the index, and the five highest weighted
component securities in the index do not, in the aggregate, account for
more than fifty percent (50%) of the weight of the index;
(7) Non-U.S. component securities (stocks or ADRs) that trade
solely on markets with which the Exchange does not have comprehensive
surveillance agreements do not, in the aggregate, represent more than:
(i) twenty-five percent (25%) of the weight of the EAFE Index (for
EAFE options), and
(ii) twenty-seven and a half percent (27.5%) of the weight of the
EM Index (for EM options);
(8) During the time options on the index are traded on the
Exchange, the current index value is widely disseminated at least once
every fifteen (15) seconds by one or more major market data vendors.
However, the Exchange may continue to trade EAFE options after trading
in all component securities has closed for the day and the index level
is no longer widely disseminated at least once every fifteen (15)
seconds by one or more major market data vendors, provided that EAFE
futures contracts are trading and prices for those contracts may be
used as a proxy for the current index value;
(9) The Exchange reasonably believes it has adequate system
capacity to support the trading of options on the index, based on a
calculation of the Exchange's current Independent System Capacity
Advisor (ISCA) allocation and the number of new messages per second
expected to be generated by options on such index; and
(10) The Exchange has written surveillance procedures in place with
respect to surveillance of trading of options on the index.
Additionally, the Exchange proposes new Commentary .01(b) to Rule
5.12-O to set forth the following continued listing standards for
options on the MSCI EAFE Index and on the MSCI EM Index:
(1) The conditions set forth in Commentary .01(a) (1), (2), (3),
(4), (8), (9) and (10) must continue to be satisfied. The conditions
set forth in Commentary .01(a)(5) and (6) must be satisfied only as
of the first day of January and July in each year. The condition set
forth in Commentary .01(a)(7) must be satisfied as of the first day
of the month following the Reporting Authority's \29\ review of the
weighting of the constituents in the applicable index but in no case
less than a quarterly basis.
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\29\ As defined in the proposed amendment to Rule 5.22-O,
Commentary .01. See note 32, infra.
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(2) The total number of component securities in the index may
not increase or decrease by more than thirty-five percent (35%) from
the number of component securities in the index at the time of its
initial listing, except for the MSCI EM Index, in which the total
number of component securities in the MSCI EM Index may not increase
or decrease by more than ten percent (10%) over the last six-month
period.
In the event a class of index options listed on the Exchange fails
to satisfy the continued listing standards set forth herein, the
Exchange shall not open for trading any additional series of options of
that class unless the continued listing of that class of index options
has been approved by the Commission under Section 19(b)(2) of the Act.
The Exchange believes that P.M. settlement would continue to be
appropriate for EAFE options and EM options due to the nature of these
indexes that encompass multiple markets around the world. As to the
MSCI EAFE Index, the components open with the start of trading in
certain parts of Asia at approximately 6:00 p.m. (New York time) (prior
day) and close with the end of trading in Europe at approximately 12:30
p.m. (New York time) (next day) as closing prices from Ireland are
accounted for in the closing calculation. The closing MSCI EAFE Index
level is distributed by MSCI between approximately 2:00 p.m. and 3:00
p.m. (New York) each trading day.
As a result, there will not be a current MSCI EAFE Index level
calculated and disseminated during a portion of the time during which
EAFE options would be traded (from approximately 12:30 p.m. (New York
time) to 4:00 p.m. (New York time)).\30\ However, the EAFE Futures
contract that trades on ICE will be trading during this time period
\31\ and the EAFE Futures prices would be a proxy for the current MSCI
EAFE Index level during this time period. Therefore, the Exchange
believes that EAFE options should be permitted to trade after trading
in all component securities has closed for the day and the index level
is no longer widely disseminated at least once every fifteen (15)
seconds by one or more major market data vendors, provided that EAFE
Futures contracts are trading and prices for those contracts may be
used as a proxy for the current index value.
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\30\ The trading hours for multiply-listed EFA options are from
9:30 a.m. (New York time) to 4:15 p.m. (New York time).
\31\ The trading hours for EAFE Futures are from 8:00 p.m. (New
York time) to 6:00 p.m. (New York time) the following day, Sunday
through Friday. See MSCI EAFE Index Future contract specifications
located at <a href="https://www.theice.com/products/31196848/MSCI-EAFE-Index-Future">https://www.theice.com/products/31196848/MSCI-EAFE-Index-Future</a>.
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As to the MSCI EM Index, the components open with the start of
trading in certain parts of Asia at approximately 7:00 p.m. (New York
time) (prior day) and close with the end of trading in Mexico and Peru
at approximately 4:30 p.m. (New York time) (next day) as closing prices
from Brazil, Chile, Peru and Mexico, including late prices, are
accounted for in the closing calculation. The closing MSCI EM Index
level is distributed at
[[Page 8541]]
approximately 6:00 p.m. (New York time) each trading day.\32\
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\32\ Late prices indicate that while the last real-time stock
tick comes in at approximately 4:00 p.m. (New York time), the MSCI
EM Index will stay open for a few minutes longer to allow any late
price information to be obtained. At approximately 4:30 p.m. (New
York time), the final foreign currency rates are applied and the
last real-time MSCI EM Index value is disseminated.
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Because the MSCI EAFE Index and the MSCI EM Index each have a large
number of component securities representative of many countries, the
Exchange believes that the same initial listing requirements as those
utilized by CBOE are appropriate to trade options on each index. In
addition, similar to other broad-based indexes, the Exchange proposes
various maintenance requirements, which require continual compliance
and periodic compliance.
Exercise and Settlement
The proposed EAFE options and EM options would expire, as
currently, on the third Friday of the expiring month in the case of
regular monthly options and LEAPS, each Friday in the case of Short
Term options, and the last trading day of the month in the case of
Monthly Options and/or Quarterly Options. As noted above, the last
trading day for expiring EAFE options series and EM options series
would continue to be the business day prior to the expiration date of
the specific series. As is currently the case, when the last trading
day/expiration date is moved because of an Exchange holiday or closure,
the last trading day/expiration date for expiring options would be the
immediately preceding business day.
Exercise would result in delivery of cash on the business day
following expiration. EAFE options and EM options would be P.M.-
settled. The exercise settlement value would be the official closing
values of the MSCI EAFE Index and the MSCI EM Index as reported by MSCI
on the expiration day of the expiring contract.\33\
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\33\ See proposed amendment to Rule 5.22-O, Commentary .01, to
identify MSCI, Inc. as the Reporting Authority for the MSCI EAFE
Index (EAFE) and the MSCI Emerging Markets Index (EM). As the
designated Reporting Authority for each of these indexes, the
disclaimers set forth in Rule 5.22-O (Disclaimers) would apply to
MSCI, Inc.
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As noted, the exercise settlement amount would be equal to the
difference between the exercise-settlement value and the exercise price
of the option, multiplied by the contract multiplier ($100). If the
exercise settlement value is not available or the normal settlement
procedure cannot be utilized due to a trading disruption or other
unusual circumstance, the settlement value would be determined in
accordance with the rules and bylaws of the OCC.
Position and Exercise Limits
The Exchange proposes to amend Rule 5.15-O(a) to establish position
limits for EAFE options and EM options equal to 50,000 contracts on the
same side of the market similar to CBOE. The Exchange further proposes
to adopt Rule 5.35-O(a)(iv) with respect to position limits for FLEX
Options. The proposed rule would provide that the position limits for
FLEX Index options on the MSCI EAFE Index and on the MSCI EM Index
would be equal to the position limits for non-FLEX options on such
indices. Additionally, pursuant to Rule 5.14-O, the exercise limits for
EAFE options and EM options would be equivalent to the position limits
for EAFE options and EM options. All position limit hedge exemptions
applicable to Broad-Based index options would also apply.
Applicable Exchange Rules
The trading of EAFE options and EM options will be subject to the
same rules that presently govern the trading of Exchange index options,
including sales practice rules and trading rules.
Rule 9.18-O(b), ``Opening of Accounts,'' is designed to protect
public customer trading and shall apply to trading in EAFE options and
EM options. Specifically, Rule 9.18-O(b) prohibits an OTP Firm or OTP
Holder from accepting a customer order to purchase or write an option,
including EAFE options and EM options, unless such customer's account
has been approved in writing by a Registered Options Principal.
Additionally, Rule 9.18-O(c), ``Suitability,'' is designed to ensure
that options, including EAFE options and EM options, are only sold to
customers capable of evaluating and bearing the risks associated with
trading in these securities. Further, Rule 9.18-O(e), ``Discretionary
Accounts,'' permits an OTP Firm or OTP Holder to exercise discretionary
power with respect to trading options, including EAFE options and EM
options, in a customer's account only if the customer has given prior
written authorization and the account has been accepted in writing by a
Registered Options Principal. Rule 9.18-O(e) also requires a record to
be made of every option transaction for an account in respect to which
an OTP Firm or OTP Holder is vested with discretionary authority, such
record to include the name of the customer, the designation, number of
contracts and premium of the option contracts, the date and time when
such transaction took place and clearly reflecting the fact that
discretionary authority was exercised. Finally, Rule 9.18-O(d),
``Supervision of Accounts,'' Rule 9.18-O(f), ``Confirmations,'' and
Rule 9.18-O(g), ``Delivery of Current Options Disclosure Document and
Prospectus,'' will also apply to trading EAFE options and EM options.
Surveillance and Capacity
The Exchange represents that the same surveillance procedures
applicable to all other options currently listed and traded on the
Exchange will apply to EAFE options and EM options, and that it has the
necessary systems capacity to support the option series. The Exchange's
existing surveillance and reporting safeguards are designed to deter
and detect possible manipulative behavior and other improper trading.
In addition, the Exchange has a Regulatory Services Agreement (``RSA'')
with the Financial Industry Regulatory Authority (``FINRA''). Pursuant
to a multi-party 17d-2 joint plan, all options exchanges allocate
regulatory responsibilities to FINRA to conduct certain options-related
market surveillances.\34\ The Exchange is also a member of the
Intermarket Surveillance Group (``ISG'') under the ISG Agreement. ISG
members work together to coordinate surveillance and investigative
information sharing in the stock, options, and futures markets.
Further, the Exchange will implement any new surveillance procedures it
deems necessary to effectively monitor the trading of EAFE options and
EM options.
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\34\ Section 19(g)(1) of the Act, among other things, requires
every SRO registered as a national securities exchange or national
securities association to comply with the Act, the rules and
regulations thereunder, and the SRO's own rules, and, absent
reasonable justification or excuse, enforce compliance by its
members and persons associated with its members. See 15 U.S.C.
78q(d)(1) and 17 CFR 240.17d-2. Section 17(d)(1) of the Act allows
the Commission to relieve an SRO of certain responsibilities with
respect to members of the SRO who are also members of another SRO.
Specifically, Section 17(d)(1) allows the Commission to relieve an
SRO of its responsibilities to: (i) receive regulatory reports from
such members; (ii) examine such members for compliance with the Act
and the rules and regulations thereunder, and the rules of the SRO;
or (iii) carry out other specified regulatory responsibilities with
respect to such members.
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Given the enormous liquidity in the underlying components of the
MSCI EAFE Index and the MSCI EM Index and large number of market
participants trading those components, the Exchange believes that any
attempt to manipulate the price of the underlying security or options
overlying such security in order to affect the price of the indices
would be cost prohibitive and unlikely to succeed. Moreover, the
Exchange believes that its existing surveillances
[[Page 8542]]
and procedures adequately address potential concerns regarding possible
manipulation of the settlement value at or near the close of the
market.
Finally, given that the EAFE options and EM options have traded on
CBOE for many years without system capacity issues and that the options
would trade the same way on the Exchange, the Exchange does not believe
that the listing and trading of these options would present any system
capacity or message traffic issues for the Exchange or The Options
Price Reporting Authority (OPRA). The Exchange will monitor the trading
volume associated with the additional options series listed as a result
of this proposed rule change and the effect (if any) of these
additional series on the capacity of the Exchange's automated systems.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\35\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\36\ in particular, 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; and is not designed to
permit unfair discrimination between customers, issuers, brokers or
dealers. Specifically, the Exchange believes that the listing and
trading of EAFE options and EM options on the Exchange would increase
order flow to the Exchange, increase the variety of options products
available for trading, and provide a valuable tool for investors to
manage risk.
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\35\ 15 U.S.C. 78f(b).
\36\ 15 U.S.C. 78f(b)(5).
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The proposed change will facilitate the transfer and trading of
EAFE options and EM options based on the approved rules of CBOE
designed to prevent fraudulent and manipulative acts and practices and
promote just and equitable principles of trade.
The Exchange believes that the proposal to adopt rules based on
CBOE to list and trade EAFE options and EM options would remove
impediments to and perfect the mechanism of a free and open market as
EAFE options and EM options would continue to provide greater
opportunities for market participants to manage risk through the use of
an index options product to the benefit of investors and the public
interest.
The Exchange believes the proposed rule change is designed to
remove impediments to and to perfect the mechanism for a free and open
market and a national market system, and, in general, to protect
investors and the public interest in that it would continue to create
greater trading and hedging opportunities and flexibility while
providing OTP Firms or OTP Holders with an additional tool to manage
their risk. The proposed rule change should also continue to result in
enhanced efficiency in initiating and closing out positions and
heightened contra-party creditworthiness given OCC's role as issuer and
guarantor of the proposed index option products.
The Exchanges believes that both the MSCI EAFE Index and the MSCI
EM Index are not easily susceptible to manipulation. Both indexes are
broad-based indexes and have high market capitalizations. As noted, the
MSCI EAFE Index is currently comprised of 694 component stocks and no
single component comprises more than 5% of the index, making it not
easily subject to market manipulation. Similarly, the MSCI EM Index is
currently comprised of 1,196 components stocks and the vast majority of
components each comprise less than 5% of the index, making it not
easily subject to market manipulation.
Additionally, the iShares MSCI EAFE ETF and the iShares MSCI
Emerging Markets ETF, which track the MSCI EAFE and MSCI EM indices,
are actively traded products, as are options on those ETFs. Because
both indexes have large numbers of component securities, are
representative of many countries and trade a large volume with respect
to ETFs and options on those ETFs, the Exchange believes that the
proposed initial and continued listing requirements based on CBOE's
rules are also appropriate to continue to trade options on these
indexes on the Exchange. Exchange rules applicable to the trading of
other index options currently traded on the Exchange would also apply
to the trading of EAFE options and EM options. Additionally, the
trading of EAFE options and EM options would be subject to, among
others, Exchange rules governing sales practice rules, trading rules
and trading halt procedures.
Finally, as noted, the Exchange represents that it has an adequate
surveillance program in place to detect potentially manipulative
trading in EAFE options and EM options. The Exchange also represents
that it has the necessary systems capacity to continue to support the
options series. Additionally, as stated in the filing, the Exchange has
rules in place to protect public customer trading.
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 not necessary or appropriate in
furtherance of the purposes of the Act.
Intermarket Competition. The Exchange believes that the proposed
rule change would facilitate the transfer to the Exchange and trading
of EAFE options and EM options while also competing with domestic
products such as EFA options and EEM options, EAFE Futures and EM
Futures and European-traded derivatives on the MSCI EAFE Index and the
MSCI EM Index, which would enhance competition among market
participants, to the benefit of investors and the marketplace. The
Exchange thus believes that the proposed change does not impose a
burden on intermarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
Intramarket Competition. The Exchange also believes that the
proposed change would not place any undue burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act as EAFE options and EM options would continue to be
equally available to all market participants who wish to trade such
options. The Exchange rules applicable to the listing and trading of
options will apply in the same manner to the listing and trading of
EAFE options and EM options. Also, and as noted above, the Exchange
already lists and trades index options.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \37\ and Rule 19b-4(f)(6) thereunder.\38\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii)
[[Page 8543]]
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) of the Act
\39\ and Rule 19b-4(f)(6)(iii) thereunder.\40\
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\37\ 15 U.S.C. 78s(b)(3)(A)(iii).
\38\ 17 CFR 240.19b-4(f)(6).
\39\ 15 U.S.C. 78s(b)(3)(A).
\40\ 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \41\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\42\ 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 so that the Exchange
may list and facilitate continuity in the trading of EAFE options and
EM options, which currently trade on CBOE, without delay once they
cease to trade on CBOE. The Exchange states that waiver of the
operative delay would be consistent with the protection of investors
and the public interest because the proposed rule change is based on
the approved rules of CBOE and would facilitate the listing and trading
of products that have long been traded on CBOE. For these reasons, and
because the proposed rule change does not raise any new or novel
regulatory issues, the Commission finds that waiving 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.\43\
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\41\ 17 CFR 240.19b-4(f)(6).
\42\ 17 CFR 240.19b-4(f)(6)(iii).
\43\ 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 U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings under
Section 19(b)(2)(B) \44\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\44\ 15 U.S.C. 78s(b)(2)(B).
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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#f785829b92da94989a9a92998384b7849294d9909881"><span class="__cf_email__" data-cfemail="8efcfbe2eba3ede1e3e3ebe0fafdcefdebeda0e9e1f8">[email protected]</span></a>. Please include
file number SR-NYSEARCA-2026-13 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-NYSEARCA-2026-13. 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 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-NYSEARCA-2026-13 and should be submitted
on or before March 16, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\45\
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\45\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-03451 Filed 2-20-26; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on February 23, 2026.
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.