Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Permit Monday and Wednesday Expirations for Options Listed Pursuant to the Short Term Option Series Program on the Invesco QQQ TrustSM, 22750-22753 [2021-08906]
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Federal Register / Vol. 86, No. 81 / Thursday, April 29, 2021 / Notices
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 22 and Rule 19b–
4(f)(6) thereunder.23
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act normally does not become operative
for 30 days after the date of its filing.
However, Rule 19b–4(f)(6)(iii) 24 permits
the Commission to designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the five-day
prefiling requirement and the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Commission notes that it
recently approved Phlx’s substantially
similar proposal to list and trade
Monday QQQ Expirations and
Wednesday QQQ Expirations.25 The
Exchange has stated that waiver of the
five-day prefiling requirement and the
30-day operative delay will allow the
Exchange to implement the proposal as
a competitive response, permitting the
Exchange to list the same expirations for
series in a multiply-listed option as
another options exchange, at the same
time that such options exchange intends
to list such series. For these reasons, the
Commission believes that the proposed
rule change presents no novel issues
and that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest, and
will allow the Exchange to remain
competitive with other exchanges.
Accordingly, the Commission hereby
waives the prefiling requirement and
the operative delay and designates the
proposed rule change operative upon
filing.26
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
22 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Commission has waived that
requirement in this case.
24 17 CFR 240.19b–4(f)(6)(iii).
25 See Securities Exchange Act Release No. 91614
(April 20, 2021).
26 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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23 17
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investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeEDGX–2021–023 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeEDGX–2021–023. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
PO 00000
Frm 00126
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Number SR–CboeEDGX–2021–023 and
should be submitted on or before May
20, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–08901 Filed 4–28–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91664; File No. SR–
NASDAQ–2021–028]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Permit
Monday and Wednesday Expirations
for Options Listed Pursuant to the
Short Term Option Series Program on
the Invesco QQQ TrustSM Series
(‘‘QQQ’’) ETF Trust
April 23, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 22,
2021, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to permit
Monday and Wednesday expirations for
options listed pursuant to the Short
Term Option Series Program on the
Invesco QQQ TrustSM Series (‘‘QQQ’’)
ETF Trust.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/nasdaq/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
27 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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
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The Exchange proposes to amend The
Nasdaq Options Market LLC (‘‘NOM’’)
rules at Options 4, Section 5 at
Supplementary Material .03 to permit
Monday and Wednesday expirations for
options listed pursuant to the Short
Term Option Series Program
(‘‘Program’’) on QQQ. This proposal is
identical to a proposal by Nasdaq PHLX
LLC (‘‘Phlx’’) that was recently
approved by the Commission.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 NOM Options 4,
Section 5 at Supplementary Material .03
to permit the listing of options series
that expire on Mondays and
Wednesdays in QQQ.
3 See Securities Exchange Act. [sic] 91614 (April
20, 2021) (SR–Phlx–2021–10) (Order Approving a
Proposed Rule Change to Permit Monday and
Wednesday Expirations for Options Listed Pursuant
to the Short Term Options Program on the Invesco
QQQ TrustSM Series ETF Trust).
4 Options 1, Section 1(a)(57) provides the term
‘‘Short Term Option Series’’ means a series in an
option class that is approved for listing and trading
on the Exchange in which the series is opened for
trading on any Monday, Tuesday, Wednesday,
Thursday or Friday that is a business day and that
expires on the Monday, Wednesday or Friday of the
next business week, or, in the case of a series that
is listed on a Friday and expires on a Monday, is
listed one business week and one business day
prior to that expiration. If a Tuesday, Wednesday,
Thursday or Friday is not a business day, the series
may be opened (or shall expire) on the first business
day immediately prior to that Tuesday, Wednesday,
Thursday or Friday, respectively. For a series listed
pursuant to this section for Monday expiration, if
a Monday is not a business day, the series shall
expire on the first business day immediately
following that Monday.
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Monday Expirations
As proposed, with respect to Monday
QQQ Expirations within Supplementary
Material .03 to Options 4, Section 5, the
Exchange may open for trading on any
Friday or Monday that is a business day
series of options on QQQ to expire on
any Monday of the month that is a
business day and is not a Monday in
which Quarterly Options Series on the
same class expire (‘‘Monday QQQ
Expirations’’), provided that Monday
QQQ Expirations that are listed on a
Friday must be listed at least one
business week and one business day
prior to the expiration. The Exchange
may list up to five consecutive Monday
QQQ Expirations at one time; the
Exchange may have no more than a total
of five Monday QQQ Expirations.
Wednesday Expirations
As proposed, with respect to
Wednesday QQQ Expirations within
Supplementary Material .03 to Options
4, Section 5, the Exchange may open for
trading on any Tuesday or Wednesday
that is a business day series of options
on QQQ to expire on any Wednesday of
the month that is a business day and is
not a Wednesday in which Quarterly
Options Series on the same class expire
(‘‘Wednesday QQQ Expirations’’). The
Exchange may list up to five
consecutive Wednesday QQQ
Expirations at one time; the Exchange
may have no more than a total of five
Wednesday QQQ Expirations.
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 Options 1, Section
1(a)(57), with respect to the Program, if
Monday is not a business day the series
shall expire on the first business day
immediately following that Monday.
This procedure differs from the
expiration date of Wednesday
expiration series that are scheduled to
expire on a holiday. Pursuant to Options
1, Section 1(a)(57) a Wednesday
expiration series shall expire on the first
business day immediately prior to that
5 See Supplementary Material .03(e) to Options 4,
Section 5.
6 Id.
PO 00000
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Fmt 4703
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22751
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
Supplementary Material .03(b) to
Options 4, Section 5, which addresses
the listing of Short Term Options Series
that expire in the same week as monthly
or quarterly options series. Currently,
that rule states that no Short Term
Option Series may expire in the same
7 See Supplementary Material .03 at Options 4,
Section 5.
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.
11 See Supplementary Material .03(a) to Options
4, Section 5.
12 Id.
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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.
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
proposed rule change is consistent with
Section 6(b) of the Act,14 in general, and
13 See current Supplementary Material .03(b) to
Options 4, Section 5.
14 15 U.S.C. 78f(b).
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furthers the objectives of 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.
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. NOM 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
U.S.C. 78f(b)(5).
Supplementary Material .03 at Options 4,
Section 5.
17 See supra note 8.
18 See supra note 9.
19 See supra note 10.
treated in this manner today.20 Cboe 21
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 22 and ISE 23 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 Supplementary Material
.03 to Options 4, Section 5 that
currently apply to Monday and
Wednesday SPY Expirations to Monday
and Wednesday QQQ Expirations is
justified. For example, the Exchange
believes that allowing Monday and
Wednesday QQQ Expirations and
monthly QQQ expirations in the same
week will benefit investors and
minimize investor confusion by
providing Monday and Wednesday
QQQ Expirations in a continuous and
uniform manner. The Exchange also
believes that it is appropriate to amend
Supplementary Material .03(b) to
Options 4, Section 5 to clarify that no
Short Term Option Series may expire on
the same day as an expiration of
Quarterly Option Series on the same
class, same as SPY.
The Exchange represents that it has an
adequate surveillance program in place
to detect manipulative trading in
Monday and Wednesday expirations,
including Monday and Wednesday
QQQ Expirations, in the same way that
it monitors trading in the current Short
Term Option Series and trading in
Monday and Wednesday SPY
Expirations. The Exchange also
represents that it has the necessary
systems capacity to support the new
options series. Finally, the Exchange
does not believe that any market
disruptions will be encountered with
the introduction of Monday and
Wednesday QQQ expirations.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange notes that having Monday and
Wednesday QQQ expirations is not a
15 15
16 See
PO 00000
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20 See Supplementary Material .03 at Options 4,
Section 5.
21 See supra note 8.
22 See supra note 9.
23 See supra note 10.
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novel proposal, as Monday and
Wednesday SPY Expirations are
currently listed on NOM.24 Cboe 25 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 26 and
ISE 27 for NDX options with Monday
expirations that are listed pursuant to
their Nonstandard Expirations Pilot
Programs, respectively.
The Exchange does not believe the
proposal will impose any burden on
intra-market competition, as all market
participants will be treated in the same
manner under this proposal.
Additionally, the Exchange does not
believe the proposal will impose any
burden on inter-market competition, as
nothing prevents the other options
exchanges from proposing similar rules
to list and trade Short-Term Option
Series with Monday and Wednesday
expirations.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
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 28 and Rule 19b–
4(f)(6) thereunder.29
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) 30 permits
the Commission to designate a shorter
time if such action is consistent with the
protection of investors and the public
jbell on DSKJLSW7X2PROD with NOTICES
24 See
Supplementary Material .03 at Options 4,
Section 5.
25 See supra note 8.
26 See supra note 9.
27 See supra note 10.
28 15 U.S.C. 78s(b)(3)(A).
29 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 Exchange has satisfied this
requirement.
30 17 CFR 240.19b–4(f)(6)(iii).
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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.31 The
Exchange has stated that waiver of the
operative delay will permit the
Exchange to immediately amend Nasdaq
Options 4, Section 5 at Supplementary
Material .03 to permit the Exchange to
offer Monday and Wednesday
expirations for options listed pursuant
to the Program on QQQ similar to Phlx.
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.32
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2021–028 on the subject line.
31 See Securities Exchange Act Release No. 91614
(April 20, 2021).
32 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).
PO 00000
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22753
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–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–NASDAQ–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.33
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–08906 Filed 4–28–21; 8:45 am]
BILLING CODE 8011–01–P
33 17
E:\FR\FM\29APN1.SGM
CFR 200.30–3(a)(12).
29APN1
]]>Agencies
[Federal Register Volume 86, Number 81 (Thursday, April 29, 2021)]
[Notices]
[Pages 22750-22753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08906]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91664; File No. SR-NASDAQ-2021-028]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Permit Monday and Wednesday Expirations for Options Listed Pursuant to
the Short Term Option Series Program on the Invesco QQQ Trust\SM\
Series (``QQQ'') ETF Trust
April 23, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 22, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to permit Monday and Wednesday expirations
for options listed pursuant to the Short Term Option Series Program on
the Invesco QQQ Trust\SM\ Series (``QQQ'') ETF Trust.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
[[Page 22751]]
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 The Nasdaq Options Market LLC
(``NOM'') rules at Options 4, Section 5 at Supplementary Material .03
to permit Monday and Wednesday expirations for options listed pursuant
to the Short Term Option Series Program (``Program'') on QQQ. This
proposal is identical to a proposal by Nasdaq PHLX LLC (``Phlx'') that
was recently approved by the Commission.\3\
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\3\ See Securities Exchange Act. [sic] 91614 (April 20, 2021)
(SR-Phlx-2021-10) (Order Approving a Proposed Rule Change to Permit
Monday and Wednesday Expirations for Options Listed Pursuant to the
Short Term Options Program on the Invesco QQQ Trust\SM\ Series ETF
Trust).
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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 NOM Options 4, Section 5 at Supplementary Material
.03 to permit the listing of options series that expire on Mondays and
Wednesdays in QQQ.
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\4\ Options 1, Section 1(a)(57) provides the term ``Short Term
Option Series'' means a series in an option class that is approved
for listing and trading on the Exchange in which the series is
opened for trading on any Monday, Tuesday, Wednesday, Thursday or
Friday that is a business day and that expires on the Monday,
Wednesday or Friday of the next business week, or, in the case of a
series that is listed on a Friday and expires on a Monday, is listed
one business week and one business day prior to that expiration. If
a Tuesday, Wednesday, Thursday or Friday is not a business day, the
series may be opened (or shall expire) on the first business day
immediately prior to that Tuesday, Wednesday, Thursday or Friday,
respectively. For a series listed pursuant to this section for
Monday expiration, if a Monday is not a business day, the series
shall expire on the first business day immediately following that
Monday.
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Monday Expirations
As proposed, with respect to Monday QQQ Expirations within
Supplementary Material .03 to Options 4, Section 5, the Exchange may
open for trading on any Friday or Monday that is a business day series
of options on QQQ to expire on any Monday of the month that is a
business day and is not a Monday in which Quarterly Options Series on
the same class expire (``Monday QQQ Expirations''), provided that
Monday QQQ Expirations that are listed on a Friday must be listed at
least one business week and one business day prior to the expiration.
The Exchange may list up to five consecutive Monday QQQ Expirations at
one time; the Exchange may have no more than a total of five Monday QQQ
Expirations.
Wednesday Expirations
As proposed, with respect to Wednesday QQQ Expirations within
Supplementary Material .03 to Options 4, Section 5, the Exchange may
open for trading on any Tuesday or Wednesday that is a business day
series of options on QQQ to expire on any Wednesday of the month that
is a business day and is not a Wednesday in which Quarterly Options
Series on the same class expire (``Wednesday QQQ Expirations''). The
Exchange may list up to five consecutive Wednesday QQQ Expirations at
one time; the Exchange may have no more than a total of five Wednesday
QQQ Expirations.
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 Supplementary Material .03(e) to Options 4, Section 5.
\6\ Id.
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Pursuant to Options 1, Section 1(a)(57), with respect to the
Program, if Monday is not a business day the series shall expire on the
first business day immediately following that Monday. This procedure
differs from the expiration date of Wednesday expiration series that
are scheduled to expire on a holiday. Pursuant to Options 1, Section
1(a)(57) a Wednesday expiration series shall expire on the first
business day immediately prior to that Wednesday, e.g., Tuesday of that
week, if the Wednesday is not a business day. For purposes of QQQ,
however, the Exchange believes that it is preferable to require Monday
expiration series in this scenario to expire on the Tuesday of that
week rather than the previous business day, e.g., the previous Friday,
since the Tuesday is closer in time to the scheduled expiration date of
the series than the previous Friday, and therefore may be more
representative of anticipated market conditions. Monday SPY expirations
are treated in this manner today.\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 Supplementary Material .03 at Options 4, Section 5.
\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.
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\11\ See Supplementary Material .03(a) to Options 4, Section 5.
\12\ Id.
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Finally, the Exchange is amending Supplementary Material .03(b) to
Options 4, Section 5, which addresses the listing of Short Term Options
Series that expire in the same week as monthly or quarterly options
series. Currently, that rule states that no Short Term Option Series
may expire in the same
[[Page 22752]]
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.
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\13\ See current Supplementary Material .03(b) to Options 4,
Section 5.
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The Exchange does not believe that any market disruptions will be
encountered with the introduction of P.M.-settled Monday and Wednesday
QQQ expirations. The Exchange has the necessary capacity and
surveillance programs in place to support and properly monitor trading
in the proposed Monday and Wednesday QQQ Expirations. The Exchange
currently trades P.M.-settled Short Term Option Series that expire
Monday and Wednesday for SPY and has not experienced any market
disruptions nor issues with capacity. Today, the Exchange has
surveillance programs in place to support and properly monitor trading
in Short Term Option Series that expire Monday and Wednesday for SPY.
Similar to SPY, the introduction of QQQ Monday and Wednesday
expirations will, among other things, expand hedging tools available to
market participants and continue the reduction of the premium cost of
buying protection. The Exchange believes that Monday and Wednesday QQQ
expirations will allow market participants to purchase QQQ based on
their timing as needed and allow them to tailor their investment and
hedging needs more effectively.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\14\ in general, and furthers the
objectives of 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.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes the Program has been
successful to date and that Monday and Wednesday QQQ Expirations should
simply expand the ability of investors to hedge risk against market
movements stemming from economic releases or market events that occur
throughout the month in the same way that the Program has expanded the
landscape of hedging. Similarly, the Exchange believes Monday and
Wednesday QQQ Expirations should create greater trading and hedging
opportunities and flexibility, and will provide customers with the
ability to tailor their investment objectives more effectively. NOM
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 Supplementary Material .03 at Options 4, Section 5.
\17\ See supra note 8.
\18\ See supra note 9.
\19\ See supra note 10.
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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 \21\ 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 \22\ and ISE \23\ for NDX options with Monday
expirations that are listed pursuant to their Nonstandard Expirations
Pilot Programs, respectively.
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\20\ See Supplementary Material .03 at Options 4, Section 5.
\21\ See supra note 8.
\22\ See supra note 9.
\23\ See supra note 10.
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Given the similarities between Monday and Wednesday SPY Expirations
and the proposed Monday and Wednesday QQQ Expirations, the Exchange
believes that applying the provisions in Supplementary Material .03 to
Options 4, Section 5 that currently apply to Monday and Wednesday SPY
Expirations to Monday and Wednesday QQQ Expirations is justified. For
example, the Exchange believes that allowing Monday and Wednesday QQQ
Expirations and monthly QQQ expirations in the same week will benefit
investors and minimize investor confusion by providing Monday and
Wednesday QQQ Expirations in a continuous and uniform manner. The
Exchange also believes that it is appropriate to amend Supplementary
Material .03(b) to Options 4, Section 5 to clarify that no Short Term
Option Series may expire on the same day as an expiration of Quarterly
Option Series on the same class, same as SPY.
The Exchange represents that it has an adequate surveillance
program in place to detect manipulative trading in Monday and Wednesday
expirations, including Monday and Wednesday QQQ Expirations, in the
same way that it monitors trading in the current Short Term Option
Series and trading in Monday and Wednesday SPY Expirations. The
Exchange also represents that it has the necessary systems capacity to
support the new options series. Finally, the Exchange does not believe
that any market disruptions will be encountered with the introduction
of Monday and Wednesday QQQ expirations.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange notes that
having Monday and Wednesday QQQ expirations is not a
[[Page 22753]]
novel proposal, as Monday and Wednesday SPY Expirations are currently
listed on NOM.\24\ Cboe \25\ 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 \26\ and ISE \27\ for NDX options with Monday
expirations that are listed pursuant to their Nonstandard Expirations
Pilot Programs, respectively.
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\24\ See Supplementary Material .03 at Options 4, Section 5.
\25\ See supra note 8.
\26\ See supra note 9.
\27\ See supra note 10.
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The Exchange does not believe the proposal will impose any burden
on intra-market competition, as all market participants will be treated
in the same manner under this proposal. Additionally, the Exchange does
not believe the proposal will impose any burden on inter-market
competition, as nothing prevents the other options exchanges from
proposing similar rules to list and trade Short-Term Option Series with
Monday and Wednesday expirations.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 \28\ and Rule 19b-
4(f)(6) thereunder.\29\
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\28\ 15 U.S.C. 78s(b)(3)(A).
\29\ 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 Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \30\ 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.\31\ The Exchange has stated that waiver of the operative
delay will permit the Exchange to immediately amend Nasdaq Options 4,
Section 5 at Supplementary Material .03 to permit the Exchange to offer
Monday and Wednesday expirations for options listed pursuant to the
Program on QQQ similar to Phlx. 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.\32\
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\30\ 17 CFR 240.19b-4(f)(6)(iii).
\31\ See Securities Exchange Act Release No. 91614 (April 20,
2021).
\32\ 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-NASDAQ-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-NASDAQ-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-NASDAQ-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.\33\
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\33\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-08906 Filed 4-28-21; 8:45 am]
BILLING CODE 8011-01-P
