Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Short Term Option Series Program To Permit Monday and Wednesday Expirations for Options Listed Pursuant to the Short Term Option Series Program on the Invesco QQQ Trust SM, 22728-22731 [2021-08902]

Download as PDF 22728 Federal Register / Vol. 86, No. 81 / Thursday, April 29, 2021 / Notices submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2020–98 and should be submitted on or before May 20, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–08905 Filed 4–28–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91656; File No. SR–BOX– 2021–10] Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Short Term Option Series Program To Permit Monday and Wednesday Expirations for Options Listed Pursuant to the Short Term Option Series Program on the Invesco QQQ Trust SM Series 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 21, 2021, BOX Exchange LLC (the ‘‘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 self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule from interested persons. jbell on DSKJLSW7X2PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend IM– 5050–6 (Short Term Option Series Program) 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 from the principal office of the Exchange, at the Commission’s Public Reference Room and also on the Exchange’s internet website at https://boxoptions.com. 15 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 18:32 Apr 28, 2021 Jkt 253001 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 self-regulatory organization 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 self-regulatory organization 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 IM– 5050–6 (Short Term Option Series Program) 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. This is a competitive filing that is based on a proposal recently submitted by Nasdaq Phlx LLC (‘‘Phlx’’).3 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.4 The Exchange is proposing to amend IM–5050–6 to 3 See Securities Exchange Act Release No. 91238 (March 2, 2021) (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). 4 BOX Rule 100(a)(65) provides the term ‘‘Short Term Option Series’’ which states that a series in an option class that is approved for listing and trading on BOX 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. PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 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 IM–5050–6(d), 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 IM–5050–6(c), 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. Monday and Wednesday Expirations The interval between strike prices for the proposed Monday and Wednesday QQQ Expirations will be the same as those for the current Short Term Option Series for Wednesday and Friday expirations applicable to the Program.5 Specifically, the Monday and Wednesday QQQ Expirations will have a $0.50 strike interval minimum.6 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 BOX Rule 100(a)(65), 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 BOX Rule 100(a)(65), a Wednesday expiration series shall expire on the first business day 5 See 6 See E:\FR\FM\29APN1.SGM IM–5050–6(b)(5). IM–5050–6(b)(5). 29APN1 Federal Register / Vol. 86, No. 81 / Thursday, April 29, 2021 / Notices 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.7 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.8 Also, Nasdaq Phlx LLC (‘‘Phlx’’) 9 and Nasdaq ISE, LLC (‘‘ISE’’) 10 use the same procedure for options on the Nasdaq-100® (‘‘NDX’’) with Monday expirations that are listed pursuant to its 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.11 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.12 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 IM–5050–6(b)(2), 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 7 See IM–5050–6(d). 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.’’ 9 See Phlx Options 4A, Section 12(b)(5). 10 See ISE Supplementary Material .07 to Options 4A, Section 12. 11 See IM–5050–6(b)(1). 12 See IM–5050–6(b)(1). jbell on DSKJLSW7X2PROD with NOTICES 8 See VerDate Sep<11>2014 18:32 Apr 28, 2021 Jkt 253001 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.13 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. 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Securities Exchange Act of 1934 (the ‘‘Act’’),14 in general, and Section 6(b)(5) 13 See 14 15 PO 00000 current IM–5050–6(b)(2). U.S.C. 78f(b). Frm 00105 Fmt 4703 Sfmt 4703 22729 of the Act,15 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. BOX currently lists Monday and Wednesday SPY Expirations.16 Also, Cboe 17 currently permits Monday and Wednesday expirations for other options with a weekly expiration, such as options on the SPX pursuant to its Nonstandard Expirations Pilot Program and Phlx 18 and ISE 19 currently permit Monday and Wednesday expirations for other options with a weekly expiration on NDX pursuant to its 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.20 Cboe uses the same procedure for SPX 15 15 U.S.C. 78f(b)(5). IM–5050–6(c) and (d). 17 See note 8 above. 18 See note 9 above. 19 See note 10 above. 20 See IM–5050–6(d). 16 See E:\FR\FM\29APN1.SGM 29APN1 22730 Federal Register / Vol. 86, No. 81 / Thursday, April 29, 2021 / Notices jbell on DSKJLSW7X2PROD with NOTICES 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 and ISE 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 IM–5050–6 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 IM–5050–6(b)(2) 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 not necessary or appropriate in furtherance of the purposes of the Act. In this regard and as indicated above, the Exchange notes that the rule change is being proposed as a competitive response to a filing submitted by Phlx.21 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 BOX. As noted above, Cboe uses the same procedure for SPX options with Monday expirations 21 See supra, note 3. VerDate Sep<11>2014 18:32 Apr 28, 2021 Jkt 253001 that are listed pursuant to its Nonstandard Expirations Pilot Program and that are scheduled to expire on a holiday, as do Phlx and ISE 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 intramarket 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 The Exchange has 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 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 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 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 intention to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 24 17 CFR 240.19b–4(f)(6)(iii). 23 17 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 Wednesday QQQ Expirations.25 The Exchange has stated that waiver of the operative delay will allow the Exchange to list and trade the proposed product immediately, allowing the Exchange to compete with the exchanges that have this product in place. 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 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 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– BOX–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–BOX–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 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). E:\FR\FM\29APN1.SGM 29APN1 Federal Register / Vol. 86, No. 81 / Thursday, April 29, 2021 / Notices 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–BOX–2021–10 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. 2021–08902 Filed 4–28–21; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–91668; File No. SR– PEARL–2021–21] jbell on DSKJLSW7X2PROD with NOTICES 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, MIAX PEARL, LLC (‘‘MIAX Pearl’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. VerDate Sep<11>2014 18:32 Apr 28, 2021 Jkt 253001 The Exchange proposes to amend its Rulebook to permit Monday and Wednesday expirations for options listed pursuant to the Short Term Options 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://www.miaxoptions.com/rulefilings/pearl at MIAX Pearl’s principal office, 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. 1. Purpose Self-Regulatory Organizations; MIAX PEARL, 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 1 15 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION 27 17 (‘‘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. The Exchange proposes to amend Policy .02 (Short Term Option Series Program) of Exchange Rule 404, Series of Option Contracts Open for Trading, to permit Monday and Wednesday expirations for options listed pursuant to the Short Term Options Series Program (‘‘Program’’) on QQQ. A Short Term Options Series is 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 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 22731 prior to that expiration.3 The Exchange is proposing to amend Policy .02 of Exchange Rule 404 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 Policy .02, 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 Policy .02, 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. Monday and Wednesday Expirations The interval between strike prices for the proposed Monday and Wednesday QQQ Expirations will be the same as 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 Expirations series will be P.M.-settled. Pursuant to Rule 100,6 with respect to the Program, if Monday is not a business day the series shall expire on the first 3 See Exchange Rulebook, as of Apr. 13, 2021, Rule 100, Definitions, of ‘‘Short Term Options Series,’’ available at: https://www.miaxoptions.com/ sites/default/files/page-files/MIAX_Pearl_ Exchange_Rules_04132021.pdf. 4 See Policy .02(e) of Exchange Rule 404. 5 Id. 6 Rule 100, Definition of ‘‘Short Term Option Series.’’ E:\FR\FM\29APN1.SGM 29APN1

Agencies

[Federal Register Volume 86, Number 81 (Thursday, April 29, 2021)]
[Notices]
[Pages 22728-22731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08902]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91656; File No. SR-BOX-2021-10]


Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the 
Short Term Option Series Program To Permit Monday and Wednesday 
Expirations for Options Listed Pursuant to the Short Term Option Series 
Program on the Invesco QQQ Trust SM Series 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 21, 2021, BOX Exchange LLC (the ``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 self-regulatory organization. The Commission is 
publishing this notice to solicit comments on the proposed rule from 
interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend IM-5050-6 (Short Term Option Series 
Program) 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 from the principal office of the Exchange, at the 
Commission's Public Reference Room and also on the Exchange's internet 
website at https://boxoptions.com.

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 self-regulatory organization 
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 self-regulatory organization 
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 IM-5050-6 (Short Term Option Series 
Program) 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. This is a competitive 
filing that is based on a proposal recently submitted by Nasdaq Phlx 
LLC (``Phlx'').\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 91238 (March 2, 
2021) (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).
---------------------------------------------------------------------------

    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.\4\ The Exchange is 
proposing to amend IM-5050-6 to permit the listing of options series 
that expire on Mondays and Wednesdays in QQQ.
---------------------------------------------------------------------------

    \4\ BOX Rule 100(a)(65) provides the term ``Short Term Option 
Series'' which states that a series in an option class that is 
approved for listing and trading on BOX 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.
---------------------------------------------------------------------------

Monday Expirations
    As proposed, with respect to Monday QQQ Expirations within IM-5050-
6(d), 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 IM-
5050-6(c), 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.
Monday and Wednesday Expirations
    The interval between strike prices for the proposed Monday and 
Wednesday QQQ Expirations will be the same as those for the current 
Short Term Option Series for Wednesday and Friday expirations 
applicable to the Program.\5\ Specifically, the Monday and Wednesday 
QQQ Expirations will have a $0.50 strike interval minimum.\6\ 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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    \5\ See IM-5050-6(b)(5).
    \6\ See IM-5050-6(b)(5).
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    Pursuant to BOX Rule 100(a)(65), 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 BOX Rule 100(a)(65), a 
Wednesday expiration series shall expire on the first business day

[[Page 22729]]

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.\7\ 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.\8\ Also, Nasdaq Phlx LLC (``Phlx'') \9\ and Nasdaq ISE, LLC 
(``ISE'') \10\ use the same procedure for options on the Nasdaq-
100[supreg] (``NDX'') with Monday expirations that are listed pursuant 
to its Nonstandard Expirations Pilot Programs, respectively.
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    \7\ See IM-5050-6(d).
    \8\ 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.''
    \9\ See Phlx Options 4A, Section 12(b)(5).
    \10\ 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.\11\ 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.\12\ 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.
---------------------------------------------------------------------------

    \11\ See IM-5050-6(b)(1).
    \12\ See IM-5050-6(b)(1).
---------------------------------------------------------------------------

    Finally, the Exchange is amending IM-5050-6(b)(2), 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.\13\ 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.
---------------------------------------------------------------------------

    \13\ See current IM-5050-6(b)(2).
---------------------------------------------------------------------------

    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.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Securities Exchange Act of 1934 
(the ``Act''),\14\ in general, and Section 6(b)(5) of the Act,\15\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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. BOX 
currently lists Monday and Wednesday SPY Expirations.\16\ Also, Cboe 
\17\ currently permits Monday and Wednesday expirations for other 
options with a weekly expiration, such as options on the SPX pursuant 
to its Nonstandard Expirations Pilot Program and Phlx \18\ and ISE \19\ 
currently permit Monday and Wednesday expirations for other options 
with a weekly expiration on NDX pursuant to its Nonstandard Expirations 
Pilot Programs, respectively.
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    \16\ See IM-5050-6(c) and (d).
    \17\ See note 8 above.
    \18\ See note 9 above.
    \19\ See note 10 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.\20\ Cboe uses the same procedure for SPX

[[Page 22730]]

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 and ISE for NDX options with Monday 
expirations that are listed pursuant to their Nonstandard Expirations 
Pilot Programs, respectively.
---------------------------------------------------------------------------

    \20\ See IM-5050-6(d).
---------------------------------------------------------------------------

    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 IM-5050-6 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 IM-5050-6(b)(2) 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 not necessary or appropriate in 
furtherance of the purposes of the Act. In this regard and as indicated 
above, the Exchange notes that the rule change is being proposed as a 
competitive response to a filing submitted by Phlx.\21\ 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 BOX. As noted above, Cboe 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 and ISE for NDX options with Monday 
expirations that are listed pursuant to their Nonstandard Expirations 
Pilot Programs, respectively.
---------------------------------------------------------------------------

    \21\ See supra, note 3.
---------------------------------------------------------------------------

    The Exchange does not believe the proposal will impose any burden 
on intramarket 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

    The Exchange has 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 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 intention to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    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 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 operative 
delay will allow the Exchange to list and trade the proposed product 
immediately, allowing the Exchange to compete with the exchanges that 
have this product in place. 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 operative delay and designates the proposed rule 
change operative upon filing.\26\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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-BOX-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-BOX-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

[[Page 22731]]

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-BOX-2021-10 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\
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-08902 Filed 4-28-21; 8:45 am]
BILLING CODE 8011-01-P
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