Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 3, Section 3 To Conform the Rule to Section 3.1 of the Plan for the Purpose of Developing and Implementing Procedures Designed To Facilitate the Listing and Trading of Standardized Options, 39603-39607 [2020-14118]
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Federal Register / Vol. 85, No. 127 / Wednesday, July 1, 2020 / Notices
compensation file tabulations are also
an integral part of the data needed to
estimate future tax revenues and
corresponding FI amounts. Without
information on NQSOs and ratification
payments, the amount of funds to be
transferred between the RRB, SSA and
CMS cannot be determined.
Previous Requests for Comments: The
RRB has already published the initial
60-day notice (81 FR 14510 on March
12, 2020) required by 44 U.S.C.
3506(c)(2). That request elicited no
comments.
Information Collection Request (ICR)—
NEW
Title: Report of Stock Options and
Other Payments.
OMB Control Number: 3220–NEW.
Form(s) submitted: BA–15.
Type of request: New Collection
(Request for a new OMB Control
Number).
Affected public: Private Sector;
Businesses or other for-profits.
Abstract: Section 7(b)(6) of the
Railroad Retirement Act (45 U.S.C.
231f(c)(2)) requires a financial
interchange between the SSA, CMS, and
the RRB trust funds. The collection
obtains non-qualified stock options and
ratification payments for railroad
employees. The information is used to
calculate the correct payroll taxes and
benefits that would have been paid to
place the OASIDI and CMS trust funds
in the same condition they would have
been had railroad employment been
covered by the SS and FIC acts.
Changes proposed: The RRB proposes
no changes to Form BA–15, as it is a
new form.
The burden estimate for the ICR is as
follows:
ESTIMATE OF ANNUAL RESPONDENT BURDEN
Annual
responses
Form No.
Time
(minutes)
Burden
(hours)
BA–15 (by secure Email, FTP, or CD–ROM)—Positive .............................................................
BA–15 ( by secure Email, FTP, or CD–ROM)—Negative ..........................................................
50
550
300
15
250
137.5
Total ......................................................................................................................................
600
........................
387.5
Additional Information or Comments:
Copies of the forms and supporting
documents can be obtained from
Kennisha Tucker at (312) 469–2591 or
Kennisha.Tucker@rrb.gov. Comments
regarding the information collection
should be addressed to Brian Foster,
Railroad Retirement Board, 844 North
Rush Street, Chicago, Illinois 60611–
1275 or Brian.Foster@rrb.gov.
Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to www.reginfo.gov/public/do/
PRAMain. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function.
Brian Foster,
Clearance Officer.
[FR Doc. 2020–14109 Filed 6–30–20; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89158; File No. SR–ISE–
2020–24]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Options 3,
Section 3 To Conform the Rule to
Section 3.1 of the Plan for the Purpose
of Developing and Implementing
Procedures Designed To Facilitate the
Listing and Trading of Standardized
Options
June 25, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 23,
2020, Nasdaq ISE, LLC (the ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
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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
Options 3, Section 3 to conform the rule
to Section 3.1 of the Plan for the
Purpose of Developing and
Implementing Procedures Designed to
Facilitate the Listing and Trading of
Standardized Options (the ‘‘OLPP’’).
The text of the proposed rule change
is available on the Exchange’s website at
https://ise.cchwallstreet.com/, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
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 purpose of this rule change is to
amend Options 3, Section 3 (Minimum
Trading Increments) to align the rule
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with the recently approved amendment
to the OLPP.
Background
On January 23, 2007, the Commission
approved on a limited basis a Penny
Pilot in option classes in certain issues
(‘‘Penny Pilot’’). The Penny Pilot was
designed to determine whether
investors would benefit from options
being quoted in penny increments, and
in which classes the benefits were most
significant. The Penny Pilot was
expanded and extended numerous times
over the last 13 years.5 In each instance,
these approvals relied upon the
consideration of data periodically
provided by the Exchanges that
analyzed how quoting options in penny
increments affects spreads, liquidity,
quote traffic, and volume. Today, the
Penny Pilot includes 363 option classes,
which are among the most actively
traded, multiply listed option classes.
The Penny Pilot is scheduled to expire
by its own terms on June 30, 2020.6
In light of the imminent expiration of
the Penny Pilot on June 30, 2020, the
Exchange, together with other
participating exchanges, filed, on July
18, 2019 a proposal to amend the
OLPP.7 On April 1, 2020 the
Commission approved the amendment
to the OLPP to make permanent the
Pilot Program (the ‘‘OLPP Program’’).8
The OLPP Program replaces the
Penny Pilot by instituting a permanent
program that would permit quoting in
penny increments for certain option
classes. Under the terms of the OLPP
Program, designated option classes
would continue to be quoted in $0.01
and $0.05 increments according to the
same parameters for the Penny Pilot. In
addition, the OLPP Program would: (i)
Establish an annual review process to
add option classes to, or to remove
option classes from, the OLPP Program;
(ii) to allow an option class to be added
to the OLPP Program if it is a newly
listed option class and it meets certain
criteria; (iii) to allow an option class to
be added to the OLPP Program if it is
an option class that has seen a
significant growth in activity; (iv) to
5 The Penny Pilot was established on the
Exchange in January 2007 and was last extended in
December 2019. See Securities Exchange Act
Release Nos. 55161 (January 24, 2007), 72 FR 4754
(February 1, 2007) (SR–ISE–2006–62); and 87752
(December 16, 2019), 84 FR 70230 (December 20,
2019) (SR–ISE–2019–33).
6 See Securities Exchange Act Release No. 87752
(December 16, 2019), 84 FR 70230 (December 20,
2019) (SR–ISE–2019–33).
7 See Securities Exchange Act Release No. 87681
(December 9, 2019), 84 FR 68960 (December 17,
2019) (‘‘Notice’’).
8 See Securities Exchange Act Release No. 88532
(April 1, 2020), 85 FR 19545 (April 7, 2020) (File
No. 4–443) (‘‘Approval Order’’).
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provide that if a corporate action
involves one or more option classes in
the OLPP Program, all adjusted and
unadjusted series and classes emerging
as a result of the corporate action will
be included in the OLPP Program; and
(v) to provide that any series in an
option class participating in the OLPP
Program that have been delisted, or are
identified by OCC as ineligible for
opening Customer transactions, will
continue to trade pursuant to the OLPP
Program until they expire.
To conform its Rules to the OLPP
Program, the Exchange proposes to
delete the current rule text in
Supplementary Material.01 to Options
3, Section 3 (the ‘‘Penny Pilot Rule’’),
and replace it with the requirements for
the proposed Penny Interval Program
from the OLPP Program, which is
described below, and to replace
references to the ‘‘Penny Pilot’’ in
several Exchange rules with ‘‘Penny
Interval Program.’’
The Exchange also proposes to amend
Options 3, Section 3 to adopt new
subparagraphs (a)(3)(A)–(C) to conform
the Exchange’s rules regarding the
minimum price variations for options in
the proposed Penny Interval Program
with similar rules of other options
exchanges.9 Specifically, the Exchange
proposes to provide in new
subparagraphs (a)(3)(A)–(C) that for
options series traded pursuant to the
proposed Penny Interval Program as
described in Supplementary Material
.01 to Options 3, Section 3, the
following minimum quoting increments
will apply: (A) One cent ($0.01) for all
options contracts in QQQ, SPY, and
IWM; (B) one cent ($0.01) for all other
options contracts included in the Penny
Interval Program that are trading at less
than $3.00; and (C) five cents ($0.05) for
all other options contracts included in
the Penny Interval Program that are
trading at or above $3.00. The Exchange
notes that the Commission previously
approved minimum quoting increments
of one cent ($0.01) for all options
contracts in QQQ, IWM, and SPY,
regardless of price, over the course of
the expansion of the Penny Pilot rules.10
Accordingly, the Exchange proposes to
align its rules regarding minimum price
9 See e.g., NYSE Arca Rule 6.72–O; and Nasdaq
Options Market Supplementary Material .01 to
Options 3, Section 3.
10 See Securities Exchange Act Release Nos.
55156 (January 23, 2007), 72 FR 4759 (February 1,
2007) (SR–NYSEArca–2006–73) (Order Granting
Approval to Proposed rule Change as Modified by
Amendment No. 1 Thereto, To Create an Options
Penny Pilot Program); 61061 (November 24, 2009),
74 FR 62857 (December 1, 2009) (SR–NYSEArca–
2009–44) (Order Granting Partial Approval of a
Proposed Rule Change, as Modified by Amendment
No. 4 Thereto, Expanding the Penny Pilot Program).
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variations for options contracts in the
Penny Interval Program with other
options exchanges.
The Exchange also proposes to delete
obsolete and superfluous language in
Options 3, Section 3(a) regarding
amendments to the minimum
increments that may be established by
the Board and designated as a stated
policy, practice or interpretation within
the meaning of the Act, and the process
for such amendments by rule filing.11
Today, the Exchange may determine to
establish a change to the minimum
increments within its Rules and must
submit proposed rule changes for such
amendments to the Commission.12
Accordingly, Options 3, Section 3(a), as
amended, will simply provide that the
following minimum quoting increments
(as enumerated within Options 3,
Section 3(a)) shall apply to options
contracts traded on the Exchange.
Penny Interval Program
The Exchange proposes to codify the
OLPP Program in Supplementary
Material .01 to Options 3, Section
(Requirements for Penny Interval
Program) (the ‘‘Penny Program’’), which
will replace the Penny Pilot Rule and
permanently permit the Exchange to
quote certain option classes in
minimum increments of one cents
($0.01) and five cents ($0.05) (‘‘penny
increments’’), as set forth in proposed
subparagraphs (a)(3)(A)–(C) of Options
3, Section 3. The penny increments that
currently apply under the Penny Pilot 13
will continue to apply for options
classes included in the Penny
Program.14
The Penny Program would initially
apply to the 363 most actively traded
multiply listed option classes, based on
National Cleared Volume at The
Options Clearing Corporation (‘‘OCC’’)
in the six full calendar months ending
in the month of approval (i.e.,
November 2019–April 2020) that
currently quote in penny increments, or
11 See Options 3, Section 3(a), which specifically
provides: ‘‘The Board may establish minimum
trading increments for options traded on the
Exchange. Such changes by the Board will be
designated as a stated policy, practice, or
interpretation with respect to the administration of
this Options 3, Section 3 within the meaning of
subparagraph (3)(A) of Section 19(b) of the
Exchange Act and will be filed with the SEC as a
rule change for effectiveness upon filing.’’
12 Decisions to change the minimum increments
relate to Exchange trading and operations, and thus
are made by Exchange management via delegated
authority from the Board, rather than the Board
itself, which is generally not involved in
determinations related to day-to-day operations of
the Exchange.
13 See supra notes 9 and 10, with accompanying
text.
14 See proposed subparagraphs (a)(3)(A)–(C) of
Options 3, Section 3.
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overlie securities priced below $200, or
any index at an index level below $200.
Eligibility for inclusion in the Penny
Program will be determined at the close
of trading on the monthly Expiration
Friday of the second full month
following April 1, 2020 (i.e., June 19,
2020).
Once in the Penny Program, an option
class will remain included until it is no
longer among the 425 most actively
traded option classes at the time the
annual review is conducted (described
below), at which point it will be
removed from the Penny Program. As
described in more detail below, the
removed class will be replaced by the
next most actively traded multiply
listed option class overlying securities
priced below $200 per share, or any
index at an index level below $200, and
not yet in the Penny Program. Advanced
notice regarding the option classes
included, added, or removed from the
Penny Program will be provided to the
Exchange’s membership via Options
Trader Alert and published by the
Exchange on its website.
Annual Review
The Penny Program would include an
annual review process that applies
objective criteria to determine option
classes to be added to, or removed from,
the Penny Program. Specifically, on an
annual basis beginning in December
2020 and occurring every December
thereafter, the Exchange will review and
rank all multiply listed option classes
based on National Cleared Volume at
OCC for the six full calendar months
from June 1st through November 30th
for determination of the most actively
traded option classes. Any option
classes not yet in the Penny Program
may be added to the Penny Program if
the class is among the 300 most actively
traded multiply listed option classes
and priced below $200 per share or any
index at an index level below $200.
Following the annual review, option
classes to be added to the Penny
Program would begin quoting in penny
increments (i.e., $0.01 if trading at less
than $3; and $0.05 if trading at $3 and
above) on the first trading day of
January. In addition, following the
annual review, any option class in the
Penny Program that falls outside of the
425 most actively traded option classes
would be removed from the Penny
Program. After the annual review,
option classes that are removed from the
Penny Program will be subject to the
minimum trading increments set forth
in Options 3, Section 3, effective on the
first trading day of April.
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Changes to the Composition of the
Penny Program Outside of the Annual
Review
Newly Listed Option Classes and
Option Classes With Significant Growth
in Activity
The Penny Program would specify a
process and parameters for including
option classes in the Penny Program
outside the annual review process in
two circumstances. These provisions are
designed to provide objective criteria to
add to the Penny Program new option
classes in issues with the most
demonstrated trading interest from
market participants and investors on an
expedited basis prior to the annual
review, with the benefit that market
participants and investors will then be
able to trade these new option classes
based upon quotes expressed in finer
trading increments.
First, the Penny Program provides for
certain newly listed option classes to be
added to the Penny Program outside of
the annual review process, provided
that (i) the class is among the 300 most
actively traded, multiply listed option
classes, as ranked by National Cleared
Volume at OCC, in its first full calendar
month of trading; and (ii) the underlying
security is priced below $200 or the
underlying index is at an index level
below $200. Such newly listed option
classes added to the Penny Program
pursuant to this process would remain
in the Penny Program for one full
calendar year and then would be subject
to the annual review process.
Second, the Penny Program would
allow an option class to be added to the
Penny Program outside of the annual
review process if it is an option class
that meets certain specific criteria.
Specifically, new option classes may be
added to the Penny Program if: (i) the
option class is among the 75 most
actively traded multiply listed option
classes, as ranked by National Cleared
Volume at OCC, in the prior six full
calendar months of trading and (ii) the
underlying security is priced below
$200 or the underlying index is at an
index level below $200. Any option
class added under this provision will be
added on the first trading day of the
second full month after it qualifies and
will remain in the Penny Program for
the rest of the calendar year, after which
it will be subject to the annual review
process.
Corporate Actions
The Penny Program would also
specify a process to address option
classes in the Penny Program that
undergo a corporate action and is
designed to ensure continuous liquidity
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39605
in the affected option classes.
Specifically, if a corporate action
involves one or more option classes in
the Penny Program, all adjusted and
unadjusted series of an option class
would continue to be included in the
Penny Program.15 Furthermore, neither
the trading volume threshold, nor the
initial price test would apply to option
classes added to the Penny Program as
a result of the corporate action. Finally,
the newly added adjusted and
unadjusted series of the option class
would remain in the Penny Program for
one full calendar year and then would
become subject to the annual review
process.
Delisted or Ineligible Option Classes
Finally, the Penny Program would
provide a mechanism to address option
classes that have been delisted or those
that are no longer eligible for listing.
Specifically, any series in an option
class participating in the Penny Program
in which the underlying has been
delisted, or is identified by OCC as
ineligible for opening customer
transactions, would continue to quote
pursuant to the terms of the Penny
Program until all options series have
expired.
Technical Changes
The Exchange proposes to replace
references to the Penny Pilot with
references to the Penny Interval Program
in Options 3, Section 8(a)(7) and in
Options 3, Section 15(a)(2)(A)(iv). The
Exchange believes these technical
changes would add clarity,
transparency, and internal consistency
to the Exchange’s rules, making them
easier for market participants to
navigate.
Implementation
The Exchange proposes to implement
the Penny Program on July 1, 2020,
which is the first trading day of the
third month following the Approval
Order issued on April 1, 2020—i.e., July
1, 2020.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,16 in general, and furthers the
objectives of Section 6(b)(5) of the Act,17
in particular, in that it is designed to
prevent fraudulent and manipulative
15 For example, if Company A acquires Company
B and Company A is not in the Penny Program but
Company B is in the Penny Program, once the
merger is consummated and an options contract
adjustment is effective, then Company A would be
added to the Penny Program and remain in the
Penny Program for one calendar year.
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
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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.
In particular, the proposed rule
change, which conforms the Exchange
rules to the recently adopted OLPP
Program, allows the Exchange to
provide market participants with a
permanent Penny Program for quoting
options in penny increments, which
maximizes the benefit of quoting in a
finer quoting increment to investors
while minimizing the burden that a
finer quoting increment places on quote
traffic.
Accordingly, the Exchange believes
that the proposal is consistent with the
Act because, in conforming the
Exchange rules to the OLPP Program,
the Penny Program would employ
processes, based upon objective criteria,
that would rebalance the composition of
the Penny Program, thereby helping to
ensure that the most actively traded
option classes are included in the Penny
Program, which helps facilitate the
maintenance of a fair and orderly
market.
The Exchange notes that the proposed
changes to Options 3, Section 8(a)(7)
and Options 3, Section 15(a)(2)(A)(iv) to
replace references to the Penny Pilot
with references to the Penny Interval
Program would provide clarity and
transparency to the Exchange’s rules,
would promote just and equitable
principles of trade, and remove
impediments to, and perfect the
mechanism of, a free and open market
and a national market system. The
proposed rule changes would also
provide internal consistency within
Exchange rules and operate to protect
investors and the investing public by
making the Exchange’s rules easier to
navigate and comprehend.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed Penny Program, which
modifies the Exchange’s rules to align
them with the Commission approved
OLPP Program, is not designed to be a
competitive filing nor does it impose an
undue burden on intermarket
competition as the Exchange anticipates
that the options exchanges will adopt
substantially identical rules. Moreover,
the Exchange believes that by
conforming Exchange rules to the OLPP
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Program, the Exchange would promote
regulatory clarity and consistency,
thereby reducing burdens on the
marketplace and facilitating investor
protection. To the extent that there is a
competitive burden on those option
classes that do not qualify for the Penny
Program, the Exchange believes that it is
appropriate because the proposal should
benefit all market participants and
investors by maximizing the benefit of
a finer quoting increment in those
option classes with the most trading
interest while minimizing the burden of
greater quote traffic in option classes
with less trading interest. The Exchange
believes that adopting rules, which it
anticipates will likewise be adopted by
all option exchanges that are
participants in the OLPP, would allow
for continued competition between
Exchange market participants trading
similar products as their counterparts
on other exchanges, while at the same
time allowing the Exchange to continue
to compete for order flow with other
exchanges.
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
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days after the date of
the filing, or such shorter time as the
Commission may designate, it has
become effective pursuant to 19(b)(3)(A)
of the Act 18 and Rule 19b–4(f)(6) 19
thereunder. The Exchange has proposed
to implement the Penny Program on
July 1, 2020 and has asked the
Commission to waive the 30-day
operative delay for this filing.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest
because it will allow the Exchange to
modify its rules to conform to the OLPP
Program and implement the Penny
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
PO 00000
18 15
19 17
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Program on July 1, 2020, consistent with
the Commission’s approval of the OLPP
Amendment. Accordingly, the
Commission designates the proposed
rule change as operative on July 1,
2020.20
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or 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
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
ISE–2020–24 on the subject line
Paper Comments
• 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–2020–24. 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 (https://www.sec.gov/
rules/sro.shtml).
Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
rule change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
20 For purposes only of waiving the operative
delay for this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–ISE–2020–24 and should be
submitted on or before July 22, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–14118 Filed 6–30–20; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–89152; File No. SR–ISE–
2020–23]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Options 9,
Sections 13 and 15 To Increase the
Position and Exercise Limits for
Options on Certain Exchange-Traded
Funds
June 25, 2020.
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 June 17,
2020, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to amend
Options 9, Section 13, Position Limits,
to increase position limits for options on
certain exchange-traded funds (‘‘ETFs’’),
and similarly increase exercise limits
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
01:53 Jul 01, 2020
Jkt 250001
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
SECURITIES AND EXCHANGE
COMMISSION
21 17
within Options 9, Section 15, Exercise
Limits.
The text of the proposed rule change
is available on the Exchange’s website at
https://ise.cchwallstreet.com/, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
1. Purpose
The Exchange proposes to amend
Options 9, Section 13, Position Limits,
to increase position limits for options on
certain exchange-traded funds (‘‘ETFs’’),
and similarly increase exercise limits
within Options 9, Section 15, Exercise
Limits. The Exchange proposes to
specifically amend Supplementary
Material .01 to Options 9, Section 13
and Supplementary Material .01 to
Options 9, Section 15. These proposed
rule changes are based on the similar
proposal by Cboe Exchange, Inc.
(‘‘Cboe’’).3 The Exchange also proposes
to make a minor non-substantive
technical corrections to an ETF name
within Supplementary Material .01 to
Options 9, Section 13 and
Supplementary Material .01 to Options
9, Section 15. Each change will be
described below.
Position limits are designed to
address potential manipulative schemes
and adverse market impacts
surrounding the use of options, such as
disrupting the market in the security
3 See Securities Exchange Act Release No. 88768
(April 29, 2020) (SR–CBOE–2020–015) (Notice of
Filing of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change,
as Modified by Amendment No. 1, to Increase
Position Limits for Options on Certain ExchangeTraded Funds and Indexes). The Cboe proposal also
proposed to increase position limits for options
overlying the MSCI Emerging Markets Index
(‘‘MXEF’’) and the MSCI EAFE Index (‘‘MXEA’’).
The Exchange, however, does not list options on the
MXEF or MXEA indexes. Accordingly, this
proposal is limited to the ETFs described above.
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
39607
underlying the options. While position
limits should address and discourage
the potential for manipulative schemes
and adverse market impact, if such
limits are set too low, participation in
the options market may be discouraged.
The Exchange believes that position
limits must therefore be balanced
between mitigating concerns of any
potential manipulation and the cost of
inhibiting potential hedging activity that
could be used for legitimate economic
purposes.
The Exchange has observed an
ongoing increase in demand in options
on the SPDR® S&P 500® ETF Trust
(‘‘SPY’’), iShares® MSCI EAFE ETF
(‘‘EFA’’), iShares® China Large-Cap ETF
(‘‘FXI’’), iShares® iBoxx® High Yield
Corporate Bond Fund (‘‘HYG’’),
Financial Select Sector SPDR® Fund
(‘‘XLF’’) (collectively, with the
aforementioned ETFs, the ‘‘Underlying
ETFs’’) for both trading and hedging
purposes. Though the demand for these
options on the Underlying ETFs appear
to have increased, position limits (and
corresponding exercise limits) for these
options have remained the same. The
Exchange believes these unchanged
position limits may have impeded, and
may continue to impede, trading
activity and strategies of investors, such
as use of effective hedging vehicles or
income generating strategies (e.g., buywrite or put-write), and the ability of
Market Makers to make liquid markets
with tighter spreads in these options,
resulting in the transfer of volume to
over-the-counter (‘‘OTC’’) markets. OTC
transactions occur through bilateral
agreements, the terms of which are not
publically disclosed to the marketplace.
As such, OTC transactions do not
contribute to the price discovery process
on a public exchange or other lit
markets. Therefore, the Exchange
believes that the proposed increases in
position limits (and exercise limits) for
options on the Underlying ETFs may
enable liquidity providers to provide
additional liquidity to the Exchange and
other market participants to transfer
their liquidity demands from OTC
markets to the Exchange, as well as
other options exchange on which they
participate. As described in further
detail below, the Exchange believes that
the continuously increasing market
capitalization of the Underlying ETFs
and ETF component securities, as well
as the highly liquid markets for those
securities, reduces the concerns for
potential market manipulation and/or
disruption in the underlying markets
upon increasing position limits, while
the rising demand for trading options on
the Underlying ETFs for legitimate
E:\FR\FM\01JYN1.SGM
01JYN1
]]>Agencies
[Federal Register Volume 85, Number 127 (Wednesday, July 1, 2020)]
[Notices]
[Pages 39603-39607]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14118]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89158; File No. SR-ISE-2020-24]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 3,
Section 3 To Conform the Rule to Section 3.1 of the Plan for the
Purpose of Developing and Implementing Procedures Designed To
Facilitate the Listing and Trading of Standardized Options
June 25, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 23, 2020, Nasdaq ISE, LLC (the ``Exchange'') filed with
the Securities and Exchange Commission (the ``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Exchange filed the proposal as
a ``non-controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Options 3, Section 3 to conform the
rule to Section 3.1 of the Plan for the Purpose of Developing and
Implementing Procedures Designed to Facilitate the Listing and Trading
of Standardized Options (the ``OLPP'').
The text of the proposed rule change is available on the Exchange's
website at https://ise.cchwallstreet.com/, at the principal office of
the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the 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 purpose of this rule change is to amend Options 3, Section 3
(Minimum Trading Increments) to align the rule
[[Page 39604]]
with the recently approved amendment to the OLPP.
Background
On January 23, 2007, the Commission approved on a limited basis a
Penny Pilot in option classes in certain issues (``Penny Pilot''). The
Penny Pilot was designed to determine whether investors would benefit
from options being quoted in penny increments, and in which classes the
benefits were most significant. The Penny Pilot was expanded and
extended numerous times over the last 13 years.\5\ In each instance,
these approvals relied upon the consideration of data periodically
provided by the Exchanges that analyzed how quoting options in penny
increments affects spreads, liquidity, quote traffic, and volume.
Today, the Penny Pilot includes 363 option classes, which are among the
most actively traded, multiply listed option classes. The Penny Pilot
is scheduled to expire by its own terms on June 30, 2020.\6\
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\5\ The Penny Pilot was established on the Exchange in January
2007 and was last extended in December 2019. See Securities Exchange
Act Release Nos. 55161 (January 24, 2007), 72 FR 4754 (February 1,
2007) (SR-ISE-2006-62); and 87752 (December 16, 2019), 84 FR 70230
(December 20, 2019) (SR-ISE-2019-33).
\6\ See Securities Exchange Act Release No. 87752 (December 16,
2019), 84 FR 70230 (December 20, 2019) (SR-ISE-2019-33).
---------------------------------------------------------------------------
In light of the imminent expiration of the Penny Pilot on June 30,
2020, the Exchange, together with other participating exchanges, filed,
on July 18, 2019 a proposal to amend the OLPP.\7\ On April 1, 2020 the
Commission approved the amendment to the OLPP to make permanent the
Pilot Program (the ``OLPP Program'').\8\
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\7\ See Securities Exchange Act Release No. 87681 (December 9,
2019), 84 FR 68960 (December 17, 2019) (``Notice'').
\8\ See Securities Exchange Act Release No. 88532 (April 1,
2020), 85 FR 19545 (April 7, 2020) (File No. 4-443) (``Approval
Order'').
---------------------------------------------------------------------------
The OLPP Program replaces the Penny Pilot by instituting a
permanent program that would permit quoting in penny increments for
certain option classes. Under the terms of the OLPP Program, designated
option classes would continue to be quoted in $0.01 and $0.05
increments according to the same parameters for the Penny Pilot. In
addition, the OLPP Program would: (i) Establish an annual review
process to add option classes to, or to remove option classes from, the
OLPP Program; (ii) to allow an option class to be added to the OLPP
Program if it is a newly listed option class and it meets certain
criteria; (iii) to allow an option class to be added to the OLPP
Program if it is an option class that has seen a significant growth in
activity; (iv) to provide that if a corporate action involves one or
more option classes in the OLPP Program, all adjusted and unadjusted
series and classes emerging as a result of the corporate action will be
included in the OLPP Program; and (v) to provide that any series in an
option class participating in the OLPP Program that have been delisted,
or are identified by OCC as ineligible for opening Customer
transactions, will continue to trade pursuant to the OLPP Program until
they expire.
To conform its Rules to the OLPP Program, the Exchange proposes to
delete the current rule text in Supplementary Material.01 to Options 3,
Section 3 (the ``Penny Pilot Rule''), and replace it with the
requirements for the proposed Penny Interval Program from the OLPP
Program, which is described below, and to replace references to the
``Penny Pilot'' in several Exchange rules with ``Penny Interval
Program.''
The Exchange also proposes to amend Options 3, Section 3 to adopt
new subparagraphs (a)(3)(A)-(C) to conform the Exchange's rules
regarding the minimum price variations for options in the proposed
Penny Interval Program with similar rules of other options
exchanges.\9\ Specifically, the Exchange proposes to provide in new
subparagraphs (a)(3)(A)-(C) that for options series traded pursuant to
the proposed Penny Interval Program as described in Supplementary
Material .01 to Options 3, Section 3, the following minimum quoting
increments will apply: (A) One cent ($0.01) for all options contracts
in QQQ, SPY, and IWM; (B) one cent ($0.01) for all other options
contracts included in the Penny Interval Program that are trading at
less than $3.00; and (C) five cents ($0.05) for all other options
contracts included in the Penny Interval Program that are trading at or
above $3.00. The Exchange notes that the Commission previously approved
minimum quoting increments of one cent ($0.01) for all options
contracts in QQQ, IWM, and SPY, regardless of price, over the course of
the expansion of the Penny Pilot rules.\10\ Accordingly, the Exchange
proposes to align its rules regarding minimum price variations for
options contracts in the Penny Interval Program with other options
exchanges.
---------------------------------------------------------------------------
\9\ See e.g., NYSE Arca Rule 6.72-O; and Nasdaq Options Market
Supplementary Material .01 to Options 3, Section 3.
\10\ See Securities Exchange Act Release Nos. 55156 (January 23,
2007), 72 FR 4759 (February 1, 2007) (SR-NYSEArca-2006-73) (Order
Granting Approval to Proposed rule Change as Modified by Amendment
No. 1 Thereto, To Create an Options Penny Pilot Program); 61061
(November 24, 2009), 74 FR 62857 (December 1, 2009) (SR-NYSEArca-
2009-44) (Order Granting Partial Approval of a Proposed Rule Change,
as Modified by Amendment No. 4 Thereto, Expanding the Penny Pilot
Program).
---------------------------------------------------------------------------
The Exchange also proposes to delete obsolete and superfluous
language in Options 3, Section 3(a) regarding amendments to the minimum
increments that may be established by the Board and designated as a
stated policy, practice or interpretation within the meaning of the
Act, and the process for such amendments by rule filing.\11\ Today, the
Exchange may determine to establish a change to the minimum increments
within its Rules and must submit proposed rule changes for such
amendments to the Commission.\12\ Accordingly, Options 3, Section 3(a),
as amended, will simply provide that the following minimum quoting
increments (as enumerated within Options 3, Section 3(a)) shall apply
to options contracts traded on the Exchange.
---------------------------------------------------------------------------
\11\ See Options 3, Section 3(a), which specifically provides:
``The Board may establish minimum trading increments for options
traded on the Exchange. Such changes by the Board will be designated
as a stated policy, practice, or interpretation with respect to the
administration of this Options 3, Section 3 within the meaning of
subparagraph (3)(A) of Section 19(b) of the Exchange Act and will be
filed with the SEC as a rule change for effectiveness upon filing.''
\12\ Decisions to change the minimum increments relate to
Exchange trading and operations, and thus are made by Exchange
management via delegated authority from the Board, rather than the
Board itself, which is generally not involved in determinations
related to day-to-day operations of the Exchange.
---------------------------------------------------------------------------
Penny Interval Program
The Exchange proposes to codify the OLPP Program in Supplementary
Material .01 to Options 3, Section (Requirements for Penny Interval
Program) (the ``Penny Program''), which will replace the Penny Pilot
Rule and permanently permit the Exchange to quote certain option
classes in minimum increments of one cents ($0.01) and five cents
($0.05) (``penny increments''), as set forth in proposed subparagraphs
(a)(3)(A)-(C) of Options 3, Section 3. The penny increments that
currently apply under the Penny Pilot \13\ will continue to apply for
options classes included in the Penny Program.\14\
---------------------------------------------------------------------------
\13\ See supra notes 9 and 10, with accompanying text.
\14\ See proposed subparagraphs (a)(3)(A)-(C) of Options 3,
Section 3.
---------------------------------------------------------------------------
The Penny Program would initially apply to the 363 most actively
traded multiply listed option classes, based on National Cleared Volume
at The Options Clearing Corporation (``OCC'') in the six full calendar
months ending in the month of approval (i.e., November 2019-April 2020)
that currently quote in penny increments, or
[[Page 39605]]
overlie securities priced below $200, or any index at an index level
below $200. Eligibility for inclusion in the Penny Program will be
determined at the close of trading on the monthly Expiration Friday of
the second full month following April 1, 2020 (i.e., June 19, 2020).
Once in the Penny Program, an option class will remain included
until it is no longer among the 425 most actively traded option classes
at the time the annual review is conducted (described below), at which
point it will be removed from the Penny Program. As described in more
detail below, the removed class will be replaced by the next most
actively traded multiply listed option class overlying securities
priced below $200 per share, or any index at an index level below $200,
and not yet in the Penny Program. Advanced notice regarding the option
classes included, added, or removed from the Penny Program will be
provided to the Exchange's membership via Options Trader Alert and
published by the Exchange on its website.
Annual Review
The Penny Program would include an annual review process that
applies objective criteria to determine option classes to be added to,
or removed from, the Penny Program. Specifically, on an annual basis
beginning in December 2020 and occurring every December thereafter, the
Exchange will review and rank all multiply listed option classes based
on National Cleared Volume at OCC for the six full calendar months from
June 1st through November 30th for determination of the most actively
traded option classes. Any option classes not yet in the Penny Program
may be added to the Penny Program if the class is among the 300 most
actively traded multiply listed option classes and priced below $200
per share or any index at an index level below $200.
Following the annual review, option classes to be added to the
Penny Program would begin quoting in penny increments (i.e., $0.01 if
trading at less than $3; and $0.05 if trading at $3 and above) on the
first trading day of January. In addition, following the annual review,
any option class in the Penny Program that falls outside of the 425
most actively traded option classes would be removed from the Penny
Program. After the annual review, option classes that are removed from
the Penny Program will be subject to the minimum trading increments set
forth in Options 3, Section 3, effective on the first trading day of
April.
Changes to the Composition of the Penny Program Outside of the Annual
Review
Newly Listed Option Classes and Option Classes With Significant Growth
in Activity
The Penny Program would specify a process and parameters for
including option classes in the Penny Program outside the annual review
process in two circumstances. These provisions are designed to provide
objective criteria to add to the Penny Program new option classes in
issues with the most demonstrated trading interest from market
participants and investors on an expedited basis prior to the annual
review, with the benefit that market participants and investors will
then be able to trade these new option classes based upon quotes
expressed in finer trading increments.
First, the Penny Program provides for certain newly listed option
classes to be added to the Penny Program outside of the annual review
process, provided that (i) the class is among the 300 most actively
traded, multiply listed option classes, as ranked by National Cleared
Volume at OCC, in its first full calendar month of trading; and (ii)
the underlying security is priced below $200 or the underlying index is
at an index level below $200. Such newly listed option classes added to
the Penny Program pursuant to this process would remain in the Penny
Program for one full calendar year and then would be subject to the
annual review process.
Second, the Penny Program would allow an option class to be added
to the Penny Program outside of the annual review process if it is an
option class that meets certain specific criteria. Specifically, new
option classes may be added to the Penny Program if: (i) the option
class is among the 75 most actively traded multiply listed option
classes, as ranked by National Cleared Volume at OCC, in the prior six
full calendar months of trading and (ii) the underlying security is
priced below $200 or the underlying index is at an index level below
$200. Any option class added under this provision will be added on the
first trading day of the second full month after it qualifies and will
remain in the Penny Program for the rest of the calendar year, after
which it will be subject to the annual review process.
Corporate Actions
The Penny Program would also specify a process to address option
classes in the Penny Program that undergo a corporate action and is
designed to ensure continuous liquidity in the affected option classes.
Specifically, if a corporate action involves one or more option classes
in the Penny Program, all adjusted and unadjusted series of an option
class would continue to be included in the Penny Program.\15\
Furthermore, neither the trading volume threshold, nor the initial
price test would apply to option classes added to the Penny Program as
a result of the corporate action. Finally, the newly added adjusted and
unadjusted series of the option class would remain in the Penny Program
for one full calendar year and then would become subject to the annual
review process.
---------------------------------------------------------------------------
\15\ For example, if Company A acquires Company B and Company A
is not in the Penny Program but Company B is in the Penny Program,
once the merger is consummated and an options contract adjustment is
effective, then Company A would be added to the Penny Program and
remain in the Penny Program for one calendar year.
---------------------------------------------------------------------------
Delisted or Ineligible Option Classes
Finally, the Penny Program would provide a mechanism to address
option classes that have been delisted or those that are no longer
eligible for listing. Specifically, any series in an option class
participating in the Penny Program in which the underlying has been
delisted, or is identified by OCC as ineligible for opening customer
transactions, would continue to quote pursuant to the terms of the
Penny Program until all options series have expired.
Technical Changes
The Exchange proposes to replace references to the Penny Pilot with
references to the Penny Interval Program in Options 3, Section 8(a)(7)
and in Options 3, Section 15(a)(2)(A)(iv). The Exchange believes these
technical changes would add clarity, transparency, and internal
consistency to the Exchange's rules, making them easier for market
participants to navigate.
Implementation
The Exchange proposes to implement the Penny Program on July 1,
2020, which is the first trading day of the third month following the
Approval Order issued on April 1, 2020--i.e., July 1, 2020.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\16\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\17\ in particular, in that it is designed to
prevent fraudulent and manipulative
[[Page 39606]]
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.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In particular, the proposed rule change, which conforms the
Exchange rules to the recently adopted OLPP Program, allows the
Exchange to provide market participants with a permanent Penny Program
for quoting options in penny increments, which maximizes the benefit of
quoting in a finer quoting increment to investors while minimizing the
burden that a finer quoting increment places on quote traffic.
Accordingly, the Exchange believes that the proposal is consistent
with the Act because, in conforming the Exchange rules to the OLPP
Program, the Penny Program would employ processes, based upon objective
criteria, that would rebalance the composition of the Penny Program,
thereby helping to ensure that the most actively traded option classes
are included in the Penny Program, which helps facilitate the
maintenance of a fair and orderly market.
The Exchange notes that the proposed changes to Options 3, Section
8(a)(7) and Options 3, Section 15(a)(2)(A)(iv) to replace references to
the Penny Pilot with references to the Penny Interval Program would
provide clarity and transparency to the Exchange's rules, would promote
just and equitable principles of trade, and remove impediments to, and
perfect the mechanism of, a free and open market and a national market
system. The proposed rule changes would also provide internal
consistency within Exchange rules and operate to protect investors and
the investing public by making the Exchange's rules easier to navigate
and comprehend.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed Penny Program,
which modifies the Exchange's rules to align them with the Commission
approved OLPP Program, is not designed to be a competitive filing nor
does it impose an undue burden on intermarket competition as the
Exchange anticipates that the options exchanges will adopt
substantially identical rules. Moreover, the Exchange believes that by
conforming Exchange rules to the OLPP Program, the Exchange would
promote regulatory clarity and consistency, thereby reducing burdens on
the marketplace and facilitating investor protection. To the extent
that there is a competitive burden on those option classes that do not
qualify for the Penny Program, the Exchange believes that it is
appropriate because the proposal should benefit all market participants
and investors by maximizing the benefit of a finer quoting increment in
those option classes with the most trading interest while minimizing
the burden of greater quote traffic in option classes with less trading
interest. The Exchange believes that adopting rules, which it
anticipates will likewise be adopted by all option exchanges that are
participants in the OLPP, would allow for continued competition between
Exchange market participants trading similar products as their
counterparts on other exchanges, while at the same time allowing the
Exchange to continue to compete for order flow with other exchanges.
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \18\ and Rule 19b-4(f)(6) \19\
thereunder. The Exchange has proposed to implement the Penny Program on
July 1, 2020 and has asked the Commission to waive the 30-day operative
delay for this filing.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because it will allow the Exchange to modify its rules to conform to
the OLPP Program and implement the Penny Program on July 1, 2020,
consistent with the Commission's approval of the OLPP Amendment.
Accordingly, the Commission designates the proposed rule change as
operative on July 1, 2020.\20\
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\20\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or 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
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-ISE-2020-24 on the subject line
Paper Comments
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-2020-24. 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 (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and
[[Page 39607]]
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2020-24 and should be
submitted on or before July 22, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-14118 Filed 6-30-20; 8:45 am]
BILLING CODE 8011-01-P
