Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 4.5(d) To Allow Monday and Wednesday Expirations for Options Listed Pursuant to the Short Term Option Series Program on the Invesco QQQ Trust (“QQQ”), 22744-22747 [2021-08904]
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Federal Register / Vol. 86, No. 81 / Thursday, April 29, 2021 / Notices
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–BX–2021–017 and should
be submitted on or before May 20, 2021.
2021, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
J. Matthew DeLesDernier,
Assistant Secretary.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
[FR Doc. 2021–08903 Filed 4–28–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91659; File No. SR–CBOE–
2021–028]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 4.5(d) To
Allow Monday and Wednesday
Expirations for Options Listed
Pursuant to the Short Term Option
Series Program on the Invesco QQQ
Trust (‘‘QQQ’’)
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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,
CFR 200.30–3(a)(12).
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
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
Rule 4.5(d) 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://www.cboe.com/
AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 4.5(d) 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
33 17
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U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
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rule change recently adopted by Nasdaq
Phlx LLC. (‘‘Phlx’’), filed with the
Securities and Exchange Commission
(‘‘Commission’’).5
Rule 4.5(d) currently governs the
Exchange’s Short Term Option Series
Program. Short Term Option Series are
weekly series in an option class that is
approved for listing and trading on the
Exchange, which may be opened for
trading on any Thursday or Friday that
is a business day and expires that expire
at the close of business on each of the
next five Fridays that are business days
and are not Fridays on which monthly
options series or Quarterly Options
Series expire. Rule 4.5(d) also 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 4.5(d) to also
allow Monday and Wednesday
expiations for options on QQQ.
Specifically, the proposed rule change
amends Rule 4.5(d) 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’’) (‘‘Monday SPY
Expiration Opening Date’’) 6 and series
of options on the Invesco QQQ Trust
(‘‘QQQ’’) (‘‘Monday QQQ Expiration
Opening Date’’) that expire at the close
of business each of the next five
Mondays that are business days and are
no Mondays on which Quarterly
Options Series expire (‘‘Monday SPY
Expirations’’ and ‘‘Monday QQQ
Expirations’’), provided that any
Monday SPY and QQQ Expiration
Opening Date that is a Friday 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 (‘‘Wednesday SPY
Expiration Opening Date’’) and series of
QQQ options (‘‘Wednesday QQQ
Expiration Opening Date’’) that expire at
the close of business on each of the next
five Wednesdays that are business days
and are not Wednesdays on which
Quarterly Options Series expire
(‘‘Wednesday SPY Expirations’’ and
‘‘Wednesday QQQ Expirations’’). 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
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).
6 The proposed rule change also relocates certain
defined terms within Rule 4.5(d) for additional
clarity and ease of understanding.
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five of each Wednesday SPY and QQQ
Expirations. Non-Monday and nonWednesday SPY and QQQ Expirations
are not included as part of this count.
If the Exchange is not open for business
on the respective Friday or Monday, the
Monday SPY and QQQ Expiration
Opening Date will be the first business
day immediately prior to that respective
Friday or Monday. If the Exchange is
not open for business on a Monday, the
expiration date for a Monday SPY and
QQQ Expiration will be the first
business day immediately following that
Monday. If the Exchange is not open for
business on the respective Tuesday or
Wednesday, the Wednesday SPY and
QQQ Expiration Opening Date will be
the first business day immediately prior
to that respective Tuesday or
Wednesday. Similarly, if the Exchange
is not open for business on a
Wednesday, the expiration date for a
Wednesday SPY and QQQ Expiration
will be the first business day
immediately prior to that Wednesday.
Additionally, the proposed rule change
amends Rule 4.5(d)(2), 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 no Short Term Option
Series (excluding Monday and
Wednesday SPY and QQQ Expirations)
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 proposed rule change, 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
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18:32 Apr 28, 2021
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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.7 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.8 Specifically, the proposed
Monday and Wednesday QQQ
Expirations have a $0.50 strike interval
minimum.9 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 4.5(d)(1), 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
7 See
Rule 4.13(e)(1).
Rule 4.5(d)(5).
9 See id.
8 See
PO 00000
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22745
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,10 and
has not experienced any issues
regarding adverse market impact in
connection with the listing of these
series. The Exchange represents that it
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.11 The
Exchange will issue a notice of the
planned implementation date to its
Trading Permit Holders (‘‘TPHs’’) in
advance.12
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.13 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 14 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
10 See
supra note 7.
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.
12 See Rule 1.5, which provides that the Exchange
announces to Trading Permit Holders all
determinations it makes pursuant to the Rules via:
(1) Specifications, Notices, or Regulatory Circulars
with appropriate advanced notice, which are posted
on the Exchange’s website, or as otherwise provided
in the Rules; (2) electronic message; or (3) other
communication method as provided in the Rules.
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
11 See
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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) 15 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
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.16 The
Exchange again notes that the proposed
rule change is substantively identical to
a rule recently adopted by Phlx and
filed with the Commission.17
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
17 See
supra note 7.
supra note 5.
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18:32 Apr 28, 2021
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
18 As stated herein, because monthly options
expire on Fridays, Monday and Wednesday weekly
options will not land on the same day.
19 See supra note 7.
15 Id.
16 See
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.18 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
Nonstandard Pilot Program,19 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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PO 00000
Frm 00122
Fmt 4703
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Monday and Wednesday QQQ
expirations on its exchange.20 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
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 21 and Rule 19b–
4(f)(6) thereunder.22
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) 23 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.24 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
20 See
supra note 5.
U.S.C. 78s(b)(3)(A).
22 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.
23 17 CFR 240.19b–4(f)(6)(iii).
24 See Securities Exchange Act Release No. 91614
(April 20, 2021).
21 15
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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
E:\FR\FM\29APN1.SGM
29APN1
]]>Agencies
[Federal Register Volume 86, Number 81 (Thursday, April 29, 2021)]
[Notices]
[Pages 22744-22747]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08904]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91659; File No. SR-CBOE-2021-028]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 4.5(d) 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 Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') 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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend Rule 4.5(d) 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 4.5(d) 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).
---------------------------------------------------------------------------
Rule 4.5(d) currently governs the Exchange's Short Term Option
Series Program. Short Term Option Series are weekly series in an option
class that is approved for listing and trading on the Exchange, which
may be opened for trading on any Thursday or Friday that is a business
day and expires that expire at the close of business on each of the
next five Fridays that are business days and are not Fridays on which
monthly options series or Quarterly Options Series expire. Rule 4.5(d)
also 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 4.5(d) to also allow
Monday and Wednesday expiations for options on QQQ. Specifically, the
proposed rule change amends Rule 4.5(d) 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'') (``Monday SPY
Expiration Opening Date'') \6\ and series of options on the Invesco QQQ
Trust (``QQQ'') (``Monday QQQ Expiration Opening Date'') that expire at
the close of business each of the next five Mondays that are business
days and are no Mondays on which Quarterly Options Series expire
(``Monday SPY Expirations'' and ``Monday QQQ Expirations''), provided
that any Monday SPY and QQQ Expiration Opening Date that is a Friday 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 (``Wednesday SPY Expiration
Opening Date'') and series of QQQ options (``Wednesday QQQ Expiration
Opening Date'') that expire at the close of business on each of the
next five Wednesdays that are business days and are not Wednesdays on
which Quarterly Options Series expire (``Wednesday SPY Expirations''
and ``Wednesday QQQ Expirations''). 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
[[Page 22745]]
five of each Wednesday SPY and QQQ Expirations. Non-Monday and non-
Wednesday SPY and QQQ Expirations are not included as part of this
count. If the Exchange is not open for business on the respective
Friday or Monday, the Monday SPY and QQQ Expiration Opening Date will
be the first business day immediately prior to that respective Friday
or Monday. If the Exchange is not open for business on a Monday, the
expiration date for a Monday SPY and QQQ Expiration will be the first
business day immediately following that Monday. If the Exchange is not
open for business on the respective Tuesday or Wednesday, the Wednesday
SPY and QQQ Expiration Opening Date will be the first business day
immediately prior to that respective Tuesday or Wednesday. Similarly,
if the Exchange is not open for business on a Wednesday, the expiration
date for a Wednesday SPY and QQQ Expiration will be the first business
day immediately prior to that Wednesday. Additionally, the proposed
rule change amends Rule 4.5(d)(2), 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 no Short Term Option Series
(excluding Monday and Wednesday SPY and QQQ Expirations) may expire in
the same week in which monthly option series on the same class expire.
---------------------------------------------------------------------------
\6\ The proposed rule change also relocates certain defined
terms within Rule 4.5(d) for additional clarity and ease of
understanding.
---------------------------------------------------------------------------
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 proposed rule change, 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.\7\ 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.
---------------------------------------------------------------------------
\7\ See Rule 4.13(e)(1).
---------------------------------------------------------------------------
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.\8\ Specifically, the
proposed Monday and Wednesday QQQ Expirations have a $0.50 strike
interval minimum.\9\ 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
4.5(d)(1), 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.
---------------------------------------------------------------------------
\8\ See Rule 4.5(d)(5).
\9\ See id.
---------------------------------------------------------------------------
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,\10\ and has not experienced any issues
regarding adverse market impact in connection with the listing of these
series. The Exchange represents that it 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.\11\ The Exchange
will issue a notice of the planned implementation date to its Trading
Permit Holders (``TPHs'') in advance.\12\
---------------------------------------------------------------------------
\10\ See supra note 7.
\11\ 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.
\12\ See Rule 1.5, which provides that the Exchange announces to
Trading Permit Holders all determinations it makes pursuant to the
Rules via: (1) Specifications, Notices, or Regulatory Circulars with
appropriate advanced notice, which are posted on the Exchange's
website, or as otherwise provided in the Rules; (2) electronic
message; or (3) other communication method as provided in the Rules.
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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.\13\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \14\ 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
[[Page 22746]]
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) \15\ requirement that the rules
of an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ Id.
---------------------------------------------------------------------------
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.\16\ The Exchange again notes
that the proposed rule change is substantively identical to a rule
recently adopted by Phlx and filed with the Commission.\17\
---------------------------------------------------------------------------
\16\ See supra note 7.
\17\ 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.\18\ The proposed rule change is designed to
provide consistency for investors and mitigate any potential confusion
regarding weekly listings each week of the month.
---------------------------------------------------------------------------
\18\ As stated herein, because monthly options expire on
Fridays, Monday and Wednesday weekly options will not land on the
same day.
---------------------------------------------------------------------------
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,\19\ 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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\19\ See supra note 7.
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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.\20\ 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.
---------------------------------------------------------------------------
\20\ See supra note 5.
---------------------------------------------------------------------------
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 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 \21\ and Rule 19b-
4(f)(6) thereunder.\22\
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 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.
---------------------------------------------------------------------------
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) \23\ 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.\24\ 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
[[Page 22747]]
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\
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\23\ 17 CFR 240.19b-4(f)(6)(iii).
\24\ See Securities Exchange Act Release No. 91614 (April 20,
2021).
\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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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-CBOE-2021-028 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-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 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.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-08904 Filed 4-28-21; 8:45 am]
BILLING CODE 8011-01-P
