Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing of Proposed Rule Change To Permit Monday and Wednesday Expirations for Options Listed Pursuant to the Short Term Option Series Program on the Invesco QQQ TrustSM, 13404-13407 [2021-04679]
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Federal Register / Vol. 86, No. 43 / Monday, March 8, 2021 / Notices
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2021–71 and
CP2021–74; Filing Title: USPS Request
to Add Priority Mail Contract 688 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: March 2, 2021; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Gregory Stanton; Comments Due: March
10, 2021.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2021–04714 Filed 3–5–21; 8:45 am]
BILLING CODE;P
[Release No. 34–91238; File No. SR-Phlx2021–10]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing of
Proposed Rule Change To Permit
Monday and Wednesday Expirations
for Options Listed Pursuant to the
Short Term Option Series Program on
the Invesco QQQ TrustSM Series
(‘‘QQQ’’) ETF Trust
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March 2, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act,’’) 1 and Rule 19b–4 thereunder,2
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
19:05 Mar 05, 2021
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to permit
Monday and Wednesday expirations for
options listed pursuant to the Short
Term Option Series Program on the
Invesco QQQ TrustSM Series (‘‘QQQ’’)
ETF Trust.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/phlx/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
SECURITIES AND EXCHANGE
COMMISSION
VerDate Sep<11>2014
notice is hereby given that on February
22, 2021, Nasdaq PHLX LLC (‘‘Phlx’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘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.
1. Purpose
The Exchange proposes to amend
Phlx Options 4, Section 5 at
Commentary .11 to allow Monday and
Wednesday expirations for options
listed pursuant to the Short Term
Option Series Program (‘‘Program’’) on
QQQ.
A Short Term Option Series means a
series in an option class that is
approved for listing and trading on the
Exchange in which the series is opened
for trading on any Monday, Tuesday,
Wednesday, Thursday or Friday that is
a business day and that expires on the
Monday, Wednesday or Friday of the
next business week, or, in the case of a
series that is listed on a Friday and
expires on a Monday, is listed one
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business week and one business day
prior to that expiration.3 The Exchange
is proposing to amend Phlx Options 4,
Section 5 at Commentary .11 to permit
the listing of options series that expire
on Mondays and Wednesdays in QQQ.
Monday Expirations
As proposed, with respect to Monday
QQQ Expirations within Commentary
.11 to Options 4, Section 5, the
Exchange may open for trading on any
Friday or Monday that is a business day
series of options on QQQ to expire on
any Monday of the month that is a
business day and is not a Monday in
which Quarterly Options Series on the
same class expire (‘‘Monday QQQ
Expirations’’), provided that Monday
QQQ Expirations that are listed on a
Friday must be listed at least one
business week and one business day
prior to the expiration. The Exchange
may list up to five consecutive Monday
QQQ Expirations at one time; the
Exchange may have no more than a total
of five Monday QQQ Expirations.
Wednesday Expirations
As proposed, with respect to
Wednesday QQQ Expirations within
Commentary .11 to Options 4, Section 5,
the Exchange may open for trading on
any Tuesday or Wednesday that is a
business day series of options on QQQ
to expire on any Wednesday of the
month that is a business day and is not
a Wednesday in which Quarterly
Options Series on the same class expire
(‘‘Wednesday QQQ Expirations’’). The
Exchange may list up to five
consecutive Wednesday QQQ
Expirations at one time; the Exchange
may have no more than a total of five
Wednesday QQQ Expirations and a total
of five Wednesday QQQ Expirations
will be subject to the provisions of this
Rule.
Monday and Wednesday Expirations
The interval between strike prices for
the proposed Monday and Wednesday
QQQ Expirations will be the same as
3 Options 1, Section 1(b)(53) provides the term
‘‘Short Term Option Series’’ [sic] a series in an
option class that is approved for listing and trading
on the Exchange in which the series is opened for
trading on any Monday, Tuesday, Wednesday,
Thursday or Friday that is a business day and that
expires on the Monday, Wednesday or Friday of the
next business week, or, in the case of a series that
is listed on a Friday and expires on a Monday, is
listed one business week and one business day
prior to that expiration. If a Tuesday, Wednesday,
Thursday or Friday is not a business day, the series
may be opened (or shall expire) on the first business
day immediately prior to that Tuesday, Wednesday,
Thursday or Friday, respectively. For a series listed
pursuant to this section for Monday expiration, if
a Monday is not a business day, the series shall
expire on the first business day immediately
following that Monday.
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Federal Register / Vol. 86, No. 43 / Monday, March 8, 2021 / Notices
those for the current Short Term Option
Series for Wednesday and Friday
expirations applicable to the Program.4
Specifically, the Monday and
Wednesday QQQ Expirations will have
a $0.50 strike interval minimum.5 As is
the case with other equity options series
listed pursuant to the Program, the
Monday and Wednesday QQQ
Expiration series will be P.M.-settled.
Pursuant to Options 1, Section
1(b)(53), with respect to the Program, if
Monday is not a business day the series
shall expire on the first business day
immediately following that Monday.
This procedure differs from the
expiration date of Wednesday
expiration series that are scheduled to
expire on a holiday. Pursuant to Options
1, Section 1(b)(53) a Wednesday
expiration series shall expire on the first
business day immediately prior to that
Wednesday, e.g., Tuesday of that week,
if the Wednesday is not a business day.
For purposes of QQQ, however, the
Exchange believes that it is preferable to
require Monday expiration series in this
scenario to expire on the Tuesday of
that week rather than the previous
business day, e.g., the previous Friday,
since the Tuesday is closer in time to
the scheduled expiration date of the
series than the previous Friday, and
therefore may be more representative of
anticipated market conditions. Monday
SPY expirations are treated in this
manner today.6 Cboe Exchange, Inc.
(‘‘Cboe’’) uses the same procedure for
options on the S&P 500 index (‘‘SPX’’)
with Monday expirations that are listed
pursuant to its Nonstandard Expirations
Pilot Program and that are scheduled to
expire on a holiday.7 Also, Nasdaq Phlx
LLC (‘‘Phlx’’) 8 and Nasdaq ISE, LLC
(‘‘ISE’’) 9 use the same procedure for
options on the Nasdaq-100® (‘‘NDX’’)
with Monday expirations that are listed
pursuant to its [sic] Nonstandard
Expirations Pilot Programs, respectively.
Currently, for each option class
eligible for participation in the Program,
the Exchange is limited to opening
thirty (30) series for each expiration date
for the specific class.10 The thirty (30)
series restriction does not include series
4 See
Commentary .11(e) to Options 4, Section 5.
Commentary .11(e) to Options 4, Section 5.
6 See Commentary .11 at Options 4, Section 5.
7 See Cboe Rule 4.13(e)(1) ‘‘. . . If the Exchange
is not open for business on a respective Monday,
the normally Monday expiring Weekly Expirations
will expire on the following business day. If the
Exchange is not open for business on a respective
Wednesday or Friday, the normally Wednesday or
Friday expiring Weekly Expirations will expire on
the previous business day.’’
8 See Phlx Options 4A, Section 12(b)(5).
9 See ISE Supplementary Material .07 to Options
4A, Section 12.
10 See Commentary .11(a) to Options 4, Section 5.
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5 See
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19:05 Mar 05, 2021
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that are open by other securities
exchanges under their respective short
term option rules; the Exchange may list
these additional series that are listed by
other exchanges.11 This thirty (30) series
restriction would apply to Monday and
Wednesday QQQ Expiration series as
well. In addition, the Exchange will be
able to list series that are listed by other
exchanges, assuming they file similar
rules with the Commission to list QQQ
options expiring on Mondays and
Wednesdays.
Finally, the Exchange is amending
Commentary .11(b) to Options 4,
Section 5, which addresses the listing of
Short Term Options Series that expire in
the same week as monthly or quarterly
options series. Currently, that rule states
that no Short Term Option Series may
expire in the same week in which
monthly option series on the same class
expire (with the exception of Monday
and Wednesday SPY Expirations) or, in
the case of Quarterly Options Series, on
an expiration that coincides with an
expiration of Quarterly Option Series on
the same class.12 As with Monday and
Wednesday SPY Expirations, the
Exchange is proposing to permit
Monday and Wednesday QQQ
Expirations to expire in the same week
as monthly options series on the same
class. The Exchange believes that it is
reasonable to extend this exemption to
Monday and Wednesday QQQ
Expirations because Monday and
Wednesday QQQ Expirations and
standard monthly options will not
expire on the same trading day, as
standard monthly options expire on
Fridays. Additionally, the Exchange
believes that not listing Monday and
Wednesday QQQ Expirations for one
week every month because there was a
monthly QQQ expiration on the Friday
of that week would create investor
confusion.
The Exchange does not believe that
any market disruptions will be
encountered with the introduction of
P.M.-settled Monday and Wednesday
QQQ expirations. The Exchange has the
necessary capacity and surveillance
programs in place to support and
properly monitor trading in the
proposed Monday and Wednesday QQQ
Expirations. The Exchange currently
trades P.M.-settled Short Term Option
Series that expire Monday and
Wednesday for SPY and has not
experienced any market disruptions nor
issues with capacity. Today, the
Exchange has surveillance programs in
place to support and properly monitor
trading in Short Term Option Series that
expire Monday and Wednesday for SPY.
Similar to SPY, the introduction of
QQQ Monday and Wednesday
expirations will, among other things,
expand hedging tools available to
market participants and continue the
reduction of the premium cost of buying
protection. The Exchange believes that
Monday and Wednesday QQQ
expirations will allow market
participants to purchase QQQ based on
their timing as needed and allow them
to tailor their investment and hedging
needs more effectively.
Implementation
The Exchange intends to begin
implementation of the proposed rule
change in Q2 2021. The Exchange will
issue an Options Trader Alert to
Participants with the date of
implementation.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,13 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,14 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 by providing the
investing public and other market
participants more flexibility to closely
tailor their investment and hedging
decisions in QQQ options, thus
allowing them to better manage their
risk exposure.
In particular, the Exchange believes
the Program has been successful to date
and that Monday and Wednesday QQQ
Expirations should simply expand the
ability of investors to hedge risk against
market movements stemming from
economic releases or market events that
occur throughout the month in the same
way that the Program has expanded the
landscape of hedging. Similarly, the
Exchange believes Monday and
Wednesday QQQ Expirations should
create greater trading and hedging
opportunities and flexibility, and will
provide customers with the ability to
tailor their investment objectives more
effectively. Phlx currently lists Monday
and Wednesday SPY Expirations.15
Also, Cboe 16 currently permits Monday
and Wednesday expirations for other
options with a weekly expiration, such
13 15
11 See
Commentary .11(a) to Options 4, Section 5.
12 See current Commentary .11(b) to Options 4,
Section 5.
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13405
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
15 See Commentary .11 at Options 4, Section 5.
16 See note 6 [sic] above.
14 15
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Federal Register / Vol. 86, No. 43 / Monday, March 8, 2021 / Notices
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as options on the SPX pursuant to its
Nonstandard Expirations Pilot Program
and Phlx 17 and ISE 18 currently permit
Monday and Wednesday expirations for
other options with a weekly expiration
on NDX pursuant to its [sic]
Nonstandard Expirations Pilot
Programs, respectively.
With the exception of Monday
expiration series that are scheduled to
expire on a holiday, there are no
material differences in the treatment of
Monday and Wednesday QQQ
expirations for Short Term Option
Series. The Exchange believes that it is
consistent with the Act to treat Monday
expiration series that expire on a
holiday differently than Wednesday or
Friday expiration series, since the
proposed treatment for Monday
expiration series will result in an
expiration date that is closer in time to
the scheduled expiration date of the
series, and therefore may be more
representative of anticipated market
conditions. Monday SPY expirations are
treated in this manner today.19 Cboe 20
uses the same procedure for SPX
options with Monday expirations that
are listed pursuant to its Nonstandard
Expirations Pilot Program and that are
scheduled to expire on a holiday, as do
Phlx 21 and ISE 22 for NDX options with
Monday expirations that are listed
pursuant to their Nonstandard
Expirations Pilot Programs, respectively.
Given the similarities between
Monday and Wednesday SPY
Expirations and the proposed Monday
and Wednesday QQQ Expirations, the
Exchange believes that applying the
provisions in Commentary .11 to
Options 4, Section 5 that currently
apply to Monday and Wednesday SPY
Expirations to Monday and Wednesday
QQQ Expirations is justified. For
example, the Exchange believes that
allowing Monday and Wednesday QQQ
Expirations and monthly QQQ
expirations in the same week will
benefit investors and minimize investor
confusion by providing Monday and
Wednesday QQQ Expirations in a
continuous and uniform manner. The
Exchange also believes that is
appropriate to amend Commentary
.11(b) to Options 4, Section 5 to clarify
that no Short Term Option Series may
expire on the same day as an expiration
of Quarterly Option Series on the same
class, same as SPY.
note 8 above.
note 9 above.
19 See Commentary .11 at Options 4, Section 5.
20 Id. [sic]
21 See note 8 above.
22 See note 9 above.
The Exchange represents that it has an
adequate surveillance program in place
to detect manipulative trading in
Monday and Wednesday expirations,
including Monday and Wednesday
QQQ Expirations, in the same way that
it monitors trading in the current Short
Term Option Series and trading in
Monday and Wednesday SPY
Expirations. The Exchange also
represents that it has the necessary
systems capacity to support the new
options series. Finally, the Exchange
does not believe that any market
disruptions will be encountered with
the introduction of Monday and
Wednesday QQQ expirations.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
B. Self-Regulatory Organization’s
Statement on Burden on Competition
IV. Solicitation of Comments
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange notes that having Monday and
Wednesday QQQ expirations is not a
novel proposal, as Monday and
Wednesday SPY Expirations are
currently listed on Phlx.23 Cboe 24 uses
the same procedure for SPX options
with Monday expirations that are listed
pursuant to its Nonstandard Expirations
Pilot Program and that are scheduled to
expire on a holiday, as do Phlx 25 and
ISE 26 for NDX options with Monday
expirations that are listed pursuant to
their Nonstandard Expirations Pilot
Programs, respectively.
The Exchange does not believe the
proposal will impose any burden on
intra-market competition, as all market
participants will be treated in the same
manner under this proposal.
Additionally, the Exchange does not
believe the proposal will impose any
burden on inter-market competition, as
nothing prevents the other options
exchanges from proposing similar rules
to list and trade Short-Term Option
Series with Monday and Wednesday
expirations.
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.
17 See
18 See
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23 See
Commentary .11 at Options 4, Section 5.
[sic]
25 See note 8 above.
26 See note 9 above.
24 Id.
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Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
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–
Phlx–2021–10 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–Phlx–2021–10. 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
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
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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–Phlx–2021–10 and should
be submitted on or before March 29,
2021.
permit the Exchange to look back only
to July 2020 to correct certain billing
errors which were discovered in
October 2020. This rule change does not
provide for any modifications to the text
of the Exchange’s rules or fees schedule.
The text of the proposal is also
available on the Exchange’s website
(https://markets.cboe.com/us/equities/
regulation/rule_filings/edga/), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
J. Matthew DeLesDernier,
Assistant Secretary.
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.
[FR Doc. 2021–04679 Filed 3–5–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91232; File No. SR–
CboeEDGA–2021–006]
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposal To Permit the Exchange To
Look Back Only to July 2020 To
Correct Certain Billing Errors Which
Were Discovered in October 2020
March 2, 2021.
jbell on DSKJLSW7X2PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
18, 2021, Cboe EDGA Exchange, Inc.
(the ‘‘Exchange’’ or ‘‘EDGA’’) 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGA Exchange, Inc. (‘‘EDGA’’
or the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposal to
27 17
CFR 200.30–3(a)(12).
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).
1 15
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19:05 Mar 05, 2021
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange recently amended its
fees schedule to adopt a provision
relating to billing errors and fee
disputes.5 Specifically, the Exchange
adopted a provision that provides that
all fees and rebates assessed prior to the
three full calendar months before the
month in which the Exchange becomes
aware of a billing error shall be
considered final. Particularly, the
Exchange will resolve an error by
crediting or debiting Members and NonMembers based on the fees or rebates
that should have been applied in the
three full calendar months preceding
the month in which the Exchange
became aware of the error, including to
all impacted transactions that occurred
during those months.6 The Exchange
5 See Securities Exchange Act Release No. 90900
(January 11, 2021), 86 FR 4149 (January 15, 2021)
(SR–CboeEDGA–2020–032).
6 For example, if the Exchange becomes aware of
a transaction fee billing error on February 4, 2021,
the Exchange will resolve the error by crediting or
debiting Members based on the fees or rebates that
should have been applied to any impacted
transactions during November, 2020, December
2020 and January 2021. The Exchange notes that
because it bills in arrears, the Exchange would be
able to correct the error in advance of issuing the
February 2021 invoice and therefore, transactions
impacted through the date of discovery (in this
example, February 4, 2021) and thereafter, would be
billed correctly.
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13407
will apply the three month look back
regardless of whether the error was
discovered by the Exchange or by a
Member or Non-Member that submitted
a fee dispute to the Exchange. The
Exchange’s fees schedule also provides
that all disputes concerning fees and
rebates assessed by the Exchange would
have to be submitted to the Exchange in
writing and accompanied by supporting
documentation. The purpose of this
policy is to provide both the Exchange
and Members and Non-Members subject
to the Exchange’s fee schedule finality
and the ability to close their books after
a known period of time. The Exchange
further notes that several other
exchanges have adopted similar
provisions in their rules.7
The Exchange proposes to apply the
recently adopted billing policy to
transactions impacted by billing errors
that were discovered in October 2020.
Particularly, in October 2020, the
Exchange’s affiliate, Cboe BZX
Exchange, Inc. identified a billing error
relating to certain fee codes. As a result
of the discovery, the Exchange, along
with its affiliates, conducted a review of
additional fee code configurations
across each Exchange, which review
was only recently completed. The
review resulted in the discovery of
additional billing errors relating to fee
codes. These errors resulted in various
EDGA Members being under-billed or
over-billed, over the course of several
years. In the absence of applying the
recently adopted billing policy to
transactions impacted by the October
2020 billing errors, the Exchange would
be required to credit or debit Members
based on the fees or rebates that should
have been applied to all impacted
transactions, regardless of how far back
the transactions occurred (which as
noted above, is several years). If the
Exchange were permitted to apply the
current rule language to the billing
errors discovered in October 2020
however, then the Exchange could limit
its look back in correcting those errors
to only those transactions that occurred
in the three months preceding the
discovery of the errors (i.e., July 2020
through September 2020).8 Moreover,
the Exchange notes there are a number
of Members that would benefit from the
7 See e.g. Securities Exchange Act Release No.
87650 (December 3, 2019), 84 FR 67304 (December
9, 2019) (SR–NYSECHX–2019–024); Securities
Exchange Act Release No. 84430 (October 16, 2018),
83 FR 53347 (October 22, 2018) (SR–NYSENAT–
2018–23); and Securities Exchange Act Release No.
79060 (October 6, 2016), 81 FR 70716 (October 13,
2016) (SR–ISEGemini–2016–11).
8 The Exchange corrected errors in advance of
issuing the October 2020 invoice and therefore,
transactions impacted through the date of discovery
and thereafter, were billed correctly.
E:\FR\FM\08MRN1.SGM
08MRN1
]]>Agencies
[Federal Register Volume 86, Number 43 (Monday, March 8, 2021)]
[Notices]
[Pages 13404-13407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04679]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91238; File No. SR-Phlx-2021-10]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
of Proposed Rule Change To Permit Monday and Wednesday Expirations for
Options Listed Pursuant to the Short Term Option Series Program on the
Invesco QQQ Trust\SM\ Series (``QQQ'') ETF Trust
March 2, 2021.
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 February 22, 2021, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I and
II, below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to permit Monday and Wednesday expirations
for options listed pursuant to the Short Term Option Series Program on
the Invesco QQQ Trust\SM\ Series (``QQQ'') ETF Trust.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/phlx/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 Phlx Options 4, Section 5 at
Commentary .11 to allow Monday and Wednesday expirations for options
listed pursuant to the Short Term Option Series Program (``Program'')
on QQQ.
A Short Term Option Series means a series in an option class that
is approved for listing and trading on the Exchange in which the series
is opened for trading on any Monday, Tuesday, Wednesday, Thursday or
Friday that is a business day and that expires on the Monday, Wednesday
or Friday of the next business week, or, in the case of a series that
is listed on a Friday and expires on a Monday, is listed one business
week and one business day prior to that expiration.\3\ The Exchange is
proposing to amend Phlx Options 4, Section 5 at Commentary .11 to
permit the listing of options series that expire on Mondays and
Wednesdays in QQQ.
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\3\ Options 1, Section 1(b)(53) provides the term ``Short Term
Option Series'' [sic] a series in an option class that is approved
for listing and trading on the Exchange in which the series is
opened for trading on any Monday, Tuesday, Wednesday, Thursday or
Friday that is a business day and that expires on the Monday,
Wednesday or Friday of the next business week, or, in the case of a
series that is listed on a Friday and expires on a Monday, is listed
one business week and one business day prior to that expiration. If
a Tuesday, Wednesday, Thursday or Friday is not a business day, the
series may be opened (or shall expire) on the first business day
immediately prior to that Tuesday, Wednesday, Thursday or Friday,
respectively. For a series listed pursuant to this section for
Monday expiration, if a Monday is not a business day, the series
shall expire on the first business day immediately following that
Monday.
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Monday Expirations
As proposed, with respect to Monday QQQ Expirations within
Commentary .11 to Options 4, Section 5, the Exchange may open for
trading on any Friday or Monday that is a business day series of
options on QQQ to expire on any Monday of the month that is a business
day and is not a Monday in which Quarterly Options Series on the same
class expire (``Monday QQQ Expirations''), provided that Monday QQQ
Expirations that are listed on a Friday must be listed at least one
business week and one business day prior to the expiration. The
Exchange may list up to five consecutive Monday QQQ Expirations at one
time; the Exchange may have no more than a total of five Monday QQQ
Expirations.
Wednesday Expirations
As proposed, with respect to Wednesday QQQ Expirations within
Commentary .11 to Options 4, Section 5, the Exchange may open for
trading on any Tuesday or Wednesday that is a business day series of
options on QQQ to expire on any Wednesday of the month that is a
business day and is not a Wednesday in which Quarterly Options Series
on the same class expire (``Wednesday QQQ Expirations''). The Exchange
may list up to five consecutive Wednesday QQQ Expirations at one time;
the Exchange may have no more than a total of five Wednesday QQQ
Expirations and a total of five Wednesday QQQ Expirations will be
subject to the provisions of this Rule.
Monday and Wednesday Expirations
The interval between strike prices for the proposed Monday and
Wednesday QQQ Expirations will be the same as
[[Page 13405]]
those for the current Short Term Option Series for Wednesday and Friday
expirations applicable to the Program.\4\ Specifically, the Monday and
Wednesday QQQ Expirations will have a $0.50 strike interval minimum.\5\
As is the case with other equity options series listed pursuant to the
Program, the Monday and Wednesday QQQ Expiration series will be P.M.-
settled.
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\4\ See Commentary .11(e) to Options 4, Section 5.
\5\ See Commentary .11(e) to Options 4, Section 5.
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Pursuant to Options 1, Section 1(b)(53), with respect to the
Program, if Monday is not a business day the series shall expire on the
first business day immediately following that Monday. This procedure
differs from the expiration date of Wednesday expiration series that
are scheduled to expire on a holiday. Pursuant to Options 1, Section
1(b)(53) a Wednesday expiration series shall expire on the first
business day immediately prior to that Wednesday, e.g., Tuesday of that
week, if the Wednesday is not a business day. For purposes of QQQ,
however, the Exchange believes that it is preferable to require Monday
expiration series in this scenario to expire on the Tuesday of that
week rather than the previous business day, e.g., the previous Friday,
since the Tuesday is closer in time to the scheduled expiration date of
the series than the previous Friday, and therefore may be more
representative of anticipated market conditions. Monday SPY expirations
are treated in this manner today.\6\ Cboe Exchange, Inc. (``Cboe'')
uses the same procedure for options on the S&P 500 index (``SPX'') with
Monday expirations that are listed pursuant to its Nonstandard
Expirations Pilot Program and that are scheduled to expire on a
holiday.\7\ Also, Nasdaq Phlx LLC (``Phlx'') \8\ and Nasdaq ISE, LLC
(``ISE'') \9\ use the same procedure for options on the Nasdaq-
100[supreg] (``NDX'') with Monday expirations that are listed pursuant
to its [sic] Nonstandard Expirations Pilot Programs, respectively.
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\6\ See Commentary .11 at Options 4, Section 5.
\7\ See Cboe Rule 4.13(e)(1) ``. . . If the Exchange is not open
for business on a respective Monday, the normally Monday expiring
Weekly Expirations will expire on the following business day. If the
Exchange is not open for business on a respective Wednesday or
Friday, the normally Wednesday or Friday expiring Weekly Expirations
will expire on the previous business day.''
\8\ See Phlx Options 4A, Section 12(b)(5).
\9\ See ISE Supplementary Material .07 to Options 4A, Section
12.
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Currently, for each option class eligible for participation in the
Program, the Exchange is limited to opening thirty (30) series for each
expiration date for the specific class.\10\ The thirty (30) series
restriction does not include series that are open by other securities
exchanges under their respective short term option rules; the Exchange
may list these additional series that are listed by other
exchanges.\11\ This thirty (30) series restriction would apply to
Monday and Wednesday QQQ Expiration series as well. In addition, the
Exchange will be able to list series that are listed by other
exchanges, assuming they file similar rules with the Commission to list
QQQ options expiring on Mondays and Wednesdays.
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\10\ See Commentary .11(a) to Options 4, Section 5.
\11\ See Commentary .11(a) to Options 4, Section 5.
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Finally, the Exchange is amending Commentary .11(b) to Options 4,
Section 5, which addresses the listing of Short Term Options Series
that expire in the same week as monthly or quarterly options series.
Currently, that rule states that no Short Term Option Series may expire
in the same week in which monthly option series on the same class
expire (with the exception of Monday and Wednesday SPY Expirations) or,
in the case of Quarterly Options Series, on an expiration that
coincides with an expiration of Quarterly Option Series on the same
class.\12\ As with Monday and Wednesday SPY Expirations, the Exchange
is proposing to permit Monday and Wednesday QQQ Expirations to expire
in the same week as monthly options series on the same class. The
Exchange believes that it is reasonable to extend this exemption to
Monday and Wednesday QQQ Expirations because Monday and Wednesday QQQ
Expirations and standard monthly options will not expire on the same
trading day, as standard monthly options expire on Fridays.
Additionally, the Exchange believes that not listing Monday and
Wednesday QQQ Expirations for one week every month because there was a
monthly QQQ expiration on the Friday of that week would create investor
confusion.
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\12\ See current Commentary .11(b) to Options 4, Section 5.
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The Exchange does not believe that any market disruptions will be
encountered with the introduction of P.M.-settled Monday and Wednesday
QQQ expirations. The Exchange has the necessary capacity and
surveillance programs in place to support and properly monitor trading
in the proposed Monday and Wednesday QQQ Expirations. The Exchange
currently trades P.M.-settled Short Term Option Series that expire
Monday and Wednesday for SPY and has not experienced any market
disruptions nor issues with capacity. Today, the Exchange has
surveillance programs in place to support and properly monitor trading
in Short Term Option Series that expire Monday and Wednesday for SPY.
Similar to SPY, the introduction of QQQ Monday and Wednesday
expirations will, among other things, expand hedging tools available to
market participants and continue the reduction of the premium cost of
buying protection. The Exchange believes that Monday and Wednesday QQQ
expirations will allow market participants to purchase QQQ based on
their timing as needed and allow them to tailor their investment and
hedging needs more effectively.
Implementation
The Exchange intends to begin implementation of the proposed rule
change in Q2 2021. The Exchange will issue an Options Trader Alert to
Participants with the date of implementation.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\13\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\14\ 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 by providing the investing public and
other market participants more flexibility to closely tailor their
investment and hedging decisions in QQQ options, thus allowing them to
better manage their risk exposure.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes the Program has been
successful to date and that Monday and Wednesday QQQ Expirations should
simply expand the ability of investors to hedge risk against market
movements stemming from economic releases or market events that occur
throughout the month in the same way that the Program has expanded the
landscape of hedging. Similarly, the Exchange believes Monday and
Wednesday QQQ Expirations should create greater trading and hedging
opportunities and flexibility, and will provide customers with the
ability to tailor their investment objectives more effectively. Phlx
currently lists Monday and Wednesday SPY Expirations.\15\ Also, Cboe
\16\ currently permits Monday and Wednesday expirations for other
options with a weekly expiration, such
[[Page 13406]]
as options on the SPX pursuant to its Nonstandard Expirations Pilot
Program and Phlx \17\ and ISE \18\ currently permit Monday and
Wednesday expirations for other options with a weekly expiration on NDX
pursuant to its [sic] Nonstandard Expirations Pilot Programs,
respectively.
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\15\ See Commentary .11 at Options 4, Section 5.
\16\ See note 6 [sic] above.
\17\ See note 8 above.
\18\ See note 9 above.
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With the exception of Monday expiration series that are scheduled
to expire on a holiday, there are no material differences in the
treatment of Monday and Wednesday QQQ expirations for Short Term Option
Series. The Exchange believes that it is consistent with the Act to
treat Monday expiration series that expire on a holiday differently
than Wednesday or Friday expiration series, since the proposed
treatment for Monday expiration series will result in an expiration
date that is closer in time to the scheduled expiration date of the
series, and therefore may be more representative of anticipated market
conditions. Monday SPY expirations are treated in this manner
today.\19\ Cboe \20\ uses the same procedure for SPX options with
Monday expirations that are listed pursuant to its Nonstandard
Expirations Pilot Program and that are scheduled to expire on a
holiday, as do Phlx \21\ and ISE \22\ for NDX options with Monday
expirations that are listed pursuant to their Nonstandard Expirations
Pilot Programs, respectively.
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\19\ See Commentary .11 at Options 4, Section 5.
\20\ Id. [sic]
\21\ See note 8 above.
\22\ See note 9 above.
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Given the similarities between Monday and Wednesday SPY Expirations
and the proposed Monday and Wednesday QQQ Expirations, the Exchange
believes that applying the provisions in Commentary .11 to Options 4,
Section 5 that currently apply to Monday and Wednesday SPY Expirations
to Monday and Wednesday QQQ Expirations is justified. For example, the
Exchange believes that allowing Monday and Wednesday QQQ Expirations
and monthly QQQ expirations in the same week will benefit investors and
minimize investor confusion by providing Monday and Wednesday QQQ
Expirations in a continuous and uniform manner. The Exchange also
believes that is appropriate to amend Commentary .11(b) to Options 4,
Section 5 to clarify that no Short Term Option Series may expire on the
same day as an expiration of Quarterly Option Series on the same class,
same as SPY.
The Exchange represents that it has an adequate surveillance
program in place to detect manipulative trading in Monday and Wednesday
expirations, including Monday and Wednesday QQQ Expirations, in the
same way that it monitors trading in the current Short Term Option
Series and trading in Monday and Wednesday SPY Expirations. The
Exchange also represents that it has the necessary systems capacity to
support the new options series. Finally, the Exchange does not believe
that any market disruptions will be encountered with the introduction
of Monday and Wednesday QQQ expirations.
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 Exchange notes that
having Monday and Wednesday QQQ expirations is not a novel proposal, as
Monday and Wednesday SPY Expirations are currently listed on Phlx.\23\
Cboe \24\ uses the same procedure for SPX options with Monday
expirations that are listed pursuant to its Nonstandard Expirations
Pilot Program and that are scheduled to expire on a holiday, as do Phlx
\25\ and ISE \26\ for NDX options with Monday expirations that are
listed pursuant to their Nonstandard Expirations Pilot Programs,
respectively.
---------------------------------------------------------------------------
\23\ See Commentary .11 at Options 4, Section 5.
\24\ Id. [sic]
\25\ See note 8 above.
\26\ See note 9 above.
---------------------------------------------------------------------------
The Exchange does not believe the proposal will impose any burden
on intra-market competition, as all market participants will be treated
in the same manner under this proposal. Additionally, the Exchange does
not believe the proposal will impose any burden on inter-market
competition, as nothing prevents the other options exchanges from
proposing similar rules to list and trade Short-Term Option Series with
Monday and Wednesday expirations.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
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-Phlx-2021-10 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-Phlx-2021-10. 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 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
[[Page 13407]]
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-Phlx-2021-10 and should be
submitted on or before March 29, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-04679 Filed 3-5-21; 8:45 am]
BILLING CODE 8011-01-P
