Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 19.6.05 To Allow Monday and Wednesday Expirations for Options Listed Pursuant to the Short Term Option Series Program on the Invesco QQQ Trust (“QQQ”), 22747-22750 [2021-08901]
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Federal Register / Vol. 86, No. 81 / Thursday, April 29, 2021 / Notices
to list such series. For these reasons, the
Commission believes that the proposed
rule change presents no novel issues
and that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest, and
will allow the Exchange to remain
competitive with other exchanges.
Accordingly, the Commission hereby
waives the prefiling requirement and
the operative delay and designates the
proposed rule change operative upon
filing.25
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.
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–2021–028 and
should be submitted on or before May
20, 2021.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
J. Matthew DeLesDernier,
Assistant Secretary.
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–2021–028 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
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–2021–028. 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
25 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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[FR Doc. 2021–08904 Filed 4–28–21; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–91655; File No. SR–
CboeEDGX–2021–023]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Rule
19.6.05 To Allow Monday and
Wednesday Expirations for Options
Listed Pursuant to the Short Term
Option Series Program on the Invesco
QQQ Trust (‘‘QQQ’’)
April 23, 2021.
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 April 21,
2021, Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
26 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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22747
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 EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX Options’’)
proposes to amend Rule 19.6.05 to allow
Monday and Wednesday expirations for
options listed pursuant to the Short
Term Option Series Program on the
Invesco QQQ Trust (‘‘QQQ’’). 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/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, 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
Rule 19.6.05 to allow Monday and
Wednesday expirations for options
listed pursuant to the Short Term
Option Series Program on QQQ. The
Exchange notes that this proposed rule
change is substantively identical to a
rule change recently adopted by Nasdaq
Phlx LLC. (‘‘Phlx’’), filed with the
Securities and Exchange Commission
(‘‘Commission’’).5
3 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
5 See Securities Exchange Release No. 91238
(March 2, 2021), 86 FR 13404 (March 8, 2021) (SR–
Phlx–2021–10) (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).
4 17
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Rule 19.6.05 currently governs the
Exchange’s Short Term Option Series
Program. The term ‘‘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. 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.6 Rule 19.6.05(h) provides that
the Exchange may open weekly series
for options on the SPDR S&P 500 ETF
Trust (‘‘SPY’’) with Monday and
Wednesday expirations. The proposed
rule change amends Rule 19.6.05(h) to
also allow Monday and Wednesday
expiations for options on QQQ.
Specifically, the proposed rule change
amends Rule 19.6.05(h) to provide that
the Exchange may open for trading on
any Friday or Monday that is a business
day series of options on the SPDR S&P
500 ETF Trust (‘‘SPY’’) and series of
options on the Invesco QQQ Trust
(‘‘QQQ’’) to expire on any Monday of
the month that is a business day and is
not a Monday on which Quarterly
Options Series expire (‘‘Monday SPY
Expirations’’ and ‘‘Monday QQQ
Expirations’’), provided that any Friday
on which the Exchange opens for
trading a Monday SPY and QQQ
Expiration is one business week and one
business day prior to expiration. The
Exchange may also open for trading on
any Tuesday or Wednesday that is a
business day series of SPY options and
series of QQQ options to expire on any
Wednesday of the month that is a
business day and is not a Wednesday on
which Quarterly Options Series expire
(‘‘Wednesday SPY Expirations’’ and
‘‘Wednesday QQQ Expirations’’). The
Exchange may list up to five
consecutive series of each Monday SPY
and QQQ Expirations and up to five
consecutive series of each Wednesday
SPY and QQQ Expirations at one time;
the Exchange may have no more than a
total of five of each Monday SPY and
6 See Rule 16.1, definition of ‘‘Short Term Option
Series’’.
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QQQ Expirations and no more than a
total of five of each Wednesday SPY and
QQQ Expirations. Monday and
Wednesday SPY and QQQ Expirations
will be subject to the provisions of this
Rule.7 Additionally, the proposed rule
change amends Rule 19.6.05(b), which
currently excepts Monday and
Wednesday SPY Expirations from the
prohibition on Short Term Option
Series expiring in the same week in
which monthly option series on the
same class expire, to provide that, with
the exception of Monday and
Wednesday SPY and QQQ Expirations,
no Short Term Option Series may expire
in the same week in which monthly
option series on the same class expire.
The Exchange believes that the
introduction of QQQ Monday and
Wednesday Expirations will expand
hedging tools available to market
participants and assist in reducing the
premium cost of buying protection. By
offering Monday and Wednesday QQQ
Expirations, the proposed rule change
will allow market participants to
purchase QQQ based on their timing
needs and allow them to more
effectively tailor their investment and
hedging strategies.
The Exchange notes that, pursuant to
the definition of Short Term Option
Series,8 if the Exchange is not open for
business on a Wednesday, then a
Wednesday QQQ Expiration will expire
on the first business day immediately
prior to that Wednesday (e.g., Tuesday
of that week). However, regarding
Monday QQQ Expirations, if the
Exchange is not open for business on a
Monday, then a Monday QQQ
Expiration will expire on the first
business day following that Monday
(e.g., Tuesday of that week). This is the
same expiration process currently in
place for Monday and Wednesday SPY
Expirations. The Exchange believes that
it is appropriate to require Monday
expiration series to expire on the
Tuesday of that week, rather than the
previous business day (e.g., the previous
Friday), when expiration Monday does
not fall on a business day because the
immediately following Tuesday is closer
in time to the scheduled expiration date
of the series than the previous Friday.
Therefore, the following business day in
this case may be more representative of
anticipated market conditions than the
previous business day. The Exchange
notes that, not only are Monday SPY
Expirations treated in the same manner
7 The proposed rule change also updates a
reference to ‘‘Monday or Wednesday SPY
Expirations’’ in Rule 19.6.05 to refer to ‘‘Monday or
Wednesday SPY and QQQ Expirations’’.
8 See supra note 6.
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Fmt 4703
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today, but the same applies to weekly
index options listed pursuant to the
Nonstandard Expiration Program.9 The
Exchange also notes that permitting
Monday and Wednesday QQQ
Expirations to expire in the same week
as monthly options series on the same
class, like that of Monday and
Wednesday SPY Expirations, is
appropriate 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 listing Monday and
Wednesday QQQ Expirations each week
of the month will provide consistency
for investors and mitigate any potential
confusion regarding weekly listings.
The Exchange notes that the interval
between strike prices for the proposed
Monday and Wednesday QQQ
Expirations are the same as those for the
Monday and Wednesday SPY
Expirations and the Short Term Option
Series with Wednesday and Friday
expirations.10 Specifically, the proposed
Monday and Wednesday QQQ
Expirations have a $0.50 strike interval
minimum.11 As is the case with other
equity options series listed pursuant to
the Short Term Option Series Program,
Monday and Wednesday QQQ
Expirations are P.M.-settled. Also,
pursuant to Rule 19.6.05(a), the
Exchange may open up to 30 Short
Term Option Series for each expiration
date in each option class eligible for
participation in the Short Term Option
Series Program. This includes Monday
and Wednesday QQQ Expirations for
QQQ options. In addition to the 30
series per class, the Exchange may open
Short Term Option Series, including
Monday and Wednesday QQQ
Expirations, that are opened by other
securities exchanges in option classes
selected by such exchanges under their
respective short term option rules.
The Exchange does not believe that
listing series of P.M.-settled Monday
and Wednesday expirations for options
on QQQ will have any adverse impact
on fair and orderly markets as the
Exchange already lists weekly series
with the same settlement and
expirations for options on SPY, as well
as for weekly index options pursuant to
the Nonstandard Pilot Program,12 and
has not experienced any issues
regarding adverse market impact in
connection with the listing of these
series. The Exchange represents that it
9 See
Rule 29.11(j)(1).
Rule 19.6.05(e).
11 See id.
12 See supra note 9.
10 See
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Federal Register / Vol. 86, No. 81 / Thursday, April 29, 2021 / Notices
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 deploys such surveillance
programs to monitor Monday and
Wednesday SPY Expirations and has
not experienced any issues with
capacity in connection with listing
Monday and Wednesday SPY
Expirations. The Exchange intends to
begin implementation of the proposed
rule change on April 23, 2021, as Phlx
intends to begin listing weekly Monday
QQQ Expirations on this date.13 The
Exchange will issue a notice of the
planned implementation date to its
Members in advance.
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2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.14 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 15 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.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 16 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
In particular, the Exchange believes
the Short Term Option Series Program
has been successful to date and that
listing Monday and Wednesday QQQ
Expirations, like Monday and
Wednesday SPY Expirations already
listed for trading, will expand the ability
of investors to effectively hedge risk
against market movements stemming
13 See Options Trader Alert #2021—23, Nasdaq
PHLX Introduces Monday and Wednesday Weekly
Expirations For QQQ Options (April 12, 2021)
available at: https://www.nasdaqtrader.com/
MicroNews.aspx?id=23. Phlx anticipates listing
weekly Wednesday QQQ Expirations on April 27,
2021.
14 15 U.S.C. 78f(b).
15 15 U.S.C. 78f(b)(5).
16 Id.
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from economic releases or market events
that occur throughout the month. The
Exchange believes that offering Monday
and Wednesday QQQ Expirations will
create greater trading and hedging
opportunities and flexibility for
investors, allowing them to use QQQ
options listed pursuant to the Short
Term Option Series Program in a
manner more effectively tailored their
investment and hedging objectives. As
already noted, the Exchange currently
offers series with the same settlement
(P.M.) and expirations (Monday and
Wednesday) for options on SPY and for
weekly index options pursuant to the
Nonstandard Pilot Program.17 The
Exchange again notes that the proposed
rule change is substantively identical to
a rule recently adopted by Phlx and
filed with the Commission.18
The manner in which Monday QQQ
Expirations will expire when expiration
Monday lands on a holiday is consistent
with the manner in which Monday SPY
Expirations currently expire under the
same circumstances. The Exchange
believes that allowing Monday QQQ
Expirations that expire on a holiday to
fall on the following business day, as
opposed to the prior business day (as
applicable to Wednesday and Friday
expirations that expire on a holiday),
removes impediments to and perfects
the mechanism of a free and open
market and national by permitting such
Monday expirations to occur closer in
time to the scheduled expiration date of
the series, which may be more
representative of anticipated market
conditions. Additionally, the proposed
rule change to except Monday and
Wednesday QQQ Expirations from the
prohibition on Short Term Option
Series expiring in the same week in
which monthly option series on the
same class expire is consistent with the
same exception that currently applies to
Monday and Wednesday SPY
Expirations.19 The proposed rule change
is designed to provide consistency for
investors and mitigate any potential
confusion regarding weekly listings
each week of the month.
The Exchange does not believe that
listing series of P.M.-settled Monday
and Wednesday expirations for options
on QQQ will have any adverse impact
on fair and orderly markets as the
Exchange already lists series with the
same settlement and expirations for
options on SPY, as well as for weekly
index options pursuant to the
17 See
supra note 9.
supra note 5.
19 As stated herein, because monthly options
expire on Fridays, Monday and Wednesday weekly
options will not land on the same day.
18 See
PO 00000
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22749
Nonstandard Pilot Program,20 and has
not observed any adverse market impact
in connection with the listing of these
series. The Exchange represents that it
already has an adequate surveillance
program in place to detect and deter any
manipulative trading in Monday and
Wednesday expirations, including
Monday and Wednesday QQQ
Expirations, and that it has the
necessary systems capacity to support
the listing and trading of the new series.
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 does not believe that the
proposed rule change will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
as Monday and Wednesday QQQ
Expirations will be available for quoting
and trading on the Exchange for all
market participants. Therefore, all
market participants will equally be able
to transact in QQQ series listed with
Monday and Wednesday expirations for
trading on the Exchange.
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
as it only impacts the permissible
expirations for an option series listed on
the Exchange. As stated, another options
exchange has recently implemented a
substantively identical rule to permit
Monday and Wednesday QQQ
expirations on its exchange.21 As such,
this proposal is a competitive response
that will permit the Exchange to list the
same expirations for series in a
multiply-listed option as another
options exchange.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
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
20 See
21 See
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supra note 9.
supra note 5.
29APN1
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Federal Register / Vol. 86, No. 81 / Thursday, April 29, 2021 / Notices
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 22 and Rule 19b–
4(f)(6) thereunder.23
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act normally does not become operative
for 30 days after the date of its filing.
However, Rule 19b–4(f)(6)(iii) 24 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 five-day
prefiling requirement and the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Commission notes that it
recently approved Phlx’s substantially
similar proposal to list and trade
Monday QQQ Expirations and
Wednesday QQQ Expirations.25 The
Exchange has stated that waiver of the
five-day prefiling requirement and the
30-day operative delay will allow the
Exchange to implement the proposal as
a competitive response, permitting the
Exchange to list the same expirations for
series in a multiply-listed option as
another options exchange, at the same
time that such options exchange intends
to list such series. For these reasons, the
Commission believes that the proposed
rule change presents no novel issues
and that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest, and
will allow the Exchange to remain
competitive with other exchanges.
Accordingly, the Commission hereby
waives the prefiling requirement and
the operative delay and designates the
proposed rule change operative upon
filing.26
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
22 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Commission has waived that
requirement in this case.
24 17 CFR 240.19b–4(f)(6)(iii).
25 See Securities Exchange Act Release No. 91614
(April 20, 2021).
26 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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23 17
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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–
CboeEDGX–2021–023 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–CboeEDGX–2021–023. 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
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
PO 00000
Frm 00126
Fmt 4703
Sfmt 4703
Number SR–CboeEDGX–2021–023 and
should be submitted on or before May
20, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–08901 Filed 4–28–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91664; File No. SR–
NASDAQ–2021–028]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness 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
April 23, 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 April 22,
2021, 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
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
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/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
27 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\29APN1.SGM
29APN1
]]>Agencies
[Federal Register Volume 86, Number 81 (Thursday, April 29, 2021)]
[Notices]
[Pages 22747-22750]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08901]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91655; File No. SR-CboeEDGX-2021-023]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Rule 19.6.05 To Allow Monday and Wednesday Expirations for
Options Listed Pursuant to the Short Term Option Series Program on the
Invesco QQQ Trust (``QQQ'')
April 23, 2021.
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 April 21, 2021, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX Options'')
proposes to amend Rule 19.6.05 to allow Monday and Wednesday
expirations for options listed pursuant to the Short Term Option Series
Program on the Invesco QQQ Trust (``QQQ''). 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/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, 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 Rule 19.6.05 to allow Monday and
Wednesday expirations for options listed pursuant to the Short Term
Option Series Program on QQQ. The Exchange notes that this proposed
rule change is substantively identical to a rule change recently
adopted by Nasdaq Phlx LLC. (``Phlx''), filed with the Securities and
Exchange Commission (``Commission'').\5\
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\5\ See Securities Exchange Release No. 91238 (March 2, 2021),
86 FR 13404 (March 8, 2021) (SR-Phlx-2021-10) (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).
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[[Page 22748]]
Rule 19.6.05 currently governs the Exchange's Short Term Option
Series Program. The term ``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. 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.\6\
Rule 19.6.05(h) provides that the Exchange may open weekly series for
options on the SPDR S&P 500 ETF Trust (``SPY'') with Monday and
Wednesday expirations. The proposed rule change amends Rule 19.6.05(h)
to also allow Monday and Wednesday expiations for options on QQQ.
Specifically, the proposed rule change amends Rule 19.6.05(h) to
provide that the Exchange may open for trading on any Friday or Monday
that is a business day series of options on the SPDR S&P 500 ETF Trust
(``SPY'') and series of options on the Invesco QQQ Trust (``QQQ'') to
expire on any Monday of the month that is a business day and is not a
Monday on which Quarterly Options Series expire (``Monday SPY
Expirations'' and ``Monday QQQ Expirations''), provided that any Friday
on which the Exchange opens for trading a Monday SPY and QQQ Expiration
is one business week and one business day prior to expiration. The
Exchange may also open for trading on any Tuesday or Wednesday that is
a business day series of SPY options and series of QQQ options to
expire on any Wednesday of the month that is a business day and is not
a Wednesday on which Quarterly Options Series expire (``Wednesday SPY
Expirations'' and ``Wednesday QQQ Expirations''). The Exchange may list
up to five consecutive series of each Monday SPY and QQQ Expirations
and up to five consecutive series of each Wednesday SPY and QQQ
Expirations at one time; the Exchange may have no more than a total of
five of each Monday SPY and QQQ Expirations and no more than a total of
five of each Wednesday SPY and QQQ Expirations. Monday and Wednesday
SPY and QQQ Expirations will be subject to the provisions of this
Rule.\7\ Additionally, the proposed rule change amends Rule 19.6.05(b),
which currently excepts Monday and Wednesday SPY Expirations from the
prohibition on Short Term Option Series expiring in the same week in
which monthly option series on the same class expire, to provide that,
with the exception of Monday and Wednesday SPY and QQQ Expirations, no
Short Term Option Series may expire in the same week in which monthly
option series on the same class expire.
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\6\ See Rule 16.1, definition of ``Short Term Option Series''.
\7\ The proposed rule change also updates a reference to
``Monday or Wednesday SPY Expirations'' in Rule 19.6.05 to refer to
``Monday or Wednesday SPY and QQQ Expirations''.
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The Exchange believes that the introduction of QQQ Monday and
Wednesday Expirations will expand hedging tools available to market
participants and assist in reducing the premium cost of buying
protection. By offering Monday and Wednesday QQQ Expirations, the
proposed rule change will allow market participants to purchase QQQ
based on their timing needs and allow them to more effectively tailor
their investment and hedging strategies.
The Exchange notes that, pursuant to the definition of Short Term
Option Series,\8\ if the Exchange is not open for business on a
Wednesday, then a Wednesday QQQ Expiration will expire on the first
business day immediately prior to that Wednesday (e.g., Tuesday of that
week). However, regarding Monday QQQ Expirations, if the Exchange is
not open for business on a Monday, then a Monday QQQ Expiration will
expire on the first business day following that Monday (e.g., Tuesday
of that week). This is the same expiration process currently in place
for Monday and Wednesday SPY Expirations. The Exchange believes that it
is appropriate to require Monday expiration series to expire on the
Tuesday of that week, rather than the previous business day (e.g., the
previous Friday), when expiration Monday does not fall on a business
day because the immediately following Tuesday is closer in time to the
scheduled expiration date of the series than the previous Friday.
Therefore, the following business day in this case may be more
representative of anticipated market conditions than the previous
business day. The Exchange notes that, not only are Monday SPY
Expirations treated in the same manner today, but the same applies to
weekly index options listed pursuant to the Nonstandard Expiration
Program.\9\ The Exchange also notes that permitting Monday and
Wednesday QQQ Expirations to expire in the same week as monthly options
series on the same class, like that of Monday and Wednesday SPY
Expirations, is appropriate 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 listing Monday and Wednesday
QQQ Expirations each week of the month will provide consistency for
investors and mitigate any potential confusion regarding weekly
listings.
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\8\ See supra note 6.
\9\ See Rule 29.11(j)(1).
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The Exchange notes that the interval between strike prices for the
proposed Monday and Wednesday QQQ Expirations are the same as those for
the Monday and Wednesday SPY Expirations and the Short Term Option
Series with Wednesday and Friday expirations.\10\ Specifically, the
proposed Monday and Wednesday QQQ Expirations have a $0.50 strike
interval minimum.\11\ As is the case with other equity options series
listed pursuant to the Short Term Option Series Program, Monday and
Wednesday QQQ Expirations are P.M.-settled. Also, pursuant to Rule
19.6.05(a), the Exchange may open up to 30 Short Term Option Series for
each expiration date in each option class eligible for participation in
the Short Term Option Series Program. This includes Monday and
Wednesday QQQ Expirations for QQQ options. In addition to the 30 series
per class, the Exchange may open Short Term Option Series, including
Monday and Wednesday QQQ Expirations, that are opened by other
securities exchanges in option classes selected by such exchanges under
their respective short term option rules.
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\10\ See Rule 19.6.05(e).
\11\ See id.
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The Exchange does not believe that listing series of P.M.-settled
Monday and Wednesday expirations for options on QQQ will have any
adverse impact on fair and orderly markets as the Exchange already
lists weekly series with the same settlement and expirations for
options on SPY, as well as for weekly index options pursuant to the
Nonstandard Pilot Program,\12\ and has not experienced any issues
regarding adverse market impact in connection with the listing of these
series. The Exchange represents that it
[[Page 22749]]
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 deploys such
surveillance programs to monitor Monday and Wednesday SPY Expirations
and has not experienced any issues with capacity in connection with
listing Monday and Wednesday SPY Expirations. The Exchange intends to
begin implementation of the proposed rule change on April 23, 2021, as
Phlx intends to begin listing weekly Monday QQQ Expirations on this
date.\13\ The Exchange will issue a notice of the planned
implementation date to its Members in advance.
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\12\ See supra note 9.
\13\ See Options Trader Alert #2021--23, Nasdaq PHLX Introduces
Monday and Wednesday Weekly Expirations For QQQ Options (April 12,
2021) available at: https://www.nasdaqtrader.com/MicroNews.aspx?id=23. Phlx anticipates listing weekly Wednesday QQQ
Expirations on April 27, 2021.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\14\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \15\ 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \16\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
\16\ Id.
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In particular, the Exchange believes the Short Term Option Series
Program has been successful to date and that listing Monday and
Wednesday QQQ Expirations, like Monday and Wednesday SPY Expirations
already listed for trading, will expand the ability of investors to
effectively hedge risk against market movements stemming from economic
releases or market events that occur throughout the month. The Exchange
believes that offering Monday and Wednesday QQQ Expirations will create
greater trading and hedging opportunities and flexibility for
investors, allowing them to use QQQ options listed pursuant to the
Short Term Option Series Program in a manner more effectively tailored
their investment and hedging objectives. As already noted, the Exchange
currently offers series with the same settlement (P.M.) and expirations
(Monday and Wednesday) for options on SPY and for weekly index options
pursuant to the Nonstandard Pilot Program.\17\ The Exchange again notes
that the proposed rule change is substantively identical to a rule
recently adopted by Phlx and filed with the Commission.\18\
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\17\ See supra note 9.
\18\ See supra note 5.
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The manner in which Monday QQQ Expirations will expire when
expiration Monday lands on a holiday is consistent with the manner in
which Monday SPY Expirations currently expire under the same
circumstances. The Exchange believes that allowing Monday QQQ
Expirations that expire on a holiday to fall on the following business
day, as opposed to the prior business day (as applicable to Wednesday
and Friday expirations that expire on a holiday), removes impediments
to and perfects the mechanism of a free and open market and national by
permitting such Monday expirations to occur closer in time to the
scheduled expiration date of the series, which may be more
representative of anticipated market conditions. Additionally, the
proposed rule change to except Monday and Wednesday QQQ Expirations
from the prohibition on Short Term Option Series expiring in the same
week in which monthly option series on the same class expire is
consistent with the same exception that currently applies to Monday and
Wednesday SPY Expirations.\19\ The proposed rule change is designed to
provide consistency for investors and mitigate any potential confusion
regarding weekly listings each week of the month.
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\19\ As stated herein, because monthly options expire on
Fridays, Monday and Wednesday weekly options will not land on the
same day.
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The Exchange does not believe that listing series of P.M.-settled
Monday and Wednesday expirations for options on QQQ will have any
adverse impact on fair and orderly markets as the Exchange already
lists series with the same settlement and expirations for options on
SPY, as well as for weekly index options pursuant to the Nonstandard
Pilot Program,\20\ and has not observed any adverse market impact in
connection with the listing of these series. The Exchange represents
that it already has an adequate surveillance program in place to detect
and deter any manipulative trading in Monday and Wednesday expirations,
including Monday and Wednesday QQQ Expirations, and that it has the
necessary systems capacity to support the listing and trading of the
new series.
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\20\ See supra note 9.
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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 does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act as Monday and Wednesday QQQ
Expirations will be available for quoting and trading on the Exchange
for all market participants. Therefore, all market participants will
equally be able to transact in QQQ series listed with Monday and
Wednesday expirations for trading on the Exchange.
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 as it only
impacts the permissible expirations for an option series listed on the
Exchange. As stated, another options exchange has recently implemented
a substantively identical rule to permit Monday and Wednesday QQQ
expirations on its exchange.\21\ As such, this proposal is a
competitive response that will permit the Exchange to list the same
expirations for series in a multiply-listed option as another options
exchange.
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\21\ See supra note 5.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
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
[[Page 22750]]
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 \22\ and Rule 19b-4(f)(6) thereunder.\23\
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\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Commission has waived that requirement in this case.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \24\ 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 five-day prefiling requirement
and the 30-day operative delay so that the proposal may become
operative immediately upon filing. The Commission notes that it
recently approved Phlx's substantially similar proposal to list and
trade Monday QQQ Expirations and Wednesday QQQ Expirations.\25\ The
Exchange has stated that waiver of the five-day prefiling requirement
and the 30-day operative delay will allow the Exchange to implement the
proposal as a competitive response, permitting the Exchange to list the
same expirations for series in a multiply-listed option as another
options exchange, at the same time that such options exchange intends
to list such series. For these reasons, the Commission believes that
the proposed rule change presents no novel issues and that waiver of
the 30-day operative delay is consistent with the protection of
investors and the public interest, and will allow the Exchange to
remain competitive with other exchanges. Accordingly, the Commission
hereby waives the prefiling requirement and the operative delay and
designates the proposed rule change operative upon filing.\26\
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\24\ 17 CFR 240.19b-4(f)(6)(iii).
\25\ See Securities Exchange Act Release No. 91614 (April 20,
2021).
\26\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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-CboeEDGX-2021-023 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-CboeEDGX-2021-023. 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 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-CboeEDGX-2021-023 and should be
submitted on or before May 20, 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. 2021-08901 Filed 4-28-21; 8:45 am]
BILLING CODE 8011-01-P
