Notice2026-04894
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 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
March 13, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 49 (Friday, March 13, 2026)</title>
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[Federal Register Volume 91, Number 49 (Friday, March 13, 2026)]
[Notices]
[Pages 12473-12478]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-04894]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104957; File No. SR-NYSEAMER-2026-15]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Facilitate the Transfer and Trading of Options That Overlie the MSCI
EAFE Index and the MSCI Emerging Markets Index
March 10, 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 27, 2026, NYSE American LLC (the ``Exchange'' or
``NYSE American'') 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 900C. ``Applicability and
Definitions,'' Rule 901C. ``Designation of Stock Index Options,'' Rule
902C. ``Rights and Obligations of Holders and Writers of Stock Index
Option Contracts,'' Rule 903C. ``Series of Stock Index Options,'' Rule
904C. ``Position Limits,'' Rule 906G. ``Position Limits,'' and Rule
901NY. ``Hours of Business.'' 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 Arca, Inc., 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 that is designed to measure
the equity market performance of developed markets, excluding the U.S.
and
[[Page 12474]]
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)
located 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 Index, is an actively traded
product listed on its affiliate 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 EM 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,
which tracks the MSCI EM Index, is an actively traded product. The
Exchange 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 900C(b)(1), for the purpose of determining
which of the Exchange's rules apply to options on such indices. EAFE
options and EM options are P.M.-settled with European-style exercise
provisions and will be settled in cash.\17\
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\17\ The Exchange proposes to amend Rule 900C(b)(21) 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 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 953NY. Trading Halts and Suspensions.
\19\ See Rule 951C. Premium Bids and Offers.
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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
[[Page 12475]]
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 one business day prior to
expiration. Consistent with existing Rule 903C(a)(v), 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
903(a)(iv)(2), the Exchange will not list Short Term options on an
options class whose expiration coincides with that of a Quarterly
Options Series on that same options class.
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\20\ See Rule 903. The rule sets forth the criteria for listing
additional series of the same class to maintain an orderly market,
to meet customer demand or when the current value of the underlying
index moves. The strike price of 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 903C, Commentary .09.
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In order to ensure continuity with existing expirations listed by
CBOE, the Exchange proposes to amend existing Rule 903C to allow for
the listing of up to twelve near-term expiration months with a third
Friday expiration date.\22\ Additionally, the Exchange proposes an
amendment to 903C(a)(iii) ``Long-term Options Series'' to permit the
listing, with respect to any class of stock index options, series of
options having up to 180 months to expiration. 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.\23\
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\22\ See proposed amendment to Rule 903C, Commentary .05. The
Exchange is proposing to allow the listing of up to twelve
expiration months at any one time for EAFE options and EM options.
\23\ See e.g., Rules 903, Commentary .10 (Short Term Option
Series) and 903C(a)(iv) (Quarterly Option Series).
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The trading hours for EAFE options and EM options would be from
9:30 a.m. to 4:00 p.m. (New York time).\24\ Additionally, the proposed
rule change states 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.\25\
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\24\ See proposed Rule 901NY, Commentary .03.
\25\ See proposed Rule 901NY, Commentary .04.
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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 stock index group as set forth in Rule 900C(b)(1).\26\ In
addition, the Exchange proposes to create 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 .05(a) to Rule 901C ``Designation
of Stock Index Options,'' to provide that the Exchange may list EAFE
options and EM options if each of the following conditions is
satisfied:
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\26\ Rule 900C(b)(1) defines a broad stock index group to mean a
stock index group designed to be representative of stock market
values or prices of a broad segment of the stock market.
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(1) The index is broad-based, as defined in Rule 900C(b)(1);
(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 of the 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 are not
subject to 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 to add new Commentary .05(b) to
Rule 901C 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 .05(a) (1), (2), (3),
(4), (8), (9) and (10) must continue to be satisfied. The conditions
set forth in Commentary .05(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 .05(a)(7) must be satisfied as of the first day of the
month following the Reporting Authority's \27\ review of the weighting
of the constituents in the applicable index but in no case less than a
quarterly basis.
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\27\ The term ``Reporting Authority'' in respect of a particular
index means the institution or reporting service designated by the
Exchange as the official source for calculating and reporting the
current levels of such stock index. See Rule 900C(b)(3).
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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 is 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.
[[Page 12476]]
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)).\28\ However, the EAFE Futures
contract that trades on ICE will be trading during this time period
\29\ 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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\28\ 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).
\29\ 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 approximately 6:00 p.m. (New York time) each
trading day.\30\
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\30\ 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 the 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 long term options, 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 last trading day of the expiring contract.\31\
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\31\ See proposed amendment to Rule 900C(b)(3), to identify
MSCI, Inc. as the Reporting Authority for the MSCI EAFE Index (EAFE)
and the MSCI Emerging Markets Index (EM). See proposed Rule 902C(l)
setting forth the MSCI's disclaimers as the Designated Reporting
Authority for the EAFE Index and EM Index.
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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 904C(b) to establish position
limits for EAFE options and EM options equal to 50,000 contracts on the
same side of the market. The Exchange further proposes to adopt Rule
906G(a)(vi) 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 Emerging Markets Index
would be equal to the position limits for non-FLEX options on such
indices. Additionally, pursuant to Rule 905C, 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.
Exchange Rules Applicable
The trading of EAFE options and EM options shall be subject to the
same rules that presently govern the trading of Exchange index options,
including sales practice rules, margin requirements, and trading rules.
Rule 921, ``Opening of Accounts,'' is designed to protect public
customer trading and shall apply to trading in EAFE options and EM
options. Specifically, Rule 921(a) prohibits a member or member
organization 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 923, ``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 924, ``Discretionary
Accounts,'' permits a member or member organization 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 924 also requires a
record to be made of every option transaction for an account in respect
to which a member or member organization 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 922, ``Supervision of Accounts,'' Rule 925,
``Confirmations,'' and Rule 926, ``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
[[Page 12477]]
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.\32\ 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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\32\ 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 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 Securities Exchange Act of 1934 (the ``Act''),\33\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\34\
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 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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\33\ 15 U.S.C. 78f(b).
\34\ 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 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 Exchange 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, the Exchange represents that it has an adequate
surveillance program in place to detect manipulative trading in EAFE
options and EM options. The Exchange also represents that it has the
necessary systems capacity to support the new 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 EM options, EAFE Futures and EM
Futures and European-traded derivatives on the MSCI EAFE Index and the
MSCI EM Index, which
[[Page 12478]]
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 \35\ and Rule 19b-4(f)(6) thereunder.\36\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \37\ and Rule 19b-
4(f)(6)(iii) thereunder.\38\
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\35\ 15 U.S.C. 78s(b)(3)(A)(iii).
\36\ 17 CFR 240.19b-4(f)(6).
\37\ 15 U.S.C. 78s(b)(3)(A).
\38\ 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) \39\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\40\ 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.\41\
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\39\ 17 CFR 240.19b-4(f)(6).
\40\ 17 CFR 240.19b-4(f)(6)(iii).
\41\ 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) \42\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\42\ 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#d4a6a1b8b1f9b7bbb9b9b1baa0a794a7b1b7fab3bba2"><span class="__cf_email__" data-cfemail="afdddac3ca82ccc0c2c2cac1dbdcefdccacc81c8c0d9">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2026-15 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEAMER-2026-15. 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-NYSEAMER-2026-15 and should be submitted
on or before April 3, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
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\43\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-04894 Filed 3-12-26; 8:45 am]
BILLING CODE 8011-01-P
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