Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing of Proposed Rule Change To Amend the Strike Price Intervals for Options on Certain Exchange-Traded Fund Shares That Meet the Qualifying Securities Criteria

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<title>Federal Register, Volume 91 Issue 212 (Wednesday, November 4, 2026)</title>
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[Federal Register Volume 91, Number 212 (Wednesday, November 4, 2026)]
[Notices]
[Pages 69596-69601]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22453]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106780; File No. SR-ISE-2026-53]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
of Proposed Rule Change To Amend the Strike Price Intervals for Options 
on Certain Exchange-Traded Fund Shares That Meet the Qualifying 
Securities Criteria

October 30, 2026.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 19, 2026, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the strike intervals for options on 
certain Exchange-Traded Fund Shares (``ETFs'').

[[Page 69597]]

    The text of the proposed rule change is available on the Exchange's 
website at <a href="https://listingcenter.nasdaq.com/rulebook/ise/rulefilings">https://listingcenter.nasdaq.com/rulebook/ise/rulefilings</a>, 
and at the principal office of the Exchange.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Options 4, Section 5, Series of 
Options Contracts Open for Trading, to revise certain strike intervals 
applicable to options on ETFs that are more than one month and less 
than nine months from expiration and to make related organizational 
changes to that section. The Exchange also proposes to amend the rule 
text related to Qualifying Securities in Supplementary Material .03 to 
Options 4, Section 5 (Short Term Options Series Program).
Background
    Currently, Options 4, Section 5(d) provides that, except as 
otherwise provided in the Supplementary Material thereto, the interval 
between strike prices of series of options on individual stocks will 
be:
    (1) $2.50 or greater where the strike price is $25.00 or less;
    (2) $5.00 or greater where the strike price is greater than $25.00; 
and
    (3) $10.00 or greater where the strike price is greater than 
$200.00.
    Current Section 5(e) separately provides that options on SPDR S&P 
500 ETF (``SPY''), iShares Core S&P 500 ETF (``IVV''), PowerShares QQQ 
Trust (``QQQ''), iShares Russell 2000 Index Fund (``IWM''), SPDR Dow 
Jones Industrial Average ETF (``DIA''), and SPDR[supreg] Gold Trust 
(``GLD'') (collectively ``enumerated ETFs''), may be listed at $1 or 
greater intervals; Section 5(e) applies only to the aforementioned 
ETFs. The unlettered paragraph of Section 5(d) generally provides $1 or 
greater intervals for ETFs where the strike price is $200 or less and 
$5.00 or greater intervals where the strike price is greater than $200.
    Additionally, currently Supplementary Material .03(e) to Options 4, 
Section 5 permits the Exchange to open for trading Short Term Option 
Series at strike price intervals of (i) $0.50 or greater where the 
strike price is less than $100, and $1 or greater where the strike 
price is between $100 and $150 for all option classes that participate 
in the Short Term Options Series Program; (ii) $0.50 for option classes 
that trade in one dollar increments and are in the Short Term Option 
Series Program; or (iii) $2.50 or greater where the strike price is 
above $150.
    Today, the Exchange's listing rules at Supplementary Material .03 
to Options 4, Section 5 permit the listing of additional expirations on 
eligible individual stocks or Exchange-Traded Fund Shares that meet 
certain criteria on a quarterly basis (``Qualifying Securities''). 
Specifically, as measured on the last day of the prior calendar 
quarter, an underlying security must have either (A) a market 
capitalization greater than 700 billion dollars for an individual 
stock, based on the closing price, or (B) Assets under Management 
(``AUM'') greater than 50 billion dollars (under (B)(i)) or greater 
than 25 billion dollars (under (B)(ii)) for an Exchange-Traded Fund 
Share, based on net asset value (``NAV''). Further, eligible individual 
stocks or ETFs must have monthly options volume, as measured by sides 
traded in the last month preceding the quarter end, of greater than 10 
million options, or greater than 5 million options for an Exchange-
Traded Fund Share that qualified under (B)(ii) of the Qualifying 
Securities criteria; must have a position limit of at least 250,000 
contracts; and must participate in the Penny Interval Program.\3\
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    \3\ The ``Penny Interval Program'' means the program described 
in Supplementary Material .01 to Options 3, Section 3. Under the 
program, the Exchange lists option classes with minimum quoting 
increments of: (A) one cent ($0.01) for all options contracts in 
QQQ, SPY, and IWM; (B) one cent ($0.01) for all other options 
contracts in the Penny Program trading at less than $3.00; and (C) 
five cents ($0.05) for all other options contracts in the Penny 
Program trading at or above $3.00.
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    Each calendar quarter, the Exchange applies the Qualifying 
Securities criteria to individual stocks and ETFs to determine 
eligibility for the following quarter as a Qualifying Security. 
Beginning on the second trading day in the first month of each calendar 
quarter, the market capitalization of individual stocks is calculated 
based on the closing price established on the primary exchange on the 
last trading day of the prior calendar quarter and the AUM for ETFs is 
calculated based on the NAV established on the primary exchange on the 
last trading day of the prior calendar quarter.\4\
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    \4\ The data establishing the volume thresholds is established 
by using data from the last month of the prior calendar quarter from 
The Options Clearing Corporation. For options listed on the first 
trading day of a given calendar quarter, the volume is calculated 
using the last month of the quarter prior to the last trading 
calendar quarter. See Supplementary .03 to Options 4, Section 5.
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Proposal
    At this time, the Exchange proposes to amend Options 4, Section 5, 
Series of Options Contracts Open for Trading. Specifically, the 
Exchange proposes to incorporate current Options 4, Section 5(e) into 
Options 4, Section 5(d) and remove the ``(e)'' designation so that it 
becomes unlettered text within Section 5(d). Under the proposal, the 
general $1-or-greater interval for ETFs where the strike price is $200 
or less and the $5.00-or-greater interval where the strike price is 
greater than $200, as well as the $1-or-greater interval for the 
enumerated ETFs, will remain unchanged, except that ETF Qualifying 
Securities may be listed at $0.50 or greater intervals where the strike 
price is less than $100, as described below.\5\
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    \5\ See current Options 4, Section 5(d) and (e). Additionally, 
the strike intervals for Short Term Option Series specified in 
Supplementary Material .03(e) to Options 4, Section 5 will also 
remain unchanged. The Short Term Option Series Program permits ETFs 
with one month or less to expiration to be listed at $0.50 intervals 
where the strike price is less than $100.
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    The Exchange also proposes to amend current Options 4, Section 5(e) 
to remove the clause ``Notwithstanding any other provision regarding 
the interval of strike prices of series of options on Exchange-Traded 
Fund Shares in this Rule,'' and to amend certain ETF names to reflect 
the current name.\6\
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    \6\ The Exchange proposes to add ``Trust'' after S&P 5000 ETF. 
The Exchange proposes to change the ``PowerShares QQQ Trust'' to 
``Invesco QQQ Trust.'' The Exchange proposes to change ``iShares 
Russell 2000 Index Fund'' to the ``iShares Russell 2000 ETF.'' The 
Exchange proposes to remove the ``the'' before ``SPDR Dow Jones 
Industrial Average ETF'' and add ``Trust'' to the end of the name. 
The Exchange is adding ``and'' before the last name on the list.
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    So that the first sentence of the proposed unlettered paragraph 
states, ``The interval of strike prices on SPDR S&P 500 ETF (``SPY''), 
iShares Core S&P 500 ETF (``IVV''), PowerShares QQQ Trust (``QQQ''), 
iShares Russell 2000 Index Fund (``IWM''), the SPDR Dow Jones 
Industrial Average ETF (``DIA''), and SPDR[supreg] Gold Trust (``GLD'') 
options will be $1 or greater.'' The Exchange

[[Page 69598]]

proposes to add new sentences to the end of that proposed unlettered 
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paragraph that state,

    Further, notwithstanding any other provision in this Rule 
regarding the interval of strike prices of series of options on 
Exchange-Traded Fund Shares, the interval of strike prices for 
options on an Exchange-Traded Fund Share that is a Qualifying 
Security under Supplementary Material .03 to Options 4, Section 5 
will be $0.50 or greater where the strike price is less than $100, 
but only for a calendar quarter for which the Exchange has 
determined that the Exchange-Traded Fund Share satisfies each of the 
Qualifying Securities criteria. If an Exchange-Traded Fund Share 
ceases to meet the criteria of a Qualifying Security, any series of 
options listed at $0.50 strike price intervals under this paragraph 
may remain listed, but the Exchange may not list additional series 
of options until the Exchange-Traded Fund Share again meets the 
criteria of a Qualifying Security.

    The Exchange's proposal is designed to fill the gap between 
existing listing rules such that options on ETF Qualifying Securities 
\7\ may list $0.50 strike intervals where the strike price is less than 
$100 for options that are more than one month and less than nine months 
\8\ from expiration.
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    \7\ As used herein, ``ETF Qualifying Securities'' are ETFs 
approved for options trading pursuant to Options 4, Section 3(h) 
that also satisfy the Qualifying Securities criteria in 
Supplementary Material .03 to Options 4, Section 5. Each quarter the 
Exchange identifies the Qualifying Securities on its website.
    \8\ Strike price interval rules do not apply to long-term 
options series until the time to expiration is less than nine 
months. See Options 4, Section 8.
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    Further, the Exchange proposes conforming organizational changes to 
Options 4, Section 5. The existing intervals for individual stocks in 
Section 5(d) are designated as subparagraphs (1) through (3). The 
current subsection (e) designation is removed; former subsection (f) is 
renumbered as subparagraph (d)(i), titled ``Volatility Indexes:'' with 
conforming cross-reference amendments; former subsection (h) is 
renumbered as subparagraph (d)(ii) and titled ``Index-Linked 
Securities''; and former subsection (i) is renumbered as subparagraph 
(d)(iii). Former subsection (j) is renumbered as (e); former subsection 
(k) is renumbered as (f); and former subsection (g) is relocated to the 
end of Section 5 as new subsection (g).
    ETF Qualifying Securities are highly liquid and actively traded, 
and only a select group of ETFs meets the stringent requirements. ETF 
Qualifying Securities occupy a unique position at the top of the ETF 
liquidity spectrum and are readily distinguishable from the broader 
population of ETFs. The 250,000-contract position limit is the highest 
position limit under Exchange rules; options that qualify for this 
limit are highly liquid securities that have met stringent 
requirements. Additionally, in order to qualify for the Penny Interval 
Program, an options class must be among the 300 most actively traded 
multiply listed option classes overlying securities priced below $200. 
Permitting $0.50 strike intervals for ETF Qualifying Securities for 
expirations more than one month and less than nine months away under 
Options 4, Section 5(d) is reasonable because these instruments possess 
sufficient liquidity to support finer strike granularity without 
adverse effects on market quality.
    The proposed change reflects that ETFs increasingly trade at lower 
dollar prices than traditional large-cap equities and market-cap-
weighted index ETFs, particularly narrower thematic, sector, commodity, 
currency, and single-country products. ETF Qualifying Securities span a 
broad range of asset classes, including domestic and international 
equity, fixed income, commodities, currencies, and alternative 
strategies, and are widely used by retail and institutional investors 
alike to obtain diversified, low-cost exposure. For ETF Qualifying 
Securities trading below $100, the current $1 minimum interval for 
expirations more than one month away, beyond what can be listed today 
for ETFs in the Short Term Options Series Program, represents a 
percentage move in the underlying that materially exceeds the 
corresponding percentage move for higher-priced securities. For 
example, a $1 interval on a $50 ETF represents a 2% move in the 
underlying, whereas a $1 interval on a $200 ETF represents only a 0.5% 
move. By contrast, a $0.50 interval on a $50 ETF represents a 1% move, 
and a $0.50 interval on a $25 ETF represents a 2% move. The proposed 
$0.50 interval would produce percentage moves that are more consistent 
across the price spectrum and more closely aligned with the daily and 
long-term price behavior of many ETFs.
    The Exchange believes that the absence of $0.50 strike price 
intervals below $100 in ETF Qualifying Securities for expirations more 
than one month and less than nine months away significantly constrains 
investors' hedging and trading opportunities. Investors commonly use 
expirations in this aforementioned timeframe to hedge or express a view 
on a position over a multi-month horizon, such as protecting a holding 
through a quarter-end or an anticipated market event. Because these 
positions are held longer and are often sized to a specific risk 
tolerance, the precision of the strike price is economically 
meaningful: a strike that is too far from the investor's target level 
either leaves unwanted exposure unhedged or requires the investor to 
pay for more protection than needed. Today, $0.50 intervals below $100 
are available for ETFs only in the Short Term Option Series Program, 
for options with one month or less to expiration, so investors seeking 
comparable precision over a longer horizon have no listed alternative. 
The Exchange proposes to extend the $0.50 interval only to the select 
group of ETFs that qualify as ETF Qualifying Securities. These ETFs sit 
at the top of the ETF liquidity spectrum: each must have AUM greater 
than $25 billion, meet substantial monthly options volume thresholds, 
carry the highest position limit permitted under Exchange rules 
(250,000 contracts), and participate in the Penny Interval Program. 
This liquidity supports finer strike granularity without adverse 
effects on market quality. The proposal is also consistent with the 
treatment of SPY, one of the most liquid ETFs, which may be listed at 
$1 or greater intervals at all strike prices. Because SPY trades at a 
high dollar price, a $1 interval represents only a small fraction of a 
percent of the underlying's value. ETF Qualifying Securities trading 
below $100 warrant comparable precision: the proposed $0.50 interval 
would result in at-the-money series based on the underlying ETF moving 
1% or less for underlyings priced at or above $50, and reasonably small 
percentage moves for underlyings priced below $50. For example, an 
investor holding an ETF Qualifying Security trading at $50 who seeks to 
protect against a decline of more than 5% through an expiration four 
months away would want a $47.50 put. Under the current $1 interval, the 
investor must choose between a $47 put, which leaves an additional 1% 
of downside unprotected, and a $48 put, which costs more than the 
protection requires. The proposed $0.50 interval would allow the 
investor to purchase the $47.50 put and hedge precisely to the desired 
level. The Exchange believes that the proposed strike-setting regime is 
consistent with the more measured price movements typical of broad-
based and diversified ETFs.
    Considering the fact that many ETF Qualifying Securities 
consistently trade at price levels below $100, and that the current $1 
minimum interval may result in at-the-money and near-the-money series 
being spaced more widely than investors require to manage risk, the 
Exchange believes that continuing to maintain the current $1 minimum 
interval below $100 may have a negative

[[Page 69599]]

effect on investing, trading, and hedging opportunities, and volume. 
The Exchange believes that the investing, trading, and hedging 
opportunities available with options on ETF Qualifying Securities far 
outweigh any potential negative impact of allowing such options to 
trade in more finely tailored intervals below the $100 price point.
    The proposed strike-setting regime would permit strikes to be set 
to reflect the value of the underlying more closely and allow investors 
and traders to roll open positions from a lower strike to a higher 
strike in conjunction with the price movements of the underlying ETF. 
Under the current rule, where the next higher available series would be 
$1 away from, for example, a $50 strike, an investor would need for the 
underlying product to move 2%--from $50 to $51--before executing a roll 
up. With the proposed rule change, the investor would be able to roll 
an open options position from a $50 strike to a $50.50 strike, which is 
only a 1% move for the underlying. As a result, the proposed rule 
change will allow the Exchange to better respond to customer demand for 
ETF strike prices more precisely aligned with the smaller, incremental 
price movements typical of ETF Qualifying Securities.
    The Exchange believes that the proposed rule change, like the other 
strike price programs currently offered by the Exchange, will benefit 
investors by providing investors the flexibility to tailor their 
investment and hedging decisions using options more closely on ETF 
Qualifying Securities. Moreover, by allowing series of such options to 
be listed at $0.50 intervals below $100, the proposal will moderately 
augment the potential total number of options series available on the 
Exchange. However, the Exchange believes it and the Options Price 
Reporting Authority (``OPRA'') have the necessary systems capacity to 
handle any potential additional traffic associated with this proposed 
rule change. The Exchange also believes that Members will not have a 
capacity issue due to the proposed rule change. In addition, the 
Exchange represents that it does not believe that this expansion will 
cause fragmentation of liquidity, but rather, believes that finer 
strike intervals will serve to increase liquidity available as well as 
price efficiency by providing more trading opportunities for all market 
participants.
    To mitigate the potential for excessive series proliferation, the 
Exchange will apply its existing series maintenance policies to options 
listed pursuant to the proposed $0.50 interval, including its policies 
governing the delisting of series with low or no open interest. The 
Exchange will monitor the impact of the proposed rule change on trading 
volume, quotation traffic, and open interest, and will report to the 
Commission upon request.
Qualifying Securities Amendment
    The Exchange also proposes to amend the rule text related to 
``Qualifying Securities'' in Supplementary Material .03 to Options 4, 
Section 5, which governs the Exchange's Short Term Option Series 
Program.\9\ The amendment seeks to clarify the applicability of Table 1 
Short Term Option Daily Expirations as compared to Table 2. Under 
Supplementary Material .03 of Options 4, Section 5, the Exchange may 
list Short Term Option Weekly Expirations that expire on each of the 
next five Fridays that are business days, excluding Fridays on which 
standard, Monthly Options Series, or Quarterly Options Series 
expirations occur. The Exchange may also list series of options on the 
symbols in Table 1 and pursuant to the criteria noted in Table 2 of 
Supplementary Material .03 that expire at the close of business on each 
of the next two Mondays, Tuesdays, Wednesdays, and Thursdays that are 
business days beyond the current week (``Short Term Option Daily 
Expirations''). The Exchange may have no more than two Short Term 
Option Daily Expirations beyond the current week for each of those days 
at one time.
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    \9\ The Exchange proposes a minor technical amendment to add a 
space between Table 1 and Table 2 in the paragraph below Short Term 
Options Daily Expirations.
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    Currently, Table 1 lists specific symbols and the number of Short 
Term Option Daily Expirations each may trade on each day.\10\ Table 2 
does not list specific symbols, rather it sets out the expirations 
available to categories of ``Qualifying Securities'' which are required 
to meet certain criteria on a quarterly basis to qualify for certain 
expirations.\11\
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    \10\ SPY, IWM, and QQQ may each trade two expirations on Monday, 
Tuesday, Wednesday, and Thursday, USO and UNG may each trade two 
Wednesday expirations only and GLD, SLV, and TLT may each trade two 
expirations on Monday and on Wednesday.
    \11\ To be a Qualifying Security, an underlying security must 
meet four criteria: As measured on the last day of the prior 
calendar quarter, it must have either (A) a market capitalization 
greater than $700 billion for an individual stock, based on the 
closing price, or (B) assets under management (``AUM'') greater than 
$50 billion (under (B)(i)) or greater than $25 billion (under 
(B)(ii)) for an Exchange-Traded Fund Share, based on net asset value 
(``NAV''). It must meet specified monthly options volume thresholds. 
It must have a position limit of at least 250,000 contracts. It must 
participate in the Penny Interval Program. Each calendar quarter, 
the Exchange applies these criteria to individual stocks and 
Exchange-Traded Fund Shares to determine which securities are 
Qualifying Securities for the following quarter. Market 
capitalization and AUM are measured using the closing price or NAV 
on the primary exchange on the last trading day of the prior 
calendar quarter. Volume thresholds are measured using data from The 
Options Clearing Corporation for the last month of the prior 
calendar quarter. See Supplementary Material .03 of Options 4, 
Section 5.
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    Currently, the rule text states that,

    Qualifying Securities are defined as eligible individual stocks 
or Exchange-Traded Fund Shares, which are separate and apart from 
the symbols listed in Table 1, that have received approval to list 
additional expiries on specific symbols, that meet the following 
criteria on a quarterly basis:

    The Exchange proposes to amend the rule text to instead provide,

    Qualifying Securities are individual stocks and Exchange-Traded 
Fund Shares that satisfy each of the following criteria on a 
quarterly basis. Options on the symbols listed in Table 1 may trade 
the number of Short Term Option Daily Expirations, on the days set 
forth in Table 1, regardless of whether they satisfy the following 
criteria. A Qualifying Security may trade the number of Short Term 
Option Daily Expirations on the days set forth in Table 2 only for 
the calendar quarter for which the Exchange has determined that it 
satisfies each of the following criteria. If a symbol listed in 
Table 1 is also a Qualifying Security, the Exchange may list, for 
each day, the greater of the number of Short Term Option Daily 
Expirations set forth in Table 1 and the number set forth in Table 
2. The criteria are as follows:

    The expiration dates in Table 1 are not dependent on the Table 1 
symbols meeting the criteria for a Qualifying Security. By way of 
example, shares of the SPDR[supreg] Gold Trust (``GLD'') are Exchange-
Traded Fund Shares under Options 4, Section 3(h)(iv). GLD is also 
listed by name in Table 1, which permits two Monday and two Wednesday 
Short Term Option Daily Expirations. Every quarter the Exchange may 
list two Monday and two Wednesday expirations for GLD under Table 1. In 
a quarter in which GLD meets the (B)(i) criteria, the Exchange may also 
list two Tuesday and two Thursday expirations under Table 2. If, in the 
following quarter, GLD fails a Qualifying Securities criterion, the 
Exchange may not list the Tuesday and Thursday expirations, but may 
retain the Monday and Wednesday expirations. Therefore, GLD always has 
its Table 1 expirations and may also have Table 2 expirations in any 
calendar quarter in which it satisfies each of the Qualifying 
Securities criteria. The proposed rule text seeks to make the 
interaction between Table 1 and Table

[[Page 69600]]

2 clear and does not substantively change the application of the rules.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\12\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\13\ in particular, in that it is designed 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. In particular, the proposed rule change will allow investors 
to use options on ETF Qualifying Securities more easily. The proposed 
rule change would allow investors to better trade and hedge positions 
in options on ETF Qualifying Securities where the strike price is less 
than $100 and that are more than one month and less than nine months 
from expiration, and would ensure that investors in such options are 
not at a disadvantage simply because the underlying trades below $100. 
Investors use these expirations to hedge or express a view over a 
multi-month horizon, where strike precision is economically meaningful, 
and today the $0.50 interval below $100 is available for ETFs only in 
the Short Term Option Series Program for expirations of one month or 
less. The proposal fills that gap and permits ETF Qualifying Securities 
to achieve percentage strike spacing comparable to that already 
available for the enumerated ETFs, such as SPY, at their higher prices. 
The proposed $0.50 strike interval on these uniquely liquid instruments 
will enhance hedging precision, promote price discovery, and remove an 
impediment to the efficient functioning of the options market.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is consistent 
with Section 6(b)(1) of the Act, which requires an exchange to be 
organized and have the capacity to carry out the purposes of the Act 
and the rules and regulations thereunder. The proposal would enable the 
Exchange to respond to customer demand for options on ETF Qualifying 
Securities to trade in $0.50 intervals below a $100 strike price. The 
Exchange does not believe that the proposed rule would create 
additional capacity issues or affect market functionality. As noted 
above, options on ETF Qualifying Securities currently trade in $1 
intervals at strike prices at or below $200 for expirations more than 
one month away. Because ETF Qualifying Securities frequently trade at 
prices below $100, that $1 minimum interval can produce percentage 
strike spacing that is materially wider than what investors and traders 
require to establish, roll, and manage risk. This proposal addresses 
that issue by establishing a $0.50 minimum interval below $100 for all 
ETF Qualifying Securities with more than one month and less than nine 
months to expiration on a class-neutral basis.
    The Exchange believes that the proposed rule change, like other 
strike-price programs currently offered by the Exchange, will benefit 
investors by giving them increased flexibility to tailor their 
investment and hedging decisions more closely. Applying the $0.50 
interval to any ETF Qualifying Security, rather than specifically 
naming underlyings, avoids arbitrary distinctions between ETFs that are 
economically similar and allows the Exchange to keep pace with new ETFs 
approved for options trading without piecemeal rulemaking. Because ETF 
Qualifying Securities must already be approved for options trading 
pursuant to Options 4, Section 3(h) and satisfy the Qualifying 
Securities criteria, the underlyings eligible for the proposed $0.50 
interval will have satisfied the same regulatory safeguards that apply 
to existing options on ETFs, including standards designed to ensure 
liquidity and transparency and to reduce susceptibility to manipulation 
of the underlying. Further, because eligibility is determined 
quarterly, any series listed at $0.50 intervals may remain listed if an 
ETF ceases to qualify, but no additional such series may be listed 
until the ETF again meets the Qualifying Securities criteria, which 
protects investors holding existing positions while limiting the $0.50 
interval to ETFs that currently qualify.
    ETF Qualifying Securities are highly liquid and actively traded, 
and only a select group of ETFs meets the stringent requirements, 
including a 250,000-contract position limit, the highest position limit 
under Exchange rules, and participation in the Penny Interval Program. 
Permitting $0.50 strike intervals for ETF Qualifying Securities for 
expirations more than one month and less than nine months away in 
Options 4, Section 5(d) is therefore reasonable because these 
instruments possess sufficient liquidity to support finer strike 
granularity without adverse effects on market quality.
    With regard to the impact of this proposal on system capacity, the 
Exchange believes it and OPRA have the necessary systems capacity to 
handle any potential additional traffic associated with this proposed 
rule change. The Exchange believes that its Members will not have a 
capacity issue as a result of this proposal. In addition, the Exchange 
will apply its existing series maintenance policies, including its 
policies governing the delisting of series with low or no open 
interest, to mitigate the potential for excessive series proliferation.
    Finally, the conforming organizational changes to Options 4, 
Section 5 are intended to bring greater clarity to the Exchange's rules 
by organizing the text in such a way as to group like concepts for 
greater readability. These proposed changes are consistent with the Act 
as they are non-substantive.
Qualifying Securities Amendment
    The proposed amendment to Supplementary Material .03 to Options 4, 
Section 5 is consistent with the Act because the proposal makes clear 
and more transparent the rule text associated with Qualifying 
Securities. As amended, the rule text more directly provides that the 
Exchange may list Table 1 symbols for the days and expirations noted, 
regardless of the criteria applicable to Qualifying Securities. In 
contrast, the Exchange may list the days and expirations noted in Table 
2 for a Qualifying Security, depending on which criteria are met, only 
for a quarter in which the security meets those criteria. The proposal 
is intended to reduce ambiguity, which removes impediments to and 
perfects the mechanism of a free and open market.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any intra-market burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposal 
does not remove or reduce any strike price interval currently 
available; it only permits additional, finer strike price intervals for 
options on ETF Qualifying Securities that are more than one month and 
less than nine months from expiration. The proposal will apply equally 
to all market participants and to every ETF that satisfies the 
Qualifying Securities criteria. Rather than burdening competition, the 
Exchange believes that the proposed rule change will result in 
additional investment options and opportunities to achieve the 
investment and trading objectives of market participants seeking 
efficient trading and hedging vehicles, to the benefit of investors, 
market participants, and the marketplace in general. In addition, the 
proposal will allow options on ETF

[[Page 69601]]

Qualifying Securities trading below $100 to achieve percentage strike 
spacing comparable to that already available for the enumerated ETFs, 
such as SPY, which are similarly popular and widely traded ETF 
products, permitting investors to employ similar investment and hedging 
strategies across these options.
    The Exchange does not believe that the proposed rule change will 
impose any inter-market burden on competition, as other options markets 
may adopt a similar rule.
Qualifying Securities Amendment
    The proposal does not impose any intra-market burden on competition 
because the rule text is intended to clarify existing rules and does 
not substantively amend the rules. The proposal does not impose any 
inter-market burden on competition as other exchanges with the same 
rule are able to list identical options pursuant to Supplementary 
Material .03 to Options 4, Section 5.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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#fb898e979ed6989496969e958f88bb889e98d59c948d"><span class="__cf_email__" data-cfemail="3240475e571f515d5f5f575c4641724157511c555d44">[email&#160;protected]</span></a>. Please include 
file number SR-ISE-2026-53 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-ISE-2026-53. 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-ISE-2026-53 and should be submitted on 
or before November 25, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-22453 Filed 11-3-26; 8:45 am]
BILLING CODE 8011-01-P


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