Notice2026-17914
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing of Amendment No. 2, and Order Granting Accelerated Approval of a Proposed Change, as Modified by Amendment No. 2, To Amend Its Rules To Extend Trading Hours for Certain Eligible Equity Options
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
September 2, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 169 (Wednesday, September 2, 2026)</title>
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[Federal Register Volume 91, Number 169 (Wednesday, September 2, 2026)]
[Notices]
[Pages 56504-56514]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17914]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106218; File No. SR-NYSEAMER-2026-34]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing of Amendment No. 2, and Order Granting Accelerated Approval of a
Proposed Change, as Modified by Amendment No. 2, To Amend Its Rules To
Extend Trading Hours for Certain Eligible Equity Options
August 28, 2026.
I. Introduction
On June 5, 2026, NYSE American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to allow for extended trading sessions of multi-
listed equity options that meet certain eligibility criteria. The
proposed rule change was published for comment in the Federal Register
on June 22, 2026.\3\ On July 30, 2026, pursuant to Section 19(b)(2) of
the Act,\4\ the Commission designated a longer period within which to
approve the proposed rule change, disapprove the proposed rule change,
or institute proceedings to determine whether to disapprove the
proposed rule change.\5\ On July 31, 2026, the Exchange filed Amendment
No. 1 to the proposed rule change, which amended and superseded the
original proposed rule change in its entirety.\6\ On August 17, 2026,
the Exchange filed Amendment No. 2, which amended and superseded
Amendment No. 1 its
[[Page 56505]]
entirety.\7\ The Commission is publishing this notice and order to
solicit comment on Amendment No. 2 in Sections II and III below, which
sections are being published verbatim as filed by the Exchange, and to
approve the proposed rule change, as modified and superseded by
Amendment No. 2, on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 105704 (June 16,
2026), 91 FR 37201 (``Notice'').
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 106017, 91 FR 49469
(August 4, 2026).
\6\ The full text of Amendment No. 1 can be found on the
Commission's website at <a href="https://www.sec.gov/comments/SR-NYSEAMER-2026-34/srnyseamer202634-985479-3096626.pdf">https://www.sec.gov/comments/SR-NYSEAMER-2026-34/srnyseamer202634-985479-3096626.pdf</a>.
\7\ The full text of Amendment No. 2 can be found on the
Commission's website at <a href="https://www.sec.gov/comments/SR-NYSEAMER-2026-34/srnyseamer202634-1006219-3202987.pdf">https://www.sec.gov/comments/SR-NYSEAMER-2026-34/srnyseamer202634-1006219-3202987.pdf</a>.
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II. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its rules to extend trading hours
for certain eligible equity options and make related conforming
changes.\8\ This Amendment No. 2 to SR-NYSEAMER-2026-34 replaces SR-
NYSEAMER-2026-34, as amended by Amendment No. 1 thereto, as originally
filed and supersedes such filings in their entirety. The proposed rule
change is available on the Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a> and at
the principal office of the Exchange.
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\8\ The Exchange initially submitted this rule filing on June 5,
2026. See Securities Exchange Act Release No. 105704 (June 16,
2026), 91 FR 37201 (June 22, 2026) (SR-NYSEAMER-2026-34) (``Notice
of Filing of Proposed Change To Amend Its Rules To Extend Trading
Hours for Certain Eligible Equity Options'') (``Initial Filing'').
On July 31, 2026, the Exchange filed Amendment No. 1 to SR-NYSEAMER-
2026-34, which replaced and superseded SR-NYSEAMER-2026-34.
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III. Self-Regulatory Organization's Statement of the Purpose of,
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it had received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The NYSE American has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its rules to adopt extended hours
trading for certain eligible equity \9\ options and make related
conforming changes. Specifically, the Exchange proposes to adopt a new
Rule 901.1NY to establish two additional trading sessions to its Core
Trading Session (9:30 a.m.-4:00 p.m. Eastern Time) \10\ and to adopt
new Rule 901.2NY to establish and govern the trading of certain
eligible equity options during the two newly created trading sessions
(i.e., ``Extended Hours Trading''). In addition, the Exchange proposes
to amend Rule 952NYP to address the auction process during Extended
Hours Trading.
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\9\ Including ETPs (e.g., Exchange Traded Funds (``ETF'') and
commodity-based trust shares).
\10\ Unless noted otherwise, all times in this filing are
Eastern Time.
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The Exchange proposes to amend the Initial Filing to: (1) extend
all proposed eligibility criteria to options overlying an ETP; (2)
detail assessment of Market Maker Quoting obligations during Extended
Hours Trading; (3) eliminate accelerated eligibility for certain equity
options with underlying securities recently listed as the result of an
initial public offering; (4) address changes in determining Auction
Imbalances for the Core Trading Session; and (5) amend order types to
be available during Extended Hours Trading.
Background
Currently, option transactions may only be made on the Exchange
during the Core Trading Session (i.e., 9:30 a.m. through 4:00 p.m. or
4:15 p.m., as applicable).\11\ The Core Trading Session is consistent
with the regular trading hours of other U.S. options exchanges and U.S.
equity exchanges. However, many U.S. equity exchanges and certain other
U.S. options exchanges, including Cboe Exchange, Inc. (``Cboe''),
presently allow for trading outside of regular trading hours as
well.\12\ The proposal is also consistent with the recent approvals for
Cboe to allow for the trading of certain eligible multiply-listed
equity options during Global Trading Hours \13\ and NASDAQ MRX
(``MRX'') for the trading of certain eligible multiply-listed equity
options during Extended Trading Hours.\14\
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\11\ See Rule 900.2NY (Definitions). ``The term `Core Trading
Hours' shall mean the regular trading hours for business set forth
in the rules of the primary markets underlying those option classes
listed on the Exchange; provided, however, that transactions may be
effected on the Exchange until the regular time set for the normal
close of trading in the primary markets with respect to equity
option classes and ETF option classes, and 15 minutes after the
regular time set for the normal close of trading in the primary
markets with respect to index option classes, or such other hours as
may be determined by the Exchange from time to time.'' Per Rule
901NY, Commentary .02, Options on ETFs and Options on Index-Linked
Securities (or ETNs) may be traded on the Exchange until 4:15 p.m.
each business day. The Exchange proposes a non-substantive change to
Rule 901NY, Commentary .02 to provide a beginning and ending time
for options on ETFs and options on Index-Linked Securities to align
itself with the practices of other options exchanges. See proposed
Rule 901NY, Commentary .02.
\12\ For example, NYSE Arca Equities currently allows for an
Early Trading Session from 4:00 a.m. to 9:30 a.m., a Core Trading
Session from 9:30 a.m. until the conclusion of Core Trading Hours or
the Core Closing Auction and a Late Trading Session following the
Conclusion of the Core Trading Session and to 8:00 p.m. NYSE has an
Early Trading Session of 7 a.m. until the opening of the Core
Trading Session (9:30 a.m.) for UTP Securities. The Nasdaq Stock
Exchange LLC (``Nasdaq'') currently allows for a Pre-Market Hours
session from 4:00 a.m. to 9:30 a.m. and a Post-Market Hours session
from 4:00 p.m. until 8:00 p.m. See Nasdaq Equity 1, Section 1(a)(20)
and (21). Cboe BZX Exchange, Inc. (``BZX'') also allows for an Early
Trading Session from 4:00 a.m. to 8:00 a.m., a Pre-Opening Session
from 8:00 a.m. to 9:30 a.m., and an After Hours Trading Session from
4:00 p.m. through 8:00 p.m. See BZX Rule 1.5(c), (r), and (ff).
Additionally, Cboe currently allows for the trading of certain index
options during Global Trading Hours from 8:15 p.m. (previous day) to
9:25 a.m. and during Curb Trading Hours from 4:15 p.m. to 5:00 p.m.
See Cboe Rule 5.1(c) & (d).
\13\ See Securities Exchange Act Release No. 105569 (May 28,
2026), 91 FR 33005 (June 2, 2026) (SR-CBOE-2025-079) (``Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1, To
Allow for Extended Trading of Multi-Listed Equity Options'') (``Cboe
Approval'').
\14\ See Securities Exchange Act Release No. 105785 (June 26,
2026), 91 FR 40061 (July 1, 2026) (SR-MRX-2026-11) (``Notice of
Filing of Amendment No. 1 and Order Granting Accelerated Approval of
a Proposed Rule Change, as Modified and Superseded by Amendment No.
1, To Adopt Extended Trading Hours for Eligible Equity and Index
Options'') (``MRX Approval'').
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The Exchange believes there is investor demand to trade equity
options outside of the Core Trading Session. Securities trading has
become a global industry, but investors located outside of the United
States may choose not to access U.S. markets during regular trading
hours with which the Core Trading Session aligns. The Exchange further
believes there is global demand from investors for options on equities
for various investment purposes. However, given that equity options
trade only during regular trading hours, it is difficult for non-U.S.
investors to participate. Additionally, U.S. investors that trade in
equities outside of regular trading hours are unable to access the
equities options for hedging and other purposes as part of their
investment strategies during trading sessions outside of the Exchange's
Core Trading Session.
In response, the Exchange proposes to designate equity options that
meet certain criteria as eligible for trading outside of its Core
Trading Session. Doing so would help align trading in such products to
the expanded trading that already occurs for the underlying securities
and help meet investor demand to use these products outside of regular
trading hours and keep pace with the continuing internationalization of
securities markets.
[[Page 56506]]
Trading Sessions
Specifically, the Exchange proposes to adopt new Rule 901.1NY
(Trading Sessions) to establish two additional separate trading
sessions to its Core Trading Session: (i) an early trading session of
7:30 a.m. to 9:25 a.m. (the ``Early Trading Session''); and (ii) a late
trading session of 4:00 p.m. to 4:15 p.m. (the ``Late Trading
Session'').\15\ The Exchange further proposes to adopt new Rule 901.2NY
to establish Extended Hours Trading, which, under the proposed rule,
will be defined as trading during the Early Trading Session and the
Late Trading Session.
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\15\ The Early Trading Session and the Late Trading Session will
be classified as distinct sessions from the Core Trading Session to
allow ATP Holders granular control over which session their orders
participate in.
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Session Designation
Proposed Rule 901.1NY(b) will require that any order entered on the
Exchange must include a designation for which trading session(s) the
order will remain in effect. Any order without a designation will be
rejected. In addition, unless otherwise specified, an order designated
for a later trading session will be accepted but not eligible to trade
until the designated trading session begins. An order designated for
trading session(s) that already ended will be rejected.\16\
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\16\ See proposed Rule 901.1NY(b)(1) & (2).
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Proposed Rule 901.1NY(c) will specify the interaction between the
different trading sessions and holidays and shortened trading days.
Proposed Rule 901.1NY(c)(1) will provide that if there is no Core
Trading Session, there will be no Early Trading Session and no Late
Trading Session. Proposed Rule 901.1(c)(2) will provide that on a
trading day with a shortened Core Trading Session (e.g., the Exchange
is open for a half day of regular trading between 9:30 a.m. through 1
p.m.): (A) the Early Trading Session will occur prior to the shortened
Core Trading Session; (B) the Core Trading Session will occur between
9:30 a.m. through 1 p.m. (1:15 p.m. for Options on ETFs and ETNs); and
(C) the Late Trading Session will commence at the end of the shortened
Core Trading Session and continue for 15 minutes (e.g., 1:00 p.m. to
1:15 p.m.).
Extended Hours Trading
As noted above, the Exchange proposes to adopt a new Rule 901.2NY
to establish trading during the Early Trading Session and the Late
Trading Session, which the proposed Rule defines as ``Extended Hours
Trading.'' \17\ Proposed Rule 901.2NY, however, will only address the
operational and structural differences that are unique to trading
during Extended Hours Trading while maintaining the applicability of
the broader rulebook. Accordingly, proposed Rule 901.2NY(a) provides
that, while proposed Rule 901.2NY will apply only to Extended Hours
Trading, all rules applicable to options during the Core Trading
Session will apply to the extent possible to options during Extended
Hours Trading, including, without limitation, trading rules, listing
rules and business conduct rules. For instance,
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\17\ See proposed Rule 901.2NY(b).
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<bullet> Consolidated Book or Book: As stated in definition Rule
900.2NY, ``Consolidated Book or Book'' means the Exchange's electronic
book of orders and quotes.
<bullet> ATP Holders: As stated in Rule 924NY ATP Holders including
Market Makers must have a Letter of Guarantee from a Clearing Member
authorized by the Options Clearing Corporation (``OCC'') in order to
make any transaction on the Floor of the Exchange or through the
facilities of the Exchange. Any Market Maker or Specialist assigned to
act in the Early Trading Session and/or the Late Trading Session must
comply with the quoting obligations of Rule 925NY and Rule 925.1NYP.
<bullet> Risk Controls: The Exchange has various price protection
mechanisms and risk controls available to market participants as set
forth in Rule 900.3NYP, Rule 928NYP and Rule 928.1 NYP. These will
apply in the same manner during the Early Trading Session and the Late
Trading as they do during Core Trading Hours.
<bullet> Market Orders: Users will not be able to submit market
orders in equity options during the Early Trading Session and the Late
Trading Session.
<bullet> Eligible Expirations: The Early Trading Session and the
Late Trading Session will utilize existing criteria for listing option
series for an option class.
<bullet> Market Maker and Specialist Obligations: Market-Maker
obligations contained in Rule 925NY and Market Maker and Specialist
quoting requirements contained in Rule 925.1NYP apply.
<bullet> Participation Entitlement of Specialist Pool and
Designation of Primary Specialist set forth in Rule 964.2NYP: the
Exchange may establish from time to time a participation entitlement
formula that is applicable to all Specialists and e-Specialists.
The Exchange recognizes that the proposed Extended Hours Trading is
shorter than the extended trading hours for equities, which may
commence as early as 4:00 a.m. and conclude as late as 8:00 p.m.\18\
Since equity options generally will not trade unless the underlying
security also trades, any trading hours outside of regular trading
hours (which is aligned with the Exchange's Core Trading Session)
available for equity options are limited to extended trading hours
available for the underlying equities. Thus, while the proposed
Extended Hours Trading for equity options could mirror the extended
trading hours available for the underlying equities, the Exchange
proposes limiting Extended Hours Trading and establishing trading hours
for equity options that are notably shorter than the hours of extended
trading for equities.
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\18\ See note 12, supra.
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The Exchange believes that the shorter Extended Hours Trading
running from 7:30 a.m. to 9:25 a.m. and 4:00 p.m. to 4:15 p.m., rather
than hours that align with the full extended trading hours available to
the underlying equities, is appropriate because of the lack of industry
experience with extended hours trading for equity options that are
physically-settled. Limiting the extended window of time for equity
options allows for a paced introduction of this new type of trading
session for equity options. The limited hours for Extended Hours
Trading will allow the Exchange to monitor and assess the development
and functioning of Extended Hours Trading markets for equity options.
Additionally, the Exchange believes that the proposed timeframe for
Extended Hours Trading for equity options can be supported by Market
Makers, Specialists and e-Specialists (collectively ``Specialists''),
clearing firms, and other market participants from a personnel coverage
perspective.
Equity Option Criteria for Extended Hours Trading Eligibility
Extended Hours Trading will allow market participants to engage in
trading designated equity options in conjunction with the trading in
the underlying securities during these hours. However, since trading in
such options is a new initiative, the Exchange proposes to limit the
number of equity option classes that may be designated for Extended
Hours Trading to 100 option classes. The limit is intended to allow the
Exchange to monitor and assess the development and functioning of the
new Extended Hours Trading for equity options within a controlled group
of equity options initially.
Accordingly, as set forth in proposed Rule 901.2NY(c), only
multiply-listed option classes designated for trading
[[Page 56507]]
under Rule 901 that satisfy certain criteria will be eligible for
trading during Extended Hours Trading. The number of eligible equity
options shall not exceed 100. However, pursuant to proposed
subparagraph (1), the Exchange may also designate as eligible for
trading during Extended Hours Trading any equity option that is traded
on another exchange during the Early Trading Session, the Late Trading
Session or any other trading session that is not the Core Trading
Session, and any equity option designated in this manner will not be
subject to the 100 multiply listed option class limit established
pursuant to this subparagraph.
The criteria and the limit are intended to allow the Exchange to
monitor and assess the development and functioning of the Extended
Hours Trading markets for equity options within a limited group of
equity options initially. In particular, proposed Rule 901.2NY(c) will
establish specific eligibility criteria for an equity option class to
be eligible for Extended Hours Trading. Accordingly, as proposed, the
Exchange may designate as eligible for trading during Extended Hours
Trading up to 100 multiply-listed equity option classes that satisfy
the following criteria:
(i) the option has an average daily volume of 150,000 contracts;
(ii) the underlying equity to the option has a $50 billion
market capitalization; and
(iii) the underlying equity to the option has an average daily
trading volume of 10 million shares.
The Exchange believes these criteria will help ensure equity
options trading during Extended Hours Trading will have sufficient
demand and liquidity to support the options markets during the Early
and Late Trading Sessions. Additionally, the chosen criteria limits the
initial number of equity options eligible for extended trading hours to
those most likely to have the most liquidity and avoids options with
underlying securities that may have temporarily high volume or market
capitalization.
Semi-Annual Review of Equity Option Eligibility for Extended Hours
Trading
For the initial process to determine the equity options that meet
the criteria in proposed Rule 901.2NY(c), the Exchange will use data
from the nearest six-month period ending either June 30 or December 31
prior to launch of equity options trading during Extended Hours
Trading. The initial list of options designated for trading in extended
trading hours sessions will be announced via the Exchange's Trader
Update, as will the first day of trading for equity options during
Extended Hours Trading.\19\ The Exchange will designate options for
trading in the Early and Late Trading Sessions from the equity options
meeting the criteria in proposed Rule 901.2NY(c). Qualifying options on
ETFs that trade until 4:15 p.m. under existing Rule 901NY Commentary
.02 will continue to trade until 4:15 p.m. via the Exchange's Core
Trading Session, rather than trading during the Late Trading Session.
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\19\ The initial listing of equity options for Extended Hours
Trading will be selected by the Exchange and is not subject to the
listing date requirements of the semiannual review process that will
occur after the launch of the new trading sessions.
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Thereafter, the Exchange will identify on a semiannual basis
(following each January 1 and July 1) the option classes meeting the
criteria in proposed Rule 901.2NY(c) and select up to 100 of such
option classes to be designated for trading during Extended Hours
Trading. However, the Exchange has discretion to determine which of the
eligible option classes will be designated to trade during Extended
Hours Trading. The Exchange is not obligated to include all options
that meet the criteria for Extended Hours Trading eligibility, and the
number of designated equity options may be less than 100 option
classes.
The Exchange will conduct a review twice per year to reassess the
list of eligible equity options. The Exchange will designate equity
options eligible for trading during Extended Hours Trading and publish
the updated list of designated equity options via Trader Update.
Specifically, as set forth in proposed Rule 901.2NY(c)(2) the Exchange
will determine semi-annually the underlying securities that satisfy the
eligibility criteria in subparagraph (c) by using trading statistics
for the previous six-month period.\20\
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\20\ The Exchange proposes to conduct the bi-annual review as of
January 1 and July 1 of each year. As such, the six-month periods
will be from January to June, and from July to December each year.
The result of the bi-annual review will be announced through Trader
Update and any new equity options that qualify would be permitted to
trade during Extended Hours Trading beginning on February 1 and
August 1 of each year.
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If, following the semiannual review, an option that was previously
designated for trading in extended trading hours no longer meets the
criteria in proposed Rule 901.2NY(c), the Exchange will identify any
such equity option class and provide the last day of trading during
Extended Hours trading for each such option class in a Trader Update.
Equity options identified as no longer meeting eligibility requirements
for trading during Extended Hours Trading will be removed from Extended
Hours Trading within 18 months of the determination that the option
class no longer meets the eligibility criteria, and the last day of
trading for any such equity option class during Extended Hours Trading
will be communicated via Trader Update.
Providing a notice of removal of an equity option class from
Extended Hours Trading up to 18 months after the date the option class
is determined to be no longer eligible for extended trading hours
sessions will avoid sudden market disturbances resulting from the
abrupt removal of any such option from Extended Hours Trading. Allowing
the Exchange to determine a removal date within 18 months ensures that,
except for certain longer dated series, open interest existing in the
equity option class to be removed from Extended Hours Trading will have
generally expired. Additionally, the 18-month period will allow for two
additional semiannual review cycles during which equity options
previously designated for removal may subsequently meet eligibility
criteria again and consequently may continue to trade during Extended
Hours Trading pursuant to new Rule 901.2NY(c)(3)(iii).
Whereas the removal process established in new Rule 901.2NY(c)(3)
is intended to provide an extended time period for the removal of
equity options to avoid sudden market disruptions, the Exchange
acknowledges that certain conditions, although unlikely, may warrant an
acceleration of removal of an equity option class from Extended Hours
Trading. Consequently, new Rule 901.2NY(c)(3)(ii) allows the Exchange
to remove an equity option class from trading during Extended Hours
Trading prior to the announced removal date if the Exchange observes
limited or no market activity during Extended Hours Trading for the
option class. If such a condition is observed, the Exchange may remove
the option class from trading during Extended Hours Trading with at
least seven days' notice. The Exchange may remove the option class from
Extended Hours Trading prior to the removal date by issuing a Trader
Update designating a new removal date for the option class from
Extended Hours Trading.
Additionally, pursuant to proposed Rule 901.2NY(c)(3)(iv), the
Exchange may remove any option class from trading in Extended Hours
Trading for any reason with at least 30 days' notice. The Exchange
expects to use such authority in limited situations, such as in
response to Market Maker or Specialist preference or concern regarding
continued extended trading hours sessions in a particular option class
or the announcement of an
[[Page 56508]]
unusual corporate action on the underlying equity to an option class
(and the effective date of such corporate action is not imminent) that
could introduce confusion or uncertainty about the value of an option,
thereby significantly reducing liquidity during Extended Hours Trading
for the option class. Similarly, the Exchange may immediately remove an
option class from Extended Hours Trading if the Exchange deems such
action is necessary in the interest of investor protection or the
maintenance of fair and orderly markets. The Exchange will provide
notice of such determination as soon as practicable after the
determination to remove has been made via Trader Update. Any option
class designated for removal from Extended Hours Trading pursuant to
new Rule 901.2NY(c)(3) and that is included in the 100 multiply-listed
option class limit will continue to be included in the 100-option class
limit until the removal date of any such option class. The Exchange may
also designate for trading during Extended Hours Trading any equity
option that is traded on another exchange during Extended Hours
Trading.\21\
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\21\ See proposed Rule 901.2NY(c)(2).
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In this instance, eligible equity options will not be counted
against the 100-option class limit proposed in Rule 901.2NY(c). The
Exchange believes that the exclusion from the 100-option class limit of
such equity options initially traded during Extended Hours Trading on
another options exchange is appropriate for competitive purposes since
such listings can indicate the continued expansion of equity options
trading outside of regular trading hours, which align with the
Exchange's Core Trading Session.
Proposed Rule 901.2NY(i) will provide that expiring equity options
eligible for trading during Extended Hours Trading shall continue to
trade through the Late Trading Session. This is consistent with
American-style physical settlement and will allow participants to close
expiring positions rather than take or deliver shares.
Session Participation and Trading Activity
As set forth above, any order entered on the Exchange must include
a designation for which trading session(s) the order will remain in
effect.\22\ The Early Trading Session will be electronic only, while
the Trading Floor will be open during the Core Trading Session,
including until 4:15 p.m. for certain eligible options (i.e., ETFs and
ETNs) \23\ and during the Late Trading Session.
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\22\ See proposed Rule 901.1NY(b) and amended Rule
900.3NYP(a)(1)(A).
\23\ See Rule 901NY, Commentary .02.
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The queuing for order and market maker quotes for both the Early
Trading Session and the Core Trading Session will begin,
simultaneously, at 6:00 a.m. and there will be no opening auction for
the Late Trading Session orders. The Late Trading Session will occur
simultaneously with late trading Options on ETFs and ETNs, which will
be in their Core Trading Session. These ETF and ETN options will not
have a Late Trading Session. As noted above, participants may designate
orders for participation in certain sessions. Any order designated for
less than all sessions will not be included in any session for which it
is not eligible.
Market Makers and Specialists will not designate their quotes for a
specific trading session. Quotes will persist across sessions. However,
to address the potential for different quoting widths and varied Market
Maker and Specialist participation across sessions, the Early Trading
Session will conclude at 9:25 a.m. (five minutes before the opening of
the Core Trading Session).
The Exchange expects reduced liquidity and wider spreads during the
Early Trading Session and the Late Trading Session (i.e., Extended
Hours Trading). Therefore, the Exchange proposes not to allow Market
Orders \24\ during Extended Hours Trading and such orders designated
for participation in the Early Trading Session or the Late Trading
Session will be rejected.\25\ The Exchange believes it is appropriate
to not allow Market Orders during Extended Hours Trading in order to
protect customers should wide price fluctuations occur due to the
potential illiquid and volatile nature of the market or other factors
that could impact market activity.
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\24\ A ``Market Order'' is an unpriced order message to buy or
sell a stated number of option contracts at the best price
obtainable, subject to the Trading Collar assigned to the order. A
Market Order may be designated Day or GTC. Unexecuted Market Orders
are ranked Priority 1--Market Orders. For purposes of processing
Market Orders, the Exchange will not use an adjusted NBBO. See Rule
900.3NYP(a)(1).
\25\ See proposed amendment to Rule 900.3NYP(a)(1)(A), proposed
Rule 901.1NY(d)(1) and proposed amendment to Rule 952NYP(b)(2).
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Order Routing
Pursuant to the Options Order Protection and Locked/Crossed Market
Plan (``Linkage Plan''),\26\ participant exchanges to the Linkage Plan
established a framework to provide order protection. The Linkage Plan
(and Exchange Rules 991NY and 992NY) will apply during all trading
sessions during which multiply-listed options trade.
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\26\ The Linkage Plan requires U.S. options exchanges to
establish a framework for providing order protection and addressing
locked and crossed markets in eligible options classes. The Linkage
Plan is a national market system plan approved by the Commission
pursuant to Section 11A of the Act and Rule 608 thereunder. The full
text of the Linkage Plan is available at <a href="https://www.theocc.com/getcontentasset/7fc629d9-4e54-4b99-9f11-c0e4db1a2266/dfc3d011-8f63-43f6-9ed8-4b444333a1d0/options_order_protection_plan.pdf">https://www.theocc.com/getcontentasset/7fc629d9-4e54-4b99-9f11-c0e4db1a2266/dfc3d011-8f63-43f6-9ed8-4b444333a1d0/options_order_protection_plan.pdf</a>.
---------------------------------------------------------------------------
Rule 964NYP(k) addresses order routing away from the Exchange to
promote compliance with the Linkage Plan. As the Exchange may route
orders during the Early Trading Session and Late Trading Session in
multiply-listed options if another U.S. options exchange lists the same
options outside of the Core Trading Session, Rule 964NYP(k) will apply
during Extended Hours Trading (i.e., the Early Trading Session and the
Late Trading Session). Consequently, ATP Holders may designate an order
for routing (or not available for routing) during all trading sessions
for multi-listed equity options. The Exchange System is designed to, at
all times, prevent trade-throughs and avoid displaying locked/crossed
markets in accordance with the Linkage Plan, and, as proposed, ATP
Holder orders will be eligible for routing during the Early Trading
Session and the Late Trading Session, just as they are during the Core
Trading Session.
Opening Process
The Exchange will replicate its current multiply-listed opening
process and apply it to the Early Trading Session.\27\ Accordingly, the
Exchange proposes to amend the Opening Auction Process in Rule 952NYP
to incorporate the Early Trading Session for equity options.
Specifically, the Exchange proposes to amend Rule 952NYP to add
subparagraph (a)(12)(C) which will provide that, similar to the Core
Open Auction, the pre-open state for the Early Open Auction begins at
6:00 a.m. \28\
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\27\ There will be no opening auction for the Late Trading
Session. Trading will continue seamlessly from the Core Trading
Session into the Late Trading Session in eligible symbols.
\28\ The Exchange also proposes a non-substantive amendment to
Rule 952NYP(b) to limit the priority for Market On Open orders to
the Core Auction Open and the Trading Halt Auction. As noted above,
market orders will not be permitted during the Early Trading
Session.
---------------------------------------------------------------------------
With the implementation of the Early Trading Session, the Exchange
will have access to additional data (i.e., orders) in calculating the
Auction Imbalance for the Core Trading Session. Accordingly, so as to
avoid dictating prices that are far outside the actual trading market,
the Exchange proposes to adopt subsection (a)(2)(C) of Rule 952NYP to
account for
[[Page 56509]]
changes in the disclosure of Auction Imbalance Information prior to the
opening of the Core Open Auction. Specifically, the proposed amendment
will disclose that during continuous trading in the Early Trading
Session the Auction Collar will include orders and the Legal Width
Quote,\29\ while in the period between the end of the Early Trading
Session and the Core Trading Session (i.e., 9:25 a.m. to 9:30 a.m.),
the Auction Collar will be as defined in Rule 952NYP(2)(A).\30\
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\29\ Pursuant to Rule 952NYP(a)(10), ``Legal Width Quote is a
calculated NBBO that: (A) may be locked, but not crossed; (B) does
not contain a zero offer; and (C) has a spread between the
Calculated NBBO for each option contract that does not exceed a
maximum differential that is determined by the Exchange on a class
basis, which amount may be modified during the Auction Process, and
such maximum differentials (and modifications thereto) will be and
announced by Trader Update, provided that a Trading Official may
establish differences other than the above for one or more series or
classes of options.
\30\ See proposed Rule 952NYP(a)(2)(C).
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As it relates to Auction Triggers, as that term is defined in Rule
952NYP, the trigger for the Early Open Auction will differ from Core
Open Auction. Specifically, the Core Open Auction begins when the
Primary Market first disseminates at or after 9:30 a.m. both a two-
sided quote and a trade that is at or within the quote.\31\ Conversely,
under proposed Rule 952NYP(a)(7)(C), the Early Open Auction will begin
when any national securities exchange first disseminates in the
underlying, at or after 7:30 a.m. Eastern Time, either a two-sided
quote or a trade of any size. The Exchange emphasizes that the Auction
Trigger for the Early Open Auction is not based on disseminated trades
or quotes from the Primary Market and is instead based on trades or
quotes from any national securities exchange as not all securities will
be trading on their Primary Market during the Early Trading Session
(e.g., NYSE-listed securities), and, therefore, an Auction Trigger
based on the Primary Market may not occur. An option will not open
unless the composite market is within a configured opening collar,
although collars may differ for the Early Open Auction.
---------------------------------------------------------------------------
\31\ See Rule 952NYP(a)(7)(A).
---------------------------------------------------------------------------
Market Makers and Market Participants
Pursuant to Rule 924NY, ATP Holders including Market Makers must
have a Letter of Guarantee from a Clearing Member authorized by the OCC
in order to make any transaction on the Floor of the Exchange or
through the facilities of the Exchange. Accordingly, as set forth in
proposed Rule 901.2NY(j), any ATP Holder with an effective Letter of
Guarantee issued by a Clearing Member and approved by the Options
Clearing Corporation may participate in Extended Hours Trading.
Participation is voluntary and no additional authorization with the
Exchange is required.
Similarly, the participation of a Market Maker appointed in a class
of options contracts pursuant to Rule 923NY in the Early Trading
Session or the Late Trading Session is voluntary. Accordingly, as set
forth in proposed Rule 901.2NY(g), while Market Maker appointments will
apply across all three trading sessions and the Market Maker assigned
to an option class eligible for trading during the Core Trading Session
will automatically receive the appointment in that class during the
Early Trading Session and the Late Trading Session, a Market Maker is
not required to enter quotations.
However, if a Market Maker chooses to enter quotations in its
assigned class during the Early Trading Session or the Late Trading
Session it will be subject to its continuous quoting obligation (Rule
925.1NYP). Market Makers will not have a way to designate quotes for a
specific session. Upon receipt by the Exchange, the quote will be
available for all three sessions, as there will not be automatic
cancellation of quotes at the conclusion of a session.
A Market Maker that does not enter quotations during the Early
Trading Session or Late Trading Session will not be subject to the
continuous quoting obligation. Nevertheless, nothing will relieve the
Market Maker of its continuous quoting obligations during the Core
Trading Session.\32\
---------------------------------------------------------------------------
\32\ See proposed Rule 901.2NY(g)(3).
---------------------------------------------------------------------------
Finally, Specialist allocations will persist across all three
sessions. However, like Market Maker assignments, the participation of
a Specialist assigned in a class eligible to participate in trading
during Extended Hours Trading is voluntary. Accordingly, as set forth
in proposed Rule 901.2NY(h)(2), a Specialist allocated such an
allocated class may opt out of participating in the Early Trading
Session and/or the Late Trading Session.
Compliance with these requirements is determined by reviewing the
aggregate of quoting in assigned options series for the ATP Holder
across all trading sessions. Accordingly, if a Market Maker chooses to
quote during Extended Hours Trading, their quoting time during the
additional session(s) will be aggregated with their Core Trading
Session quoting time (i.e., across all trading sessions) for purposes
of determining compliance.
Pursuant to Rule 925.1NYP, Specialists and Market Makers must
provide continuous two-sided quotations throughout the trading day in
its appointed issues for 90% and 60%, respectively, for the session(s)
in which they quote. For purposes of determining compliance with the
continuous quoting obligation, a Specialist's and Market Maker's
quoting activity will be measured in the aggregate across all trading
sessions in which they quote. The Exchange calculates Specialist and
Market Maker compliance across all appointed issues rather than on a
class-by-class basis, which does not vary based on the trading sessions
in which a Specialist or Market Maker chooses to participate.
The Exchange believes that calculating compliance across all
appointed issues appropriately reflects different liquidity and
participation dynamics of the Early Trading Session and the Late
Trading Session. The Exchange expects lower levels of trading during
these sessions as compared to the Core Trading Session, which could
result in potentially lower liquidity (including fewer Specialists and
Market Makers quoting), higher volatility and wider spreads. However,
the Exchange believes that applying the continuous quoting requirements
for Specialists and Market Makers across all classes and trading
sessions is a fair and efficient way for the Exchange to evaluate
compliance with continuance quoting obligations. It will also benefit
Specialists and Market Makers by providing some flexibility to choose
which series in their appointed classes they will continuously quote--
increasing continuous quoting in in one series while allowing for a
decrease in another, which is important for classes that have
relatively few series and may prevent Specialists and Market Makers
from reaching the overall continuous quoting obligations while failing
to achieve it in more than one series in an appointed class.
This flexibility, however, does not diminish the Specialist's or
Market Maker's obligation to continuously quote in a significant
percentage of series for a significant part of the trading day. Thus,
applying the existing quoting obligations for all trading sessions will
promote active markets in these extended trading hours sessions.
Specifically, this approach is intended to help reduce the rigidity of
quoting requirements for a Specialist or Market Maker of multiple
sessions if trading activity is less in one of the sessions. By
requiring that a Specialist or Market
[[Page 56510]]
Maker meet its continuous quoting obligations across all trading
sessions in which it is appointed (and collectively across classes, as
is the case today), a Specialist or Market Maker might meet its
obligations on a given day even if it falls below obligation
requirements in one trading session if they surpass obligations
requirements in another session because the total activity across
trading sessions will be used to determine compliance with continuous
quoting obligation requirements. Accordingly, the Exchange believes
that applying the existing Specialist and Market Maker obligations for
the Core Trading Session to the Early Trading Session and the Late
Trading Session will promote active markets in these extended trading
hours sessions and will foster liquid markets while providing
flexibility to Specialists and Market Makers to meet their obligations.
Disclosures
Proposed Rule 901.2NY(f) will require ATP Holders to make certain
disclosures to customers regarding material trading risks that exist
during the Early Trading Session and the Late Trading Session (i.e.
Extended Hours Trading). The Exchange expects overall lower levels of
trading during Extended Hours Trading compared with the Core Trading
Session. While trading processes during Extended Hours Trading will be
substantially similar to trading processes during the Core Trading
Session, the Exchange believes it is important for investors,
particularly non-professional customers, to be aware of any differences
and risks that may result from lower trading levels and thus will
require these disclosures.
Proposed Rule 901.2NY(f) will provide that no ATP Holder may accept
an order from a customer for execution during Extended Hours Trading
without disclosing to that customer that trading during Extended Hours
Trading involves, among other things, material trading risks, including
the possibility of lower liquidity, high volatility, changing prices,
an exaggerated effect from news announcements, wider spreads. The
proposed rule provides an example of these disclosures in subparagraphs
(1) through (7). The Exchange believes that requiring ATP Holders to
disclose these risks to non-member customers will facilitate informed
participation in Extended Hours Trading. The required disclosures are
materially identical to the disclosure requirements imposed by the Cboe
during its Global Trading Hours.\33\
---------------------------------------------------------------------------
\33\ See Cboe Rule 9.20.
---------------------------------------------------------------------------
Due to differences in the trading process during the Core Trading
Session and Extended Hours Trading, ATP Holders that accept orders from
customers during Extended Hours Trading will be required to make
certain disclosures to those customers. The requirements addressing the
differences between the trading sessions are consistent with the
Exchange's goal of permitting ATP Holders, that choose to do so, to
trade during Extended Hours Trading without imposing additional burdens
on those that do not.\34\
---------------------------------------------------------------------------
\34\ See proposed Rule 901.2NY(g) & (h), permitting Market
Makers and Specialists to not participate in trading activity during
the Early Trading Session or the Late Trading Session. To the extent
that a Market Maker chooses to participate in the additional trading
sessions their quoting obligations are defined in proposed amended
Rule 925NY(b)(5).
---------------------------------------------------------------------------
Accordingly, the Exchange will minimize ATP Holder's preparation
efforts to the greatest extent possible by allowing ATP Holders to
trade during Extended Hours Trading with the same ports and data feeds
and employing existing session designations used during the Core
Trading Session. Session designation will be controlled via existing
order tags; order processing will operate in the same manner during
Extended Hours Trading as it does during the Core Trading Session.
There will be no changes to the ranking, display, or allocation rules.
Similarly, there will be no changes to the processes for clearing,
settlement, exercise, and expiration.\35\ The Exchange notes that the
OCC already clears certain ETFs that are eligible pursuant to Exchange
Rules to trade until 4:15 p.m. as part of the Core Trading Session.
Therefore, the OCC already has the operational functionality to support
the proposed Extended Hours Trading for equity options.\36\
---------------------------------------------------------------------------
\35\ The Exchange has held discussions with the OCC, which is
responsible for clearing and settlement of all listed options
transactions and has informed the Exchange that no operational
changes are required for clearance and settlement during Extended
Hours Trading. All transactions during Extended Hours Trading will
be cleared and settled in the same manner that trades during the
Core Trading Session are cleared and settled. It is operationally
ready and will use existing processes and marginal requirements.
\36\ It is the Exchange's understanding that the OCC has made a
filing for approval to allow it to clear non-ETF equity options
during extended trading hours being proposed by various exchanges.
See Securities Exchange Act Release No. 106080 (August 12, 2026), 91
FR 53294 (August 17, 2026) (SR-OCC-2026-008) (Notice of Filing of
Proposed Rule Change by The Options Clearing Corporation Concerning
Amendments to Its Rules to Establish a Procedures-Based Approach for
Determining Product Eligibility During Overnight or Extended Trading
Sessions Utilizing Its Current ETH Risk Management Framework). The
Exchange will delay the launch of equity options trading during
Extended Hours Trading until approval of the OCC's rule filing.
---------------------------------------------------------------------------
In addition, the Options Price Reporting Authority (``OPRA'') will
accommodate equity options during Extended Hours trading on the
existing lines used during the Core Trading Session. With the exception
of imbalance messages, Exchange proprietary data feeds will also be
disseminated during Extended Hours Trading using the same formats and
delivery mechanisms with which the Exchange disseminates during the
Core Trading Session. Finally, price protection mechanisms,
participant-level risk controls and obvious error adjustment processes
employed during the Core Trading Session shall apply during Extended
Hours Trading.\37\
---------------------------------------------------------------------------
\37\ In addition, the Exchange will continue to explore
additional risk controls specific to the Early Trading Session and
the Late Trading Session.
---------------------------------------------------------------------------
The Exchange understands that systems and other issues may arise
and is committed to resolving those issues as quickly as possible,
including during Extended Hours Trading. Thus, the Exchange will have
appropriate staff available as necessary during Extended Hours Trading
to handle any technical and support issues that may arise during those
hours. Additionally, the Exchange will have personnel available to
address any trading issues that may arise during Extended Hours
Trading. The Exchange also will have appropriately trained, qualified
regulatory staff in place during Extended Hours Trading to the extent
it deems necessary to satisfy its self-regulatory obligations. The
Exchange believes its surveillance procedures are adequate to properly
monitor trading of eligible equity options during Extended Hours
Trading.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\38\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\39\
in particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, 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.
---------------------------------------------------------------------------
\38\ 15 U.S.C. 78f(b).
\39\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposal would remove impediments to
and perfect the mechanism of a free and open market and a national
market system by providing a rules framework to support the Exchange's
introduction of Extended Hours Trading, which the
[[Page 56511]]
Exchange believes will increase market accessibility, promote capital
formation, and facilitate portfolio management.
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange operates in a
highly competitive market. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \40\
---------------------------------------------------------------------------
\40\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04).
---------------------------------------------------------------------------
Extended Hours Trading is a competitive initiative designed to
improve the Exchange's marketplace for the benefit of investors. The
proposed rule changes provide a new investment opportunity within the
options trading industry that more closely aligns the Exchange's
trading hours with extended trading hours of stock exchanges and other
options exchanges.\41\ It also aligns with the recently approved
extended trading hours for Cboe and MRX.\42\ The Exchange believes the
competition among exchanges ultimately benefits the entire marketplace.
Given the robust competition among options exchanges, innovative
trading mechanisms are consistent with the above-mentioned goals of the
Act.
---------------------------------------------------------------------------
\41\ See supra note 12.
\42\ See Cboe Approval Order and MRX Approval Order, supra notes
13 and 14.
---------------------------------------------------------------------------
The proposed rule change also provides a mechanism for the Exchange
to more effectively compete with exchanges located outside the United
States. Global markets have become increasingly interdependent and
linked through improved communications technology. This has been
accompanied by an increased desire among investors to have access to
U.S.-listed exchange products outside of regular trading hours, and the
Exchange believes this desire extends to equity options. The Exchange
believes that its proposal is reasonably designed to provide an
appropriate mechanism for trading outside the Core Trading Session
while providing for appropriate Exchange oversight and surveillance
pursuant to the Act.
As noted above, the Commission has authorized stock exchanges and a
small number of options exchanges to be open for trading outside of
regular trading hours pursuant to the Act.\43\ In addition, the
proposal for extended trading hours for certain qualifying equity
options is similar to recent approvals for extended trading hours on
Cboe and MRX.\44\ Thus, the proposed rule change to adopt Extended
Hours Trading is not novel or unique. Moreover, the Exchange believes
it is reasonable to trade a limited number of equity option classes for
which demand is anticipated to be the highest during the Early Trading
Session and the Late Trading Session upon implementation of Extended
Hours Trading in those options.
---------------------------------------------------------------------------
\43\ See supra note 12.
\44\ See Cboe Approval Order and MRX Approval Order, supra notes
13 and 14.
---------------------------------------------------------------------------
With few exceptions, options traded during Extended Hours Trading
will be subject to all other rules applicable to options on the
Exchange, including, without limitation, listing rules and business
conduct rules. These rules have all been previously filed with the
Commission and established as being consistent with the goals of the
Act. For example, during Extended Hours Trading, rules that protect
public customers, impose best execution requirements, and prohibit acts
and practices that are inconsistent with just and equitable principles
of trade or are otherwise fraudulent or manipulative practices.
Similarly, the proposed rule changes offer the same opportunity for
price improvement during Extended Hours Trading and applies the same
allocation and priority rules that are available on the Exchange during
the Core Trading Session. Thus, the Exchange believes that, during
Extended Hours Trading, market participants will continue to be
protected by the Exchange's rules that promote just and equitable
principles of trade and prevent fraudulent and manipulative acts.
Similarly, the proposed rule change requires disclosures that
clearly identify the ways in which trading during Extended Hours
Trading differs from trading during the Core Trading Session and
highlight any related risks. Specifically, the proposed rule change
will note that trading during Extended Hours Trading involves material
risks, such as lower liquidity, higher volatility, changing prices,
unlinked markets, and exaggerated effect from news announcements. This
ensures that investors would be aware of any differences among trading
sessions before being allowed to participate in Extended Hours Trading.
Consistent with the goals of investor protection, the Exchange will not
allow Market Orders during Extended Hours Trading due to the expected
increased volatility and decreased liquidity during those hours.\45\
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\45\ In addition, the Exchange does not initially propose to
initially offer the following order types during the Early Trading
Session and the Late Trading Session: Good-`Til-Cancelled Orders,
Market-on-Open Orders, Imbalance Offset Orders, Stop Orders, Stop
Limit Orders, Complex Orders, Cross Orders, CUBE Orders, Limit-on-
Open Orders, Reserve Orders, GTX Orders and orders marked eligible
for Broadcast Order Liquidity (``BOLD'') Mechanism. Similarly, open
outcry orders will not be permitted during the Early Trading
Session, but the Floor will be open during the Late Trading Session.
---------------------------------------------------------------------------
Additionally, the Exchange believes that the proposed rule change
will foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information. As noted above,
trading during Extended Hours Trading will use the same ports and data
feeds and order processing will operate in the same manner. Similarly,
there will be no changes to the processes for clearing, settlement,
exercise, and expiration. Finally, OPRA will accommodate equity options
during Extended Hours Trading on the existing lines used during the
Core Trading Session and, with the exception of imbalance messages,
Exchange proprietary data feeds will also be disseminated during
Extended Hours Trading using the same formats and delivery mechanisms
with which the Exchange disseminates during the Core Trading Session.
The proposed rule change is also consistent with Section 11A of the
Act and Regulation NMS thereunder, because it provides for the
dissemination of transaction and quotation information during Extended
Hours Trading through OPRA, pursuant to the OPRA Plan, which the
Commission approved and indicated as consistent with the Act. As noted
above, the Exchange will also comply with the Linkage Plan for all
eligible option classes that list and trade on another U.S. options
exchange outside of regular trading hours. The proposed rule change
will remove impediments to and perfect the mechanism of a free and open
market and a national market system because, as noted above, other
options exchanges currently offer trading in certain index options
outside of regular trading hours.\46\ The Exchange believes that the
proposed rule change will also help further competition by providing
[[Page 56512]]
market participants with yet another investment option.
---------------------------------------------------------------------------
\46\ See note 12, supra.
---------------------------------------------------------------------------
Price protection mechanisms and participant-level risk controls
employed during the Core Trading Session will apply during Early
Trading Session with necessary session-based modifications made. With
respect to this, the Exchange will ensure that adequate staffing is
available during Extended Hours Trading to provide appropriate trading
support during those hours, as well as Exchange personnel to make any
necessary determinations under the rules during Extended Hours Trading.
The Exchange is also committed to fulfilling its obligations as a self-
regulatory organization at all times, including during Extended Hours
Trading. The Exchange believes its surveillance procedures are adequate
to properly monitor trading in eligible equity options during Extended
Hours Trading.
In addition, while their participation is likewise optional, Market
Makers and Specialists will be subject to continuous quoting
obligations during Extended Hours Trading with respect to their option
class appointments as they are during the Core Trading Session. In such
cases, the Market Maker's and Specialist's quoting activity would be
aggregated for all trading sessions to determine whether they met their
continuous quoting obligations.
The Exchange believes that these provisions reflect different
liquidity and participation dynamics of Extended Hours Trading and the
Core Trading Session. The Exchange expects lower levels of trading
during the Early Trading Session and the Late Trading Session (i.e.,
Extended Hours Trading) compared to the Core Trading Session, which
could result in potentially lower liquidity (including fewer Market
Makers and Specialists quoting) and wider spreads. Accordingly,
participation in Extended Hours Trading is voluntary to provide ATP
Holders, Market Makers, Specialists and customers with the choice to
engage in that market.
If the Exchange required Market Makers and Specialists to meet
continuous quoting obligations during the Early Trading Session and/or
the Late Trading Session even though they chose not to participate in
that session, the Market Maker and Specialist could be penalized for
choosing not to quote during either session while nonetheless meeting
their continuous quoting obligations during the Core Trading Session.
The Exchange believes that the aggregate trading session-based
calculation promotes clarity and would encourage Market Maker and
Specialist participation in either the Early Trading Session or the
Late Trading Session without inadvertently penalizing them if they
choose not to participate in either session for that day.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
Intramarket Competition
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act as all ATP
Holders with access to the Exchange may trade during Extended Hours
Trading using the same ports and data feeds they use during the Core
Trading Session, minimizing any preparation efforts necessary to
participate during Extended Hours Trading.
ATP Holders will be authorized, but not required, to participate in
trading activity during Extended Hours Trading. As such, the proposal
does not impose additional burdens on an ATP Holder, particularly those
that do not elect to participate. The Exchange believes the obligations
imposed on ATP Holders to be eligible to trade during Extended Hours
Trading is an appropriate balance of obligations of additional
requirements with the benefits of additional trading sessions.
Intermarket Competition
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, because the
proposed rule change is a new competitive initiative that will benefit
the marketplace and investors. The Exchange also believes the proposed
rule change will enhance competition by providing new trading sessions
to investors that other options exchanges currently are not providing.
Additionally, all options exchanges are free to compete in the same
manner, including Cboe and MRX, which recently received approval for
extended trading hours similar to those being proposed by the
Exchange.\47\ The Exchange does not believe that the level of
competition among options exchanges will change during the Core Trading
Session because of the introduction of Extended Hours Trading for
equity options. The Exchange also believes the proposed rule change
would enhance its competitive position internationally by enabling
market participants to access its market during hours that overlap with
regular trading sessions in non-U.S. jurisdictions.
---------------------------------------------------------------------------
\47\ See Cboe Approval Order and MRX Approval Order, supra notes
13 and 14.
---------------------------------------------------------------------------
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.
IV. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change, as modified and superseded by Amendment No. 2 (``Amended
Proposal''), is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\48\ In particular, the Commission finds that the Amended
Proposal is consistent with Section 6(b)(1) of the Act,\49\ which
requires, among other things, that the Exchange be so organized and
have the capacity to be able to carry out the purposes of the Act and
to comply, and to enforce compliance by its members and persons
associated with its members, with the provisions of the Act, Commission
rules and regulations thereunder, and its own rules; Section 6(b)(5) of
the Act,\50\ which requires, among other things, that the rules of a
national securities exchange be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, to protect investors
and the public interest, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers; and
Section 6(b)(8) of the Act,\51\ which requires that the rules of a
national securities exchange not impose any burden on competition that
is not necessary or
[[Page 56513]]
appropriate in furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\48\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\49\ 15 U.S.C. 78f(b)(1).
\50\ 15 U.S.C. 78f(b)(5).
\51\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
The Amended Proposal largely harmonizes with extended-session
trading frameworks already approved for equity options on other
exchanges.\52\ In this vein, the proposed rules set forth, among other
things: (i) an early morning session that would occur from 7:30 a.m. ET
to 9:25 a.m. ET and a late afternoon session that would occur from 4:00
p.m. to 4:15 p.m. ET, which timeframes are significantly shorter than
the trading sessions for equity securities available on many equity
exchanges; \53\ (ii) eligibility criteria for determining the multi-
listed equity option classes that would be available for trading during
the proposed extended trading sessions that only highly liquid classes
could meet; \54\ (iii) a 100-class cap on the number of eligible equity
option classes that would be available for extended-session trading
with the exception that, if another exchange offers extended trading of
an equity option class that the Exchange has not offered, the Exchange
could add that class without it counting against the 100-class cap;
\55\ (iv) a detailed review procedure to determine the equity option
classes eligible for inclusion in or removal from the proposed extended
trading sessions; \56\ (v) provisions related to the availability of
order types and times-in-force, including that market orders and stop
orders will not be permitted during the proposed extended sessions;
\57\ (vii) a modified opening process in light of the proposed early
morning session; \58\ (viii) provisions regarding certain market maker
and specialist appointments across the core trading session and the
proposed extended sessions, including the application of priority
overlays; \59\ (ix) a provision regarding letters of guarantee to
authorize trading during the proposed extended sessions; \60\ and (x)
disclosures of the risks of extended session option trading.\61\
---------------------------------------------------------------------------
\52\ See, e.g., Cboe Rule 5.1; Securities Exchange Act Release
Nos. 105153 (April 6, 2026), 91 FR 18010 (April 9, 2026) (Notice of
Amendment No. 1 to SR-CBOE-2025-079) and 105569 (May 28, 2026), 91
FR 33005 (Jun. 2, 2026) (Order approving SR-CBOE-2025-079 as
modified by Amendment No. 1) (``Cboe Extended Trading Order'' and,
collectively with the Notice of Amendment No. 1 to SR-CBOE-2025-079,
``Cboe Extended Trading Notice and Order''); see also Securities
Exchange Act Release No. 105785 (June 26, 2026), 91 FR 40061 (July
1, 2026)(Order approving SR-MRX-2026-11 as modified and superseded
by Amendment No. 1) (``MRX Extended Trading Order''). See also
Letters from Katie Kolchin, Managing Director, Head of Equity &
Options Market Structure, and Gerald O'Hara, Vice President and
Assistant General Counsel, The Securities Industry and Financial
Markets Association, dated April 24, 2026 (``SIFMA April Letter'')
and May 15, 2026 (``SIFMA May Letter'') (urging harmonization across
options exchanges in regulatory approaches to expanding trading
hours). The SIFMA April Letter and SIFMA May Letter were submitted
in response to SR-CBOE-2025-079 and are available on the
Commission's website at: <a href="https://www.sec.gov/rules-regulations/public-comments/sr-cboe-2025-079">https://www.sec.gov/rules-regulations/public-comments/sr-cboe-2025-079</a>.
\53\ See proposed Rule 901.1NY(a)(1) and (3); Section III,
supra; Cboe Rule 5.1(b) and (c); Cboe Extended Trading Notice and
Order; MRX Options 3C, Section 2; MRX Extended Trading Order.
\54\ See proposed Rule 901.2NY(c); Section III, supra; Cboe Rule
5.1(c)(2); Cboe Extended Trading Notice and Order; MRX Options 3C,
Section 3(a)(1)(A)-(C); MRX Extended Trading Order.
\55\ See proposed Rule 901.1NY(c); Section III, supra; Cboe Rule
5.1(c)(2); Cboe Extended Trading Notice and Order; MRX proposed
Options 3C, Section 3(a)(1); MRX Extended Trading Order.
\56\ See proposed Rule 901.2NY(c)(3)-(4); Section III, supra;
Cboe Rule 5.1(c)(2)(A)-(C); Cboe Extended Trading Notice and Order;
MRX Options 3C, Section 3(a)(2)-(4); MRX Extended Trading Order.
\57\ See proposed Rule 901.1NY(d)(1); Section III, supra; Cboe
Rule 5.6; Cboe Extended Trading Notice and Order; MRX Options 3C,
Section 4; MRX Extended Trading Order.
\58\ See proposed Rule 952NYP(a)-(b); Section III, supra; Cboe
Rule 5.31(d); Cboe Extended Trading Notice and Order; MRX Options
3C, Section 5; MRX Extended Trading Order.
\59\ See proposed Rule 901.2NY(g) and (h); Section III, supra;
Cboe Extended Trading Notice/Order; Securities Exchange Act Release
No. 105763 (June 24, 2026) (Order approving SR-CBOE-2026-016)
(``Cboe DPM Order''); MRX Options 3C, Section 7; MRX Extended
Trading Order.
\60\ See proposed Rule 901.2NY(j); Section III, supra; Cboe
Extended Trading Notice and Order; MRX Options 3C, Section 8; MRX
Extended Trading Order.
\61\ See proposed Rule 901.2NY(f); Section III, supra; Cboe Rule
9.20; Cboe Extended Trading Notice and Order; MRX Options 3C,
Section 9; MRX Extended Trading Order. The Amended Proposal also
provides that existing options rules and functionalities of the
Exchange will apply to extended session option trading on the
Exchange unless the context requires otherwise, and the Exchange
sets forth various disclosures that, according to the Exchange, are
designed to permit extended session trading for members that choose
to participate in such trading without imposing additional burdens
on those that do not. See proposed Rule 901.2NY(a); Section III,
supra; MRX Options 3C, Section 1(a); see also Cboe Extended Trading
Notice and Order. Further, the Exchange would comply with the
Linkage Plan by making orders eligible for routing during the
proposed extended trading sessions pursuant to Rule 964NYP(k)
consistent with their routing eligibility during the core trading
session. See Section III, supra; see also Cboe Rule 5.36; Cboe
Extended Trading Notice and Order. Members would be able to
designate their orders as eligible for routing (or not) during all
trading sessions for multi-listed equity options. See Section III,
supra.
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These aspects of the Amended Proposal do not raise novel regulatory
issues that the Commission has not considered previously,\62\ and are
consistent with the Act. Equity securities are exchange-traded outside
of the core trading session, but investors currently are unable to
engage in exchange trading outside of the core trading session to
utilize equity option trading strategies, including to hedge equity
positions and mitigate downside risk in those positions. The Amended
Proposal is reasonably designed to expand access to options as a tool
for risk mitigation and help investors hedge equity positions against
price movements. Further, by largely replicating other exchanges'
approach to permitting extended session option trading, the Amended
Proposal is designed to perfect the mechanism of a free and open market
and national market system and enhance competition among options
exchanges offering such extended session option trading, to the benefit
of investors.
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\62\ See Cboe Extended Trading Order; see also MRX Extended
Trading Order.
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Other, discrete aspects of the Amended Proposal that depart from
what is already provided in other exchange rules are consistent with
the Act. The Exchange has proposed its own terminology for classifying
its extended trading sessions,\63\ and would require any order entered
into the Exchange to include a designation for which trading session(s)
the order will remain in effect, which should provide members with
flexibility to specify the trading sessions during which their option
orders may--or may not--trade.\64\ These aspects of the Amended
Proposal are consistent with the functioning of fair and orderly
markets, the perfection of the mechanism of a free and open market and
a national market system, and the protection of investors and the
public interest.\65\
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\63\ See proposed Rule 901.1NY(a)(1) and (3); compare Cboe Rule
5.1(b) and (c); Cboe Extended Trading Notice and Order; MRX Options
3C, Section 1(b); MRX Extended Trading Order.
\64\ See proposed Rule 901.1NY(b); compare MRX Options 3C,
Section 4(b); MRX Extended Trading Order.
\65\ Additional aspects of the Exchange's proposal are
consistent with these tenets in that they are designed to minimize
member impact by leveraging existing Exchange functionality and
processes. For example, the Exchange states that members will be
permitted to trade during the proposed extended sessions using
existing ports; with the exception of imbalance messages, Exchange
proprietary data feeds will be disseminated during the proposed
extended sessions using the same formats and delivery mechanisms
with which the Exchange disseminates during the core trading
session; session designation will be controlled via existing order
tags; order processing will operate in the same manner during
extended session trading as it does during the core trading session;
there will be no changes to the Exchange's ranking, display, or
allocation algorithm rules; and price protection mechanisms,
participant-level risk controls and obvious error adjustment
processes employed during the core trading session also would apply
during the proposed extended sessions. See Section III, supra; see
also proposed Rule 928.1NYP.
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With respect to the collection and dissemination of quotation and
transaction information during the proposed extended sessions, the
Exchange states that OPRA will accommodate equity options during
extended hours trading on the existing
[[Page 56514]]
lines used during the core trading session.\66\ Similarly, the Exchange
states that there will be no changes to the processes for clearing,
settlement, exercise, and expiration.\67\ Moreover, the Exchange states
that the OCC will be able to clear and settle all transactions that
occur on the Exchange and handle exercises of options during the
proposed extended trading sessions.\68\ The Exchange acknowledges that
the OCC has filed a proposed rule change with the Commission to support
the extension of trading hours for equity options, and the Exchange
represents that it will not launch extended session equity option
trading until Commission approval of OCC's rule filing.\69\
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\66\ See Section III, supra; see also Memorandum from the
Division of Trading and Markets Regarding a March 4, 2026,
Conference Call with Representatives of the Options Price Reporting
Authority and the Securities Industry Automation Corporation, dated
March 4, 2026 (stating that OPRA is able to support the proposed
extended trading sessions for all exchanges, following a 30-day
notice period to OPRA subscribers), available on the Commission's
website at: <a href="https://www.sec.gov/rules-regulations/public-comments/sr-cboe-2025-079">https://www.sec.gov/rules-regulations/public-comments/sr-cboe-2025-079</a>.
\67\ See Section III, supra.
\68\ Id.
\69\ Id.
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As the Commission stated previously, the Exchange's timing for the
commencement of its proposed extended trading sessions must be
consistent with Sections 6(b)(1), 6(b)(5), and 6(b)(8) of the Act.\70\
Here, as there, these requirements have been met in light of (i) OPRA's
readiness to collect and disseminate quotation and transaction
information for any exchange during the proposed extended trading
sessions, (ii) the Exchange's commitment not to launch equity option
trading during the proposed extended trading sessions until approval of
the proposed rule change that the OCC has filed with the Commission,
and (iii) the fact that Exchange members should have reasonable time
and opportunity to prepare for the proposed extended trading sessions,
including during the statutory timeframe that applies to the proposed
rule change that the OCC has filed with the Commission.\71\ Moreover,
that no exchange may trade equity options during the proposed extended
trading sessions until the OCC's related proposed rule change has been
completed should provide for a harmonized point in time at which
exchanges may implement the proposed extended sessions for equity
option trading, pursuant to rules approved by the Commission or that
otherwise become effective pursuant to Section 19(b), if they so
choose.\72\
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\70\ See Cboe Extended Trading Order and MRX Extended Trading
Order.
\71\ See Section III, supra; see also Section 19(b) of the Act;
15 U.S.C. 78s(b).
\72\ See SIFMA May Letter (urging harmonization of the initial
launch of extended trading of equity options); Section 19(b) of the
Act; 15 U.S.C. 78s(b).
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For the foregoing reasons, the Commission finds that the Amended
Proposal is consistent with the Act and the rules and regulations
thereunder applicable to a national securities exchange.
V. Solicitation of Comments on Amendment No. 2 to the Proposed Rule
Change
Interested persons are invited to submit written data, views, and
arguments concerning whether Amendment No. 2 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#91e3e4fdf4bcf2fefcfcf4ffe5e2d1e2f4f2bff6fee7"><span class="__cf_email__" data-cfemail="f183849d94dc929e9c9c949f8582b1829492df969e87">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2026-34 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-2026-34. 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-2026-34 and should be submitted
by September 23, 2026.
VI. Accelerated Approval of the Proposed Rule Change, as Modified and
Superseded by Amendment No. 2
The Commission finds good cause to approve the proposed rule
change, as modified and superseded by Amendment No. 2, prior to the
thirtieth day after the date of publication of notice of the filing of
Amendment No. 2 in the Federal Register. Amendment No. 2 further
harmonizes the Initial Filing with what is already permitted by other
exchanges with respect to extended session equity option trading.
Amendment No. 2, without altering the purpose of the Initial Filing,
strengthens the Initial Filing by providing additional clarity and a
more harmonized approach to extended session equity option trading.
The Commission therefore finds that Amendment No. 2 does not raise
any novel regulatory issues substantially different from those that had
been previously subject to comment and is reasonably designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, and, in general, to protect
investors and the public interest. Accordingly, the Commission finds
good cause, pursuant to Section 19(b)(2) of the Act,\73\ to approve the
proposed rule change, as modified and superseded by Amendment No. 2, on
an accelerated basis prior to the 30th day after publication of notice
of the filing of Amendment No. 2 in the Federal Register.
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\73\ 15 U.S.C. 78s(b)(2).
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VII. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\74\ that the proposed rule change (SR-NYSEAMER-2026-34), as
modified and superseded by Amendment No. 2, be, and hereby is, approved
on an accelerated basis.
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\74\ Id.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\75\
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\75\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-17914 Filed 9-1-26; 8:45 am]
BILLING CODE 8011-01-P
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