Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Technical and Conforming Amendments to The Nasdaq Options Market Rules at Options 4, 73537-73540 [2020-25380]

Download as PDF Federal Register / Vol. 85, No. 223 / Wednesday, November 18, 2020 / Notices otherwise a part of, the Marketing Fee Program. khammond on DSKJM1Z7X2PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes the proposed amendments to its Fee Schedule will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the XSP transaction and routing fee amounts for each separate type of market participant will be assessed automatically and uniformly to all such market participants, i.e., all qualifying (that is, routed, greater than or equal to 10 contracts, etc.). Customer orders in XSP will be assessed the same amount, all Market-Maker orders in XSP will be assessed the same amount, and so on. While lower fees are assessed to Customers, Customer order flow, importantly, provides increased trading opportunities signaling additional liquidity and ultimately enhancing overall market quality. As noted above, preferential pricing to Customers is a long-standing options industry practice. In addition to this, the proposed rule change to remove XSP from the SCORe Program and add it to the Marketing Fee Program will apply equally to all applicable transactions in XSP, in that, all Firm orders in XSP will, uniformly, not be eligible for the SCORe program and all Market-Maker orders in XSP will be uniformly assessed under, and otherwise a part of, the Marketing Fee Program (as almost all other options trading on the Exchange are). Overall, the proposed rule change is designed to increase incentive for customer order flow providers to submit customer order flow in XSP, which, as indicated above, contributes to a more robust market ecosystem to the benefit of all market participants. The Exchange does not believe that the proposed rule change will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the propose fees assessed and rebates offered apply to an Exchange proprietary product, which are traded exclusively on the Exchange and the Exchange’s affiliated options exchange, BZX Options. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 19 and paragraph (f) of Rule 19b–4 20 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change 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– CBOE–2020–108 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–CBOE–2020–108. 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 17:59 Nov 17, 2020 Jkt 253001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–25385 Filed 11–17–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90395; File No. SR– NASDAQ–2020–075] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Technical and Conforming Amendments to The Nasdaq Options Market Rules at Options 4 November 12, 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 November 3, 2020, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ 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 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. U.S.C. 78s(b)(3)(A). 20 17 CFR 240.19b–4(f). VerDate Sep<11>2014 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 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–CBOE–2020–108 and should be submitted on or before December 9, 2020. 21 17 19 15 PO 00000 Frm 00083 Fmt 4703 1 15 Sfmt 4703 73537 E:\FR\FM\18NON1.SGM 18NON1 73538 Federal Register / Vol. 85, No. 223 / Wednesday, November 18, 2020 / Notices comments on the proposed rule change from interested persons. ‘‘ETNs’’ will assist Participants in locating this rule text. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Options 4, Section 5 The Exchange proposes to amend The Nasdaq Options Market (‘‘NOM’’) Rules at Options 4, Section 3, ‘‘Criteria for Underlying Securities,’’ Options 4, Section 5, ‘‘Series of Options Contracts Open for Trading,’’ and Options 4, Section 6, which is currently reserved, to relocate certain rule text and make other minor technical amendments. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/nasdaq/rules, 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 Exchange proposes to amend Options 4, Section 3, ‘‘Criteria for Underlying Securities,’’ Options 4, Section 5, ‘‘Series of Options Contracts Open for Trading,’’ and Options 4, Section 6, which is currently reserved, to relocate certain rule text and make other minor technical amendments. This rule change is similar to a rule change filed by Nasdaq BX, Inc.3 khammond on DSKJM1Z7X2PROD with NOTICES Options 4, Section 3 The Exchange proposes to amend Options 4, Section 3(1)(i) to add the words ‘‘or ETNs’’ after the phrase ‘‘collectively known as ‘‘Index-Linked Securities’’ for additional clarity. The Exchange believes that this addition of 3 See Securities Exchange Act Release No. 90218 (October 19, 2020), 85 FR 67579 (October 23, 2020) (SR–BX–2020–030) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Technical Amendments to the Options Listing Rules). VerDate Sep<11>2014 17:59 Nov 17, 2020 Jkt 253001 Relocate Rule Text The Exchange proposes to relocate certain portions of the Supplementary Material to Options 4, Section 5 in order that rule text related to certain strike listing programs be placed with related rule text. Proposed relocated rule text is not being amended with this proposal. The Exchange proposes to relocate Supplementary Material .11 within Options 4, Section 5 to new Options 4, Section 5(a)(1). The Exchange proposes to relocate Supplementary Material .14 within Options 4, Section 5 to new Options 4, Section 5(e). The Exchange proposes to relocate Supplementary Material .12 within Options 4, Section 5 to new Options 4, Section 5(f). The Exchange proposes to relocate Supplementary Material .02 within Options 4, Section 5 to new Options 4, Section 6. The Exchange proposes to relocate Supplementary Material .07 within Options 4, Section 5 to new Options 4, Section 5(h). The Exchange proposes to relocate Supplementary Material .08 within Options 4, Section 5 to new Options 4, Section 5(i). The Exchange proposes to relocate Options 4, Section 5(d)(iv) to Supplementary Material .02 within Options 4, Section 5 and add a title ‘‘$2.50 Strike Price Interval Program.’’ 4 The Exchange proposes to delete the first sentence of Supplementary Material .03(e) within Options 4, Section 5, which provides ‘‘The interval between strike prices on Short Term Option Series shall be the same as the strike prices for series in that same option class that expire in accordance with the normal monthly expiration cycle.’’ The Exchange notes that this rule text is not necessary because with the relocation of the strike listing rules for Short Term Option Series, which are proposed to be relocated from Supplementary Material .13 of Options 4, Section 5 to the end of Supplementary .03(e) of Options 4, Section 5, the reference becomes unnecessary. The Exchange proposes to relocate Supplementary Material .13 within Options 4, Section 5 to the end of Supplementary .03(e) of Options 4, Section 5. 4 The Exchange proposes to relocate current Supplementary Material .02 to Options 4, Section 5 to new Options 4, Section 6, as described below. PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 Other Technical Amendments The Exchange proposes to update certain outdated citations to rule text within Options 4, Section 5. The Exchange proposes to lowercase the term ‘‘customer’’ within Options 4, Section 5(c). The Exchange proposes to re-number and re-letter certain sections for consistency, and remove reserved sections from the rule. The Exchange proposes to utilize the defined term ‘‘Commission’’ 5 within Options 4, Section 5(f). The Exchange proposes to add the words ‘‘Long-Term Options Series or’’ before the term ‘‘LEAPS’’ and add quotation marks in that same sentence within current Supplementary Material .01(b)(v) at Options 5, Section 5 which is being renumbered as Supplementary Material .01(b)(5) at Options 5, Section 5. Options 4, Section 6 The Exchange proposes to amend Options 4, Section 6, which is currently reserved. Similar to Nasdaq ISE, LLC (‘‘ISE’’) and Nasdaq BX, Inc., the Exchange proposes to relocate current Supplementary Material .02 to Options 4, Section 5 to new Options 4, Section 6 and title the section ‘‘Select Provisions of Options Listing Procedures Plan.’’ The Exchange proposes to update and conform the rule text of current Supplementary Material .02 to Options 4, Section 5 to mirror the rule text within ISE Options 4, Section 6 as well as BX Options 4, Section 6. The Exchange proposes to add this sentence. ‘‘A complete copy of the current OLPP may be accessed at: https:// www.optionsclearing.com/products/ options_listing_proceduresplan.pdf ’’ to the end of proposed Options 4, Section 6(a) to provide greater detail. The Exchange also proposes to add a clause which provides that, ‘‘The series exercise price range limitations contained in subparagraph (a) above do not apply with regard to: the listing of Flexible Exchange Options,’’ similar to ISE and BX. In addition to renumbering this section to correspond to ISE’s and BX’s numbering, the Exchange proposes additional rule text which mirrors ISE’s and BX’s rule text which states, (iii) The Exchange may designate up to five options classes to which the series exercise price range may be up to 100% above and below the price of the underlying security (which underlying security price shall be determined in accordance with subparagraph (i) above). Such designations shall be made on an annual basis and shall not be removed during the calendar year unless the options 5 The terms ‘‘Commission’’ or ‘‘SEC’’ mean the Securities and Exchange Commission (SEC), established pursuant to the Act. See General 1(b)(7). E:\FR\FM\18NON1.SGM 18NON1 Federal Register / Vol. 85, No. 223 / Wednesday, November 18, 2020 / Notices class is delisted by the Exchange, in which case the Exchange may designate another options class to replace the delisted class. If a designated options class is delisted by the Exchange but continues to trade on at least one options exchange, the options class shall be subject to the limitations on listing new series set forth in subparagraph (i) above unless designated by another exchange. (iv) If the Exchange that has designated five options classes pursuant to subparagraph (iii) above requests that one or more additional options classes be excepted from the limitations on listing new series set forth in subparagraph (i) above, the additional options class(es) shall be so designated upon the unanimous consent of all exchanges that trade the options class(es). Additionally, pursuant to the Exchange’s request, the percentage range for the listing of new series may be increased to more than 100% above and below the price of the underlying security for an options class, by the unanimous consent of all exchanges that trade the designated options class. Exceptions for an additional class or for an increase of the exercise price range shall apply to all standard expiration months existing at the time of the vote, plus the next standard expiration month to be added, and also to any non-standard expirations that occur prior to the next standard monthly expiration. khammond on DSKJM1Z7X2PROD with NOTICES The Exchange believes that the addition of this rule text will harmonize NOM’s Rule to ISE’s Options 4, Section 6 as well as BX Options 4, Section 6 and also memorialize certain aspects of the Options Listing Procedures Plan so that market participants will have ease of reference in locating language concerning the Options Listing Procedures Plan. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,6 in general, and furthers the objectives of Section 6(b)(5) of the Act,7 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. The Exchange’s proposal to make a nonsubstantive amendment to Options 4, Section 3 to add the more commonly used term ‘‘ETN’’ next to ‘‘Index-Linked Securities’’ will allow Participants to search the rule text using the term ‘‘ETN’’. Amending Options 4, Section 5 to relocate rule text within the related listing program will make the rule easier to understand. The rule text being relocated is not amended by this proposal. The remainder of the rule 6 15 7 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:59 Nov 17, 2020 Jkt 253001 changes within Options 4, Section 5 are non-substantive and intended to provide clarity to the rule text. Relocating current Supplementary Material .02 to Options 4, Section 5 to new Options 4, Section 6 and titling the section ‘‘Select Provisions of Options Listing Procedures Plan’’ will harmonize NOM’s listing rules with those of ISE and BX. Further, the Exchange believes that the addition of rule text within Options 4, Section 6, similar to ISE Options 4, Section 6 and BX Options 4, Section 6, will provide market participants with ease of reference in locating language concerning the Options Listing Procedures Plan. The Exchange believes that the proposed amendments are consistent with the Act and the protection of investors and the general public because the amendments bring greater clarity to NOM’s listing rules. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule changes are nonsubstantive and are intended to provide greater clarity. 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 from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 8 and Rule 19b– 4(f)(6) thereunder.9 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the 8 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 9 17 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 73539 Act 10 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 11 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay. As the proposed rule change raises no novel issues and promotes clarity and consistency within the Exchange’s options listing rules, the Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.12 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 change 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– NASDAQ–2020–075 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–NASDAQ–2020–075. This file number should be included on the subject line if email is used. To help the Commission process and review your 10 17 CFR 240.19b–4(f)(6). CFR 240.19b–4(f)(6)(iii). 12 For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 11 17 E:\FR\FM\18NON1.SGM 18NON1 73540 Federal Register / Vol. 85, No. 223 / Wednesday, November 18, 2020 / Notices 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 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–NASDAQ–2020–075, and should be submitted on or before December 9, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–25380 Filed 11–17–20; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–90403; File No. SR– CboeBZX–2020–084] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fee Schedule To Correct Drafting Error in a Footnote khammond on DSKJM1Z7X2PROD with NOTICES November 12, 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 November 9, 2020, Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 17:59 Nov 17, 2020 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. 1. Purpose The Exchange proposes to amend its fee schedule to correct an inadvertent drafting error. Specifically, the Exchange submitted a rule filing on September 11, 2020 to amend the Fee Schedule,3 which, among other things, amended the standard rates for orders that add liquidity in securities priced under $1.00 by providing for a standard rebate of $0.00009 per share (‘‘September Filing’’). As discussed in the September Filing, this change was intended to apply solely to orders yielding fee codes B, V and Y that add liquidity to the Exchange. Indeed, the filing specifically provided that this new standard rebate for orders in 3 See Securities Exchange Act Release No. 89974 (September 23, 2020), 85 FR 61071 (September 29, 2020) (SR–CboeBZX–2020–071). 1 15 VerDate Sep<11>2014 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) is filing with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change to amend the fee schedule. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/bzx/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P 13 17 (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III 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. Jkt 253001 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 securities priced below $1.00 would be applied to ‘‘corresponding fee codes that add liquidity (i.e., B, V and Y)’’. However, the proposed fee change incorrectly reflected the proposed $0.00009 subdollar rebate in footnote 7 of the Fee Schedule, which is appended not only to fee codes B, V and Y, but also to fee codes HB, HI, HV, HY, RP and ZA. As a result of this drafting error, the Fee Schedule incorrectly indicates that the $0.00009 subdollar rebate that was introduced for orders yielding fee codes B, V and Y in the September Filing also applies to fee codes HB, HI, HV, HY, RP and ZA. Therefore, the Exchange proposes to correct this inadvertent drafting error by removing footnote 7 from fee codes B, V and Y and adopting new footnote 19, appended to fee codes B, V and Y, to reflect the $0.00009 rebate for orders in securities priced below $1.00, as well as revising footnote 7 to provide, as it did prior to the September Filing, that no charge or rebate will be applied to orders in securities priced below $1.00 that yield the fee codes to which footnote 7 remains appended (HB, HI, HV, HY, RP and ZA). The Exchange notes that the proposed rule change is merely corrective in nature and does not change any rates that are currently applied to orders that yield fee codes B, V, Y, HB, HI, HV, HY, RP and ZA. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,4 in general, and furthers the objectives of Section 6(b)(4),5 in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members and issuers and other persons using its facilities. The Exchange also believes that the proposed rule change is consistent with the objectives of Section 6(b)(5) 6 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest, and, particularly, is not designed to permit 4 15 U.S.C. 78f. U.S.C. 78f(b)(4). 6 15 U.S.C. 78f.(b)(5). 5 15 E:\FR\FM\18NON1.SGM 18NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 85, Number 223 (Wednesday, November 18, 2020)]
[Notices]
[Pages 73537-73540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25380]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90395; File No. SR-NASDAQ-2020-075]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Make Technical and Conforming Amendments to The Nasdaq Options Market 
Rules at Options 4

November 12, 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 November 3, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' 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

[[Page 73538]]

comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend The Nasdaq Options Market (``NOM'') 
Rules at Options 4, Section 3, ``Criteria for Underlying Securities,'' 
Options 4, Section 5, ``Series of Options Contracts Open for Trading,'' 
and Options 4, Section 6, which is currently reserved, to relocate 
certain rule text and make other minor technical amendments.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 Exchange proposes to amend Options 4, Section 3, ``Criteria for 
Underlying Securities,'' Options 4, Section 5, ``Series of Options 
Contracts Open for Trading,'' and Options 4, Section 6, which is 
currently reserved, to relocate certain rule text and make other minor 
technical amendments. This rule change is similar to a rule change 
filed by Nasdaq BX, Inc.\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 90218 (October 19, 
2020), 85 FR 67579 (October 23, 2020) (SR-BX-2020-030) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Make 
Technical Amendments to the Options Listing Rules).
---------------------------------------------------------------------------

Options 4, Section 3
    The Exchange proposes to amend Options 4, Section 3(1)(i) to add 
the words ``or ETNs'' after the phrase ``collectively known as ``Index-
Linked Securities'' for additional clarity. The Exchange believes that 
this addition of ``ETNs'' will assist Participants in locating this 
rule text.
Options 4, Section 5
Relocate Rule Text
    The Exchange proposes to relocate certain portions of the 
Supplementary Material to Options 4, Section 5 in order that rule text 
related to certain strike listing programs be placed with related rule 
text. Proposed relocated rule text is not being amended with this 
proposal.
    The Exchange proposes to relocate Supplementary Material .11 within 
Options 4, Section 5 to new Options 4, Section 5(a)(1).
    The Exchange proposes to relocate Supplementary Material .14 within 
Options 4, Section 5 to new Options 4, Section 5(e).
    The Exchange proposes to relocate Supplementary Material .12 within 
Options 4, Section 5 to new Options 4, Section 5(f).
    The Exchange proposes to relocate Supplementary Material .02 within 
Options 4, Section 5 to new Options 4, Section 6.
    The Exchange proposes to relocate Supplementary Material .07 within 
Options 4, Section 5 to new Options 4, Section 5(h).
    The Exchange proposes to relocate Supplementary Material .08 within 
Options 4, Section 5 to new Options 4, Section 5(i).
    The Exchange proposes to relocate Options 4, Section 5(d)(iv) to 
Supplementary Material .02 within Options 4, Section 5 and add a title 
``$2.50 Strike Price Interval Program.'' \4\
---------------------------------------------------------------------------

    \4\ The Exchange proposes to relocate current Supplementary 
Material .02 to Options 4, Section 5 to new Options 4, Section 6, as 
described below.
---------------------------------------------------------------------------

    The Exchange proposes to delete the first sentence of Supplementary 
Material .03(e) within Options 4, Section 5, which provides ``The 
interval between strike prices on Short Term Option Series shall be the 
same as the strike prices for series in that same option class that 
expire in accordance with the normal monthly expiration cycle.'' The 
Exchange notes that this rule text is not necessary because with the 
relocation of the strike listing rules for Short Term Option Series, 
which are proposed to be relocated from Supplementary Material .13 of 
Options 4, Section 5 to the end of Supplementary .03(e) of Options 4, 
Section 5, the reference becomes unnecessary.
    The Exchange proposes to relocate Supplementary Material .13 within 
Options 4, Section 5 to the end of Supplementary .03(e) of Options 4, 
Section 5.
Other Technical Amendments
    The Exchange proposes to update certain outdated citations to rule 
text within Options 4, Section 5. The Exchange proposes to lowercase 
the term ``customer'' within Options 4, Section 5(c). The Exchange 
proposes to re-number and re-letter certain sections for consistency, 
and remove reserved sections from the rule. The Exchange proposes to 
utilize the defined term ``Commission'' \5\ within Options 4, Section 
5(f). The Exchange proposes to add the words ``Long-Term Options Series 
or'' before the term ``LEAPS'' and add quotation marks in that same 
sentence within current Supplementary Material .01(b)(v) at Options 5, 
Section 5 which is being renumbered as Supplementary Material .01(b)(5) 
at Options 5, Section 5.
---------------------------------------------------------------------------

    \5\ The terms ``Commission'' or ``SEC'' mean the Securities and 
Exchange Commission (SEC), established pursuant to the Act. See 
General 1(b)(7).
---------------------------------------------------------------------------

Options 4, Section 6
    The Exchange proposes to amend Options 4, Section 6, which is 
currently reserved. Similar to Nasdaq ISE, LLC (``ISE'') and Nasdaq BX, 
Inc., the Exchange proposes to relocate current Supplementary Material 
.02 to Options 4, Section 5 to new Options 4, Section 6 and title the 
section ``Select Provisions of Options Listing Procedures Plan.'' The 
Exchange proposes to update and conform the rule text of current 
Supplementary Material .02 to Options 4, Section 5 to mirror the rule 
text within ISE Options 4, Section 6 as well as BX Options 4, Section 
6. The Exchange proposes to add this sentence. ``A complete copy of the 
current OLPP may be accessed at: https://www.optionsclearing.com/products/options_listing_proceduresplan.pdf '' to the end of proposed 
Options 4, Section 6(a) to provide greater detail. The Exchange also 
proposes to add a clause which provides that, ``The series exercise 
price range limitations contained in subparagraph (a) above do not 
apply with regard to: the listing of Flexible Exchange Options,'' 
similar to ISE and BX. In addition to renumbering this section to 
correspond to ISE's and BX's numbering, the Exchange proposes 
additional rule text which mirrors ISE's and BX's rule text which 
states,

    (iii) The Exchange may designate up to five options classes to 
which the series exercise price range may be up to 100% above and 
below the price of the underlying security (which underlying 
security price shall be determined in accordance with subparagraph 
(i) above). Such designations shall be made on an annual basis and 
shall not be removed during the calendar year unless the options

[[Page 73539]]

class is delisted by the Exchange, in which case the Exchange may 
designate another options class to replace the delisted class. If a 
designated options class is delisted by the Exchange but continues 
to trade on at least one options exchange, the options class shall 
be subject to the limitations on listing new series set forth in 
subparagraph (i) above unless designated by another exchange.
    (iv) If the Exchange that has designated five options classes 
pursuant to subparagraph (iii) above requests that one or more 
additional options classes be excepted from the limitations on 
listing new series set forth in subparagraph (i) above, the 
additional options class(es) shall be so designated upon the 
unanimous consent of all exchanges that trade the options class(es). 
Additionally, pursuant to the Exchange's request, the percentage 
range for the listing of new series may be increased to more than 
100% above and below the price of the underlying security for an 
options class, by the unanimous consent of all exchanges that trade 
the designated options class.
    Exceptions for an additional class or for an increase of the 
exercise price range shall apply to all standard expiration months 
existing at the time of the vote, plus the next standard expiration 
month to be added, and also to any non-standard expirations that 
occur prior to the next standard monthly expiration.

    The Exchange believes that the addition of this rule text will 
harmonize NOM's Rule to ISE's Options 4, Section 6 as well as BX 
Options 4, Section 6 and also memorialize certain aspects of the 
Options Listing Procedures Plan so that market participants will have 
ease of reference in locating language concerning the Options Listing 
Procedures Plan.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\7\ 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. 
The Exchange's proposal to make a non-substantive amendment to Options 
4, Section 3 to add the more commonly used term ``ETN'' next to 
``Index-Linked Securities'' will allow Participants to search the rule 
text using the term ``ETN''.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Amending Options 4, Section 5 to relocate rule text within the 
related listing program will make the rule easier to understand. The 
rule text being relocated is not amended by this proposal. The 
remainder of the rule changes within Options 4, Section 5 are non-
substantive and intended to provide clarity to the rule text.
    Relocating current Supplementary Material .02 to Options 4, Section 
5 to new Options 4, Section 6 and titling the section ``Select 
Provisions of Options Listing Procedures Plan'' will harmonize NOM's 
listing rules with those of ISE and BX. Further, the Exchange believes 
that the addition of rule text within Options 4, Section 6, similar to 
ISE Options 4, Section 6 and BX Options 4, Section 6, will provide 
market participants with ease of reference in locating language 
concerning the Options Listing Procedures Plan.
    The Exchange believes that the proposed amendments are consistent 
with the Act and the protection of investors and the general public 
because the amendments bring greater clarity to NOM's listing rules.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule changes 
are non-substantive and are intended to provide greater clarity.

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 from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay. As 
the proposed rule change raises no novel issues and promotes clarity 
and consistency within the Exchange's options listing rules, the 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the operative delay and 
designates the proposed rule change operative upon filing.\12\
---------------------------------------------------------------------------

    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission also 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 change 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-NASDAQ-2020-075 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-NASDAQ-2020-075. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your

[[Page 73540]]

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 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-
NASDAQ-2020-075, and should be submitted on or before December 9, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25380 Filed 11-17-20; 8:45 am]
BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.