Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 2, Section 4 (Obligations of Market Makers), Options 4, Section 3 (Criteria for Underlying Securities), Options 4, Section 8 (Long-Term Options Contracts), and Options 4A, Section 12 (Terms of Index Options Contracts), 34096-34101 [2021-13654]
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Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Notices
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–FINRA–2021–016. 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
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of
FINRA. 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–FINRA–
2021–016 and should be submitted on
or before July 19, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.72
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–13653 Filed 6–25–21; 8:45 am]
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BILLING CODE 8011–01–P
[Release No. 34–92226; File No. SR–ISE–
2021–14]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Options 2,
Section 4 (Obligations of Market
Makers), Options 4, Section 3 (Criteria
for Underlying Securities), Options 4,
Section 8 (Long-Term Options
Contracts), and Options 4A, Section 12
(Terms of Index Options Contracts)
1. Purpose
The Exchange proposes to amend
Options 2, Section 4, Obligations of
Market Makers; Options 4, Section 3,
Criteria for Underlying Securities;
Options 4, Section 8, Long-Term
Options Contracts; and Options 4A,
Section 12, Terms of Index Options
Contracts. Each change will be
described below.
SECURITIES AND EXCHANGE
COMMISSION
June 22, 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 June 9,
2021, Nasdaq ISE, LLC (‘‘ISE’’ 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 amend
Options 2, Section 4, Obligations of
Market Makers; Options 4, Section 3,
Criteria for Underlying Securities;
Options 4, Section 8, Long-Term
Options Contracts; and Options 4A,
Section 12, Terms of Index Options
Contracts.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/ise/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
72 17
CFR 200.30–3(a)(12).
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Options 2, Section 4(a)
The Exchange proposes to remove the
following rule text from Options 2,
Section 4(a), which has been in place
since ISE’s inception: 3
. . . Ordinarily, Market Makers are expected
to:
(1) Refrain from purchasing a call option or
a put option at a price more than $0.25 below
parity, although a larger amount may be
appropriate considering the particular market
conditions. In the case of calls, parity is
measured by the bid in the underlying
security, and in the case of puts, parity is
measured by the offer in the underlying
security.
(2) The $0.25 amount above may be
increased, or the provisions of this Rule may
be waived, by the Exchange on a series-byseries basis.
This proposed rule text also previously
existed on Cboe Exchange, Inc. within
prior Rule 8.7 4 and was removed from
Cboe’s Rulebook in 2019.5 The
3 See Securities Exchange Act Release No. 42455
(February 24, 2000), 65 FR 11388 (March 2, 2000)
(In the Matter of the Application of The
International Securities Exchange LLC for
Registration as a National Securities Exchange;
Findings and Opinion of the Commission).
4 Prior Interpretation and Policy .02 to Rule 8.7
provided, ‘‘Market-Makers are expected ordinarily
to refrain from purchasing a call option or a put
option at a price more than $0.25 below parity,
although a larger amount may be appropriate
considering the particular market conditions. In the
case of calls, parity is measured by the bid in the
underlying security, and in the case of puts, parity
is measured by the offer in the underlying security.
The $0.25 amount above may be increased, or the
provisions of this Interpretation may be waived, by
the Exchange on a series-by-series basis.’’
5 Cboe’s rule change merely noted, with respect
to the removal of Cboe’s parity rule, that the filing
makes non-substantive changes to the rule
governing a Market-Maker’s general obligations
(current Rule 8.7, in part), most of which remove
redundant provisions that are already covered
under the umbrella of a Market-Maker’s obligation
to engage in dealing to maintain fair and orderly
markets. No specific argument is provided with
respect to removing this provision. See Securities
Exchange Act 87024 (September 19, 2019), 84 FR
50545 (September 25, 2019) (SR–CBOE–2019–059)
(Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Certain Rules
Relating To Market-Makers Upon Migration to the
Trading System Used by Cboe Affiliated
Exchanges).
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Exchange likewise desires to remove
this restriction on Market Makers which
does not exist on Cboe or other Nasdaq
affiliated markets.6 The proposed rule
text is currently waived on ISE pursuant
to Options 2, Section 4(a)(2). The
Exchange proposes to remove this rule
text from Options 2, Section 4 as the
Exchange does not desire to enforce this
provision in the future. The Exchange
believes that this market maker
provision is no longer necessary. Today,
ISE incentivizes Market Makers through
pricing 7 and allocation 8 to quote tightly
in their assigned options series. Primary
Market Makers and Competitive Market
Makers also have other obligations with
respect to market making 9 in addition
to other quoting obligations 10 that they
must abide by when quoting on ISE.
Also, since the adoption of the rule, the
Exchange has adopted the obvious error
rule 11 which permits the Exchange to
review a transaction as potentially
erroneous based on a theoretical price.
Also, ISE orders are subject to tradethrough compliance, thereby limiting
the prices at which orders may
execute.12 Market Makers are relied
upon to provide liquidity on ISE, which
benefits other Members who have an
opportunity to interact with the order
flow. The Exchange believes that the
obligation to refrain from purchasing a
call option or a put option at a price
more than $0.25 below parity places yet
6 See Nasdaq Phlx LLC, The Nasdaq Options
Market LLC and Nasdaq BX, Inc. at Options 2,
Section 4 (Obligations of Market Makers).
7 See Options 7 (Option Pricing). ISE offers lower
fees and rebates to Market Makers based on the
percentage of time spent on the National Best Bid
or National Best Offer (‘‘NBBO’’) for certain
qualifying series.
8 See Options 3, Section 10 (Priority of Quotes
and Orders). Primary Market Makers are offered an
enhanced allocation provided the Primary Market
Maker is quoting at same price as a non-Priority
Customer Order or Market Maker quote.
9 See Options 2, Section 4. ISE Market Makers
must for example: (1) Compete with other Market
Makers to improve the market in all series of
options classes to which the Market Maker is
appointed; (2) make markets that, absent changed
market conditions, will be honored for the number
of contracts entered into the Exchange’s System in
all series of options classes to which the Market
Maker is appointed; (3) update market quotations in
response to changed market conditions in all series
of options classes to which the Market Maker is
appointed; and (4) price options contracts fairly by,
among other things, bidding and offering so as to
create differences of no more than $5 between the
bid and offer following the opening rotation in an
equity or index options contract. See Options 2,
Section 4(b).
10 See Options 2, Section 5 (Electronic Market
Maker Obligations and Quoting Requirements).
Further, Options 3, Section 8(c)(3) requires Primary
Market Makers to submit a Valid Width Quote
during the Opening Process.
11 See Options 3, Section 20 (Nullification and
Adjustment of Options Transactions including
Obvious Errors).
12 See Options 3, Section 4(b)(6).
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another obligation on ISE Market
Makers that is not required on Cboe or
other Nasdaq markets. The Exchange
believes that this additional obligation
is not necessary to maintain fair and
orderly markets and notes the Exchange
has waived this obligation.
Bid/Ask Differentials
The Exchange proposes to amend
Options 2, Section 4(b)(4) and Options
4A, Section 12(b)(i) to relocate text
concerning bid/ask differentials for
long-term option series. Currently,
Options 4, Section 8(a) describes the
bid/ask differentials for long-term
options series for equity options and
exchange-traded products and Options
4A, Section 12(b)(i) describes the bid/
ask differentials for long-term options
series for indexes. Currently, the bid/ask
differentials shall not apply to any
options series until the time to
expiration is less than nine (9) months
for equity options and exchange-traded
funds as provided for within Options 4,
Section 8(a). Currently, bid/ask
differentials shall not apply to any
options series until the time to
expiration is less than twelve (12)
months for index options as provided
for within Options 4A, Section 12(b)(i).
The Exchange proposes to centralize
the bid/ask differentials within new
Options 2, Section 4(b)(4)(iii) and add a
sentence to both Options 4, Section 8(a)
and Options 4A, Section 12(b)(i) that
cites to Options 2, Section 4(b)(4)(iii) for
information on bid/ask differentials for
the various products. The Exchange
believes that this relocation will provide
Primary Market Makers and Competitive
Market Makers with centralized
information regarding their bid/ask
differential requirements. The Exchange
is not amending the bid/ask
differentials; the rule text is simply
being relocated.
Business Continuity and Disaster
Recovery Plan
The Exchange proposes to relocate
Supplementary Material .02 to Options
2, Section 4, concerning business
continuity and disaster recovery plans,
to General 2, Section 12, which is
currently reserved. The Exchange
proposes to title General 2, Section 12
as ‘‘Business Continuity and Disaster
Recovery Plan Testing Requirements for
Members Pursuant to Regulation SCI.’’
The rule text is being relocated without
change. The Exchange proposes to
relocate this rule text to harmonize ISE’s
rules with that of Nasdaq PHLX LLC
(‘‘Phlx’’), Nasdaq BX, Inc. and The
Nasdaq Stock Market LLC which all
have business continuity and disaster
recovery plans located within General 2,
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34097
Section 12 of their respective
rulebooks.13 The Exchange also
proposes to reserve Sections 7–10 and
13–22 within General 2.14 Harmonizing
the rule locations of the rules of the
Nasdaq affiliated markets will make it
easier for market participants to review
and compare the rules of each Nasdaq
market.
Options 4, Section 3
The Exchange proposes to remove the
following products from Options 4,
Section 3(h): The ETFS Silver Trust, the
ETFS Palladium Trust, the ETFS
Platinum Trust or the Sprott Physical
Gold Trust. The Exchange no longer
lists these products and proposes to
remove them the products from its
listing rules. The Exchange will file a
proposal with the Commission if it
determines to list these products in the
future.
The Exchange proposes to amend
Options 4, Section 3(h) by removing the
rule text at the end of the paragraph
which provides, ‘‘all of the following
conditions are met.’’ Paragraph (h)
would simply end with ‘‘provided that:’’
and direct market participants to
subparagraphs (1) and (2). The Exchange
also proposes to capitalize ‘‘the’’ at the
beginning of Options 4, Section 3(h)(1)
and remove ‘‘; and’’ at the end of the
paragraph and instead at a period so
that subparagraphs (1) and (2) are not
linked, but rather read independently.
Today, Options 4, Section 3(h)(1)
applies to all Exchange-Traded Fund
Shares. The Exchange proposes to
clarify that Options 4, Section 3(h)(2)
applies to only international or global
Exchange-Traded Fund Shares.
Specifically, the Exchange proposes to
amend Options 4, Section 3(h)(2) to
provide, ‘‘Exchange-Traded Fund
Shares based on international or global
indexes, or portfolios that include nonU.S. securities, shall meet the following
criteria.’’ Phlx Options 4, Section 3(h)
currently has similar rule text.15
Proposed Options 4, Sections 3(h)
generally concerns securities deemed
appropriate for options trading. The
proposed new rule text adds language
stating that subparagraph (h)(2) of
Options 4, Section 3 applies to the
extent the Exchange-Traded Fund Share
is based on international or global
indexes, or portfolios that include nonU.S. securities. This language is
13 Similar rule changes will also be made for
Nasdaq GEMX, LLC and Nasdaq MRX, LLC.
14 General 2, Sections 5 and 6 are currently
reserved. These sections are proposed to be deleted.
The proposed text would instead reflect General 2,
Sections 5–10 are reserved.
15 Phlx will also file to conform its rule text to
the proposed text within Options 4, Section 3(h)(2).
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intended to serve as a guidepost and
clarify that (1) subparagraph (h)(2) does
not apply to an Exchange-Traded Fund
Shares based on a U.S. domestic index
or portfolio, and (2) subparagraph (h)(2)
includes Exchange-Traded Fund Shares
that track a portfolio and do not track
an index.
The Exchange proposes to amend
Options 4, Section 3(h)(2)(A) to remove
the phrase ‘‘for series of portfolio
depositary receipts and index fund
shares based on international or global
indexes,’’. Today, Options 4, Section
3(h), subparagraphs (h)(1) 16 and (h)(v) 17
permit the Exchange to list options on
Exchange-Traded Fund Shares based on
generic listing standards for portfolio
depositary receipts and index fund
shares without applying component
based requirements in subparagraphs
(h)(2)(B)–(D). By removing the proposed
rule text, the Exchange would make
clear that subparagraph (h)(2)(A) applies
to Exchange-Traded Fund Shares based
on international or global indexes, or
portfolios that include non-U.S.
securities, that are listed pursuant to
generic listing standards and comply
with Options 4, Section 3(h) and
subparagraph (h)(1).
The Exchange also proposes to amend
the term ‘‘comprehensive surveillance
agreement’’ within Options 4, Section
16 Subsection (h)(i) concerns passive ExchangeTraded Fund Shares. Subsection (h)(1) provides,
‘‘represent interests in registered investment
companies (or series thereof) organized as open-end
management investment companies, unit
investment trusts or similar entities that hold
portfolios of securities and/or financial instruments,
including, but not limited to, stock index futures
contracts, options on futures, options on securities
and indices, equity caps, collars and floors, swap
agreements, forward contracts, repurchase
agreements and reverse repurchase agreements (the
‘‘Financial Instruments’’), and money market
instruments, including, but not limited to, U.S.
government securities and repurchase agreements
(the ‘‘Money Market Instruments’’) comprising or
otherwise based on or representing investments in
broad-based indexes or portfolios of securities and/
or Financial Instruments and Money Market
Instruments (or that hold securities in one or more
other registered investment companies that
themselves hold such portfolios of securities and/
or Financial Instruments and Money Market
Instruments).’’
17 Subsection (h)(v) concerns active ExchangeTraded Fund Shares. Subsection (h)(v) Provides,
‘‘represents an interest in a registered investment
company (‘‘Investment Company’’) organized as an
open-end management company or similar entity,
that invests in a portfolio of securities selected by
the Investment Company’s investment adviser
consistent with the Investment Company’s
investment objectives and policies, which is issued
in a specified aggregate minimum number in return
for a deposit of a specified portfolio of securities
and/or a cash amount with a value equal to the next
determined net asset value (‘‘NAV’’), and when
aggregated in the same specified minimum number,
may be redeemed at a holder’s request, which
holder will be paid a specified portfolio of
securities and/or cash with a value equal to the next
determined NAV (‘‘Managed Fund Share’’).
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3(h)(2)(A)–(D) to instead provide
‘‘comprehensive surveillance sharing
agreement.’’ This amendment will bring
greater clarity to the term.
Further, the Exchange proposes to add
the phrase ‘‘if not available or
applicable, the Exchange-Traded
Fund’s’’ within Options 4, Section
3(h)(2)(B), (C), and (D) to clarify that
when component securities are not
available, the portfolio of securities
upon which the Exchange-Traded Fund
Share is based can be used instead. The
Exchange notes that ‘‘not available’’ is
intended for cases where the Exchange
does not have access to the index
components, in those cases the
Exchange would look to the portfolio
components. The term ‘‘not applicable’’
is intended if the fund is active and does
not track an index and only the portfolio
is available. As noted above, this rule
text currently exists within Phlx
Options 4, Section 3(h).
The Exchange also proposes to
wordsmith Options 4, Section 3(h)(2)(B)
to amend the phrase to provide, ‘‘any
non-U.S. component securities of an
index on which the Exchange-Traded
Fund Shares are based or if not available
or applicable, the Exchange-Traded
Fund’s portfolio of securities that are
not subject to comprehensive
surveillance sharing agreements do not
in the aggregate represent more than
50% of the weight of the index or
portfolio;’’. The Exchange believes that
the revised wording will bring greater
clarity to the rule text.
Similarly, the Exchange proposes to
wordsmith Options 4, Section 3(h)(2)(C)
and (D) to relocate the phrase ‘‘on which
the Exchange-Traded Fund Shares are
based’’ and add ‘‘or portfolio’’ to bring
greater clarity to the rule text by
conforming the rule text of (C) and (D)
to the language within (B).
Technical Amendments
The Exchange proposes a nonsubstantive technical amendment to
Options 4, Section 3(C)(2)(A)(ii) to
correct a typographical error by
changing a ‘‘than’’ to a ‘‘that’’. The
Exchange proposes a non-substantive
technical amendment to Options 4,
Section 3(g)(2) to capitalize ‘‘section’’.
The Exchange proposes a nonsubstantive technical amendment to
Options 4, Section 3(h)(1) to change
‘‘In’’ to ‘‘in’’.
Finally, the Exchange proposes to add
new Options 4C and mark it as reserved.
Phlx added a 4C to its Rulebook and this
rule change will harmonize ISE’s
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Rulebook structure to Phlx’s Rulebook
Structure.18
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,19 in general, and furthers the
objectives of Section 6(b)(5) of the Act,20
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.
Options 2, Section 4(a)
The Exchange’s proposal to remove
certain rule text from Options 2, Section
4(a) that refrains Market Makers from
purchasing a call option or a put option
at a price more than $0.25 below parity
is consistent with the Act. The
Exchange desires to remove this
restriction on Market Makers which
does not exist on Cboe or other Nasdaq
affiliated markets.21 The proposed rule
text is currently waived on ISE pursuant
to Options 2, Section 4(a)(2). The
Exchange believes that this market
maker provision is no longer necessary.
Today, ISE incentivizes Market Makers
through pricing 22 and allocation 23 to
quote tightly in their assigned options
series. Primary Market Makers and
Competitive Market Makers also have
other obligations with respect to market
making 24 in addition to other quoting
obligations 25 that they must abide by
when quoting on ISE. Also, since the
adoption of the rule, the Exchange has
adopted the obvious error rule 26 which
permits the Exchange to review a
transaction as potentially erroneous
based on a theoretical price. Also, ISE
orders are subject to trade-through
compliance, thereby limiting the prices
at which orders may execute.27 Market
Makers are relied upon to provide
liquidity on ISE, which benefits other
Members who have an opportunity to
interact with the order flow. The
Exchange believes that the obligation to
refrain from purchasing a call option or
18 See Securities Exchange Act Release No. 91488
(April 6, 2021), 86 FR 19037 (April 12, 2021) (SR–
Phlx–2021–14) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Amend
the Phlx Options Rules at Options 4 Under the
Options 4 Title in the Exchanges Rulebooks Shell
Structure).
19 15 U.S.C. 78f(b).
20 15 U.S.C. 78f(b)(5).
21 See supra note 5.
22 See supra note 7.
23 See supra note 8.
24 See supra note 9.
25 See supra note 10.
26 See supra note 11.
27 See supra note 12.
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a put option at a price more than $0.25
below parity places yet another
obligation on ISE Market Makers that is
not required on Cboe or other Nasdaq
markets. The Exchange believes that this
additional obligation is not necessary to
maintain fair and orderly markets and
notes the Exchange has waived this
obligation and the removal of this
provision would remove an impediment
to and perfect the mechanism of a free
and open market and a national market
system.
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Bid/Ask Differentials
The Exchange’s proposal to amend
Options 2, Section 4(b)(4) and Options
4A, Section 12(b)(i) to relocate text
concerning bid/ask differentials for
long-term option series is consistent
with the Act. The Exchange’s proposal
will centralize the bid/ask differentials
within new Options 2, Section
4(b)(4)(iii) and add a sentence to both
Options 4, Section 8(a) and Options 4A,
Section 12(b)(i) that cites to Options 2,
Section 4(b)(4)(iii) for information on
bid/ask differentials for the various
products. The Exchange is not
amending the bid/ask differentials; the
rule text is simply being relocated. The
Exchange believes that this relocation
will provide Primary Market Makers
and Competitive Market Makers with
centralized information regarding their
bid/ask differential requirements.
Business Continuity and Disaster
Recovery Plan
The Exchange’s proposal to relocate
Supplementary Material .02 to Options
2, Section 4, concerning business
continuity and disaster recovery plans,
to General 2, Section 12, which is
currently reserved, is consistent with
the Act. This rule text will harmonize
ISE’s rules with that of Phlx, Nasdaq
BX, Inc. and The Nasdaq Stock Market
LLC which all have business continuity
and disaster recovery plans located
within General 2, Section 12 of their
respective rulebooks.28 Harmonizing the
rule locations of the rules of the Nasdaq
affiliated markets will make it easier for
market participants to review and
compare the rules of each Nasdaq
market. The Exchange also proposes to
reserve Sections 7–10 and 13–22 within
General 2. These changes are nonsubstantive as the rule text is not being
amended.
Options 4, Section 3
The Exchange’s proposal to remove
the following products from Options 4,
Section 3(h): The ETFS Silver Trust, the
ETFS Palladium Trust, the ETFS
28 See
supra note 13.
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Platinum Trust or the Sprott Physical
Gold Trust is consistent with the Act
because the Exchange no longer lists
these products and proposes to remove
them the products from its listing rules.
The Exchange will file a proposal with
the Commission if it determines to list
these products in the future.
The Exchange’s proposal to amend
Options 4, Section 3(h) by removing the
rule text at the end of the paragraph
which provides, ‘‘all of the following
conditions are met,’’ and creating
separate paragraphs for Options 4,
Section 3(h)(1) and (2) is consistent with
the Act. These amendments will de-link
these subparagraphs so they are read
independently. Today, Options 4,
Section 3(h)(1) applies to all ExchangeTraded Fund Shares. The Exchange’s
proposal to clarify that Options 4,
Section 3(h)(2) applies to only
international or global indexes or
portfolios that include non-U.S.
securities will bring greater clarity to the
qualification standards for listing
options on Exchange-Traded Fund
Shares. Phlx Options 4, Section 3(h)
currently has similar rule text.29
Proposed Options 4, Sections 3(h)
generally concerns securities deemed
appropriate for options trading. The
proposed new rule text adds language
stating that subparagraph (h)(2) of
Options 4, Section 3 applies to the
extent the Exchange-Traded Fund Share
is based on international or global
indexes or portfolios that include nonU.S. securities. This language is
intended to serve as a guidepost and
clarify that (1) subparagraph (h)(2) does
not apply to an Exchange-Traded Fund
Shares based on a U.S. domestic index
or portfolio, and (2) subparagraph (h)(2)
includes Exchange-Traded Fund Shares
that track a portfolio and do not track
an index.
The Exchange’s proposal to amend
Options 4, Section 3(h)(2)(A) to remove
the phrase ‘‘for series of portfolio
depositary receipts and index fund
shares based on international or global
indexes,’’ is consistent with the Act.
Today, Options 4, Section 3(h),
subparagraphs (h)(1) 30 and (h)(v) 31
permit the Exchange to list options on
Exchange-Traded Fund Shares based on
generic listing standards for portfolio
depositary receipts and index fund
shares without applying component
based requirements in subparagraphs
(h)(2)(B)–(D). By removing the proposed
rule text, the Exchange would make
clear that subparagraph (h)(2)(A) applies
29 Phlx will also file to conform its rule text to
the proposed text within Options 4, Section 3(h)(2).
30 See supra note 16.
31 See supra note 17.
PO 00000
Frm 00133
Fmt 4703
Sfmt 4703
34099
to Exchange-Traded Fund Shares based
on international or global indexes, or
portfolios that include non-U.S.
securities, that are listed pursuant to
generic listing standards and comply
with Options 4, Section 3(h) and
subparagraph (h)(1).
The Exchange’s proposal to amend
the term ‘‘comprehensive surveillance
agreement’’ within Options 4, Section
3(h)(2) (A)–(D) to instead provide
‘‘comprehensive surveillance sharing
agreement’’ is consistent with the Act as
the amendment will bring greater clarity
to the term.
The Exchange’s proposal to add the
phrase ‘‘if not available or applicable,
the Exchange-Traded Fund’s’’ to
Options 4, Section 3(h)(2)(B), (C), and
(D) is consistent with the Act as it will
clarify that when component securities
are not available, the portfolio of
securities upon which the ExchangeTraded Fund Share is based can be used
instead. This rule text currently exists
within Phlx Options 4, Section 3(h).
The Exchange’s proposal to amend
and relocate the rule text within
Options 4, Section 3(h)(2)(B), (C), and
(D) will bring greater clarity to the
current rule text by explicitly providing
that the index being referenced is the
one on which the Exchange-Traded
Fund Shares is based. Also, adding ‘‘or
portfolio’’ to Options 4, Section
3(h)(2)(C), and (D) will bring greater
clarity to the rule text by conforming the
rule text of (C) and (D) to the language
within (B).
Technical Amendments
The Exchange’s proposal to make
certain non-substantive technical
amendment to Options 4, Section
3(C)(2)(A)(ii), Options 4, Section 3(g)(2)
and Options 4, Section 3(h)(1) are
consistent with the Act. Also, adding
Options 4C and reserving it within the
rules is a non-substantive amendment
which will harmonize ISE’s Rulebook
structure to Phlx’s Rulebook
Structure.32
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
Options 2, Section 4(a)
The Exchange’s proposal to remove
certain rule text from Options 2, Section
4(a) that refrains Market Makers from
purchasing a call option or a put option
at a price more than $0.25 below parity
32 See
E:\FR\FM\28JNN1.SGM
supra note 18.
28JNN1
34100
Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Notices
does not impose an undue burden on
competition. The Exchange desires to
remove this restriction on Market
Makers which does not exist on Cboe or
other Nasdaq affiliated markets.33 The
proposed rule text is currently waived
on ISE pursuant to Options 2, Section
4(a)(2). Market Makers are relied upon
to provide liquidity on ISE, which
benefits other Members who have an
opportunity to interact with the order
flow. The Exchange believes that the
obligation to refrain from purchasing a
call option or a put option at a price
more than $0.25 below parity places yet
another obligation on ISE Market
Makers that is not required on Cboe or
other Nasdaq markets. The Exchange
believes that this additional obligation
is not necessary to maintain fair and
orderly markets and notes the Exchange
has waived this obligation.
Bid/Ask Differentials
The Exchange’s proposal to amend
Options 2, Section 4(b)(4) and Options
4A, Section 12(b)(i) to relocate text
concerning bid/ask differentials for
long-term option series does not impose
an undue burden on competition. The
Exchange’s proposal will centralize the
bid/ask differentials within new
Options 2, Section 4(b)(4)(iii) and add a
sentence to both Options 4, Section 8(a)
and Options 4A, Section 12(b)(i) that
cites to Options 2, Section 4(b)(4)(iii) for
information on bid/ask differentials for
the various products. The Exchange
believes that this relocation will provide
Primary Market Makers and Competitive
Market Makers with centralized
information regarding their bid/ask
differential requirements.
khammond on DSKJM1Z7X2PROD with NOTICES
Business Continuity and Disaster
Recovery Plan
The Exchange’s proposal to relocate
Supplementary Material .02 to Options
2, Section 4, concerning business
continuity and disaster recovery plans,
to General 2, Section 12, which is
currently reserved, does not impose an
undue burden on competition. This rule
text will harmonize ISE’s rules with that
of Phlx, Nasdaq BX, Inc. and The
Nasdaq Stock Market LLC which all
have business continuity and disaster
recovery plans located within General 2,
Section 12 of their respective
rulebooks.34 Harmonizing the rule
locations of the rules of the Nasdaq
affiliated markets will make it easier for
market participants to review and
compare the rules of each Nasdaq
33 See
34 See
supra note 5.
supra note 13.
VerDate Sep<11>2014
17:39 Jun 25, 2021
market. This change is non-substantive
as the rule text is not being amended.
Options 4, Section 3
The Exchange’s proposal to remove
the following products from Options 4,
Section 3(h): The ETFS Silver Trust, the
ETFS Palladium Trust, the ETFS
Platinum Trust or the Sprott Physical
Gold Trust does not impose an undue
burden on competition because the
Exchange no longer lists these products
and proposes to remove them the
products from its listing rules. No
Member will be permitted to trade these
products on ISE.
The Exchange’s proposal to amend
Options 4, Section 3(h) by removing the
rule text at the end of the paragraph
which provides, ‘‘all of the following
conditions are met,’’ and creating
separate paragraphs for Options 4,
Section 3(h)(1) and (2) does not impose
an undue burden on competition. These
amendments will de-link these
subparagraphs so they are read
independently. Today, Options 4,
Section 3(h)(1) applies to all ExchangeTraded Fund Shares. The Exchange’s
proposal to clarify that Options 4,
Section 3(h)(2) applies to only
international or global Exchange-Traded
Fund Shares that include non-U.S.
securities will bring greater clarity to the
qualification standards for listing
options on Exchange-Traded Fund
Shares. Specifically, this language is
intended to serve as a guidepost and
clarify that (1) subparagraph (h)(2) does
not apply to an Exchange-Traded Fund
Shares based on a U.S. domestic index
or portfolio, and (2) subparagraph (h)(2)
includes Exchange-Traded Fund Shares
that track a portfolio and do not track
an index. This amendment will
uniformly apply the criteria within
Options 4, Section 3 when it lists
options products on ISE.
The Exchange’s proposal to amend
Options 4, Section 3(h)(2)(A) to remove
the phrase ‘‘for series of portfolio
depositary receipts and index fund
shares based on international or global
indexes,’’ does not impose an undue
burden on competition. Today, Options
4, Section 3(h), subparagraphs (h)(1) 35
and (h)(v) 36 permit the Exchange to list
options on Exchange-Traded Fund
Shares based on generic listing
standards for portfolio depositary
receipts and index fund shares without
applying component based
requirements in subparagraphs
(h)(2)(B)–(D). By removing the proposed
rule text, the Exchange would make
clear that subparagraph (h)(2)(A) applies
35 See
36 See
Jkt 253001
PO 00000
supra note 16.
supra note 17.
Frm 00134
Fmt 4703
to Exchange-Traded Fund Shares based
on international or global indexes, or
portfolios that include non-U.S.
securities, that are listed pursuant to
generic listing standards and comply
with Options 4, Section 3(h) and
subparagraph (h)(1). This amendment
will uniformly apply the criteria within
Options 4, Section 3 when it lists
options products on ISE.
The Exchange’s proposal to amend
the term ‘‘comprehensive surveillance
agreement’’ within Options 4, Section
3(h)(2) (A)–(D) to instead provide
‘‘comprehensive surveillance sharing
agreement’’ does not impose an undue
burden on competition as the
amendment will bring greater clarity to
the term.
The Exchange’s proposal to add the
phrase ‘‘if not available or applicable,
the Exchange-Traded Fund’s’’ to
Options 4, Section 3(h)(2)(B), (C), and
(D) does not impose an undue burden
on competition as it will clarify that
when component securities are not
available, the portfolio of securities
upon which the Exchange-Traded Fund
Share is based can be used instead.
The Exchange’s proposal to amend
and relocate the rule text within
Options 4, Section 3(h)(2)(B), (C), and
(D) will bring greater clarity to the
current rule text by explicitly providing
that the index being referenced is the
one on which the Exchange-Traded
Fund Shares is based. Also, adding ‘‘or
portfolio’’ to Options 4, Section
3(h)(2)(C), and (D) will bring greater
clarity to the rule text by conforming the
rule text of (C) and (D) to the language
within (B).
Technical Amendments
The Exchange’s proposal to make
certain non-substantive technical
amendment to Options 4, Section
3(C)(2)(A)(ii), Options 4, Section 3(g)(2)
and Options 4, Section 3(h)(1) does no
impose an undue burden on
competition. Also, adding Options 4C
and reserving it within the rules is a
non-substantive amendment which will
harmonize ISE’s Rulebook structure to
Phlx’s Rulebook Structure.37
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.
37 See
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E:\FR\FM\28JNN1.SGM
supra note 18.
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Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 38 and Rule 19b–
4(f)(6) 39 thereunder. 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 40 and Rule 19b–
4(f)(6) 41 thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 42 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),43 the
Commission may designate a shorter
time if such action is consistent with
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposed
rule change may become operative upon
filing. The Exchange’s proposal does not
raise any new or novel issues.
Therefore, the Commission believes that
waving the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Accordingly, the Commission
designates the proposed rule change to
be operative on upon filing.44
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 will institute proceedings
to determine whether the proposed rule
khammond on DSKJM1Z7X2PROD with NOTICES
38 15
U.S.C. 78(b)(3)(A).
39 17 CFR 240.19b–4(f)(6).
40 15 U.S.C. 78s(b)(3)(A).
41 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of 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.
42 17 CFR 240.19b–4(f)(6).
43 17 CFR 240.19b–4(f)(6).
44 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
VerDate Sep<11>2014
17:39 Jun 25, 2021
Jkt 253001
change should be approved or
disapproved.
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)(iii) of the Act 45 and
subparagraph (f)(6) of Rule 19b–4
thereunder.46
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
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:
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–ISE–2021–14 and should be
submitted on or before July 19, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.47
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–13654 Filed 6–25–21; 8:45 am]
Electronic Comments
BILLING CODE 8011–01–P
• 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–
ISE–2021–14 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–ISE–2021–14. 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
45 15
U.S.C. 78s(b)(3)(A)(iii).
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.
46 17
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Frm 00135
Fmt 4703
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34101
[Release No. 34–92231; File No. SR–Phlx–
2021–37]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Exchange’s Pricing Schedule at Equity
7, Section 3
June 22, 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 June 11,
2021, Nasdaq PHLX LLC (‘‘Phlx’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
47 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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]]>Agencies
[Federal Register Volume 86, Number 121 (Monday, June 28, 2021)]
[Notices]
[Pages 34096-34101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13654]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92226; File No. SR-ISE-2021-14]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 2,
Section 4 (Obligations of Market Makers), Options 4, Section 3
(Criteria for Underlying Securities), Options 4, Section 8 (Long-Term
Options Contracts), and Options 4A, Section 12 (Terms of Index Options
Contracts)
June 22, 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 June 9, 2021, Nasdaq ISE, LLC (``ISE'' 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Options 2, Section 4, Obligations of
Market Makers; Options 4, Section 3, Criteria for Underlying
Securities; Options 4, Section 8, Long-Term Options Contracts; and
Options 4A, Section 12, Terms of Index Options Contracts.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/ise/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Options 2, Section 4, Obligations of
Market Makers; Options 4, Section 3, Criteria for Underlying
Securities; Options 4, Section 8, Long-Term Options Contracts; and
Options 4A, Section 12, Terms of Index Options Contracts. Each change
will be described below.
Options 2, Section 4(a)
The Exchange proposes to remove the following rule text from
Options 2, Section 4(a), which has been in place since ISE's inception:
\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 42455 (February 24,
2000), 65 FR 11388 (March 2, 2000) (In the Matter of the Application
of The International Securities Exchange LLC for Registration as a
National Securities Exchange; Findings and Opinion of the
Commission).
. . . Ordinarily, Market Makers are expected to:
(1) Refrain from purchasing a call option or a put option at a
price more than $0.25 below parity, although a larger amount may be
appropriate considering the particular market conditions. In the
case of calls, parity is measured by the bid in the underlying
security, and in the case of puts, parity is measured by the offer
in the underlying security.
(2) The $0.25 amount above may be increased, or the provisions
of this Rule may be waived, by the Exchange on a series-by-series
basis.
This proposed rule text also previously existed on Cboe Exchange, Inc.
within prior Rule 8.7 \4\ and was removed from Cboe's Rulebook in
2019.\5\ The
[[Page 34097]]
Exchange likewise desires to remove this restriction on Market Makers
which does not exist on Cboe or other Nasdaq affiliated markets.\6\ The
proposed rule text is currently waived on ISE pursuant to Options 2,
Section 4(a)(2). The Exchange proposes to remove this rule text from
Options 2, Section 4 as the Exchange does not desire to enforce this
provision in the future. The Exchange believes that this market maker
provision is no longer necessary. Today, ISE incentivizes Market Makers
through pricing \7\ and allocation \8\ to quote tightly in their
assigned options series. Primary Market Makers and Competitive Market
Makers also have other obligations with respect to market making \9\ in
addition to other quoting obligations \10\ that they must abide by when
quoting on ISE. Also, since the adoption of the rule, the Exchange has
adopted the obvious error rule \11\ which permits the Exchange to
review a transaction as potentially erroneous based on a theoretical
price. Also, ISE orders are subject to trade-through compliance,
thereby limiting the prices at which orders may execute.\12\ Market
Makers are relied upon to provide liquidity on ISE, which benefits
other Members who have an opportunity to interact with the order flow.
The Exchange believes that the obligation to refrain from purchasing a
call option or a put option at a price more than $0.25 below parity
places yet another obligation on ISE Market Makers that is not required
on Cboe or other Nasdaq markets. The Exchange believes that this
additional obligation is not necessary to maintain fair and orderly
markets and notes the Exchange has waived this obligation.
---------------------------------------------------------------------------
\4\ Prior Interpretation and Policy .02 to Rule 8.7 provided,
``Market-Makers are expected ordinarily to refrain from purchasing a
call option or a put option at a price more than $0.25 below parity,
although a larger amount may be appropriate considering the
particular market conditions. In the case of calls, parity is
measured by the bid in the underlying security, and in the case of
puts, parity is measured by the offer in the underlying security.
The $0.25 amount above may be increased, or the provisions of this
Interpretation may be waived, by the Exchange on a series-by-series
basis.''
\5\ Cboe's rule change merely noted, with respect to the removal
of Cboe's parity rule, that the filing makes non-substantive changes
to the rule governing a Market-Maker's general obligations (current
Rule 8.7, in part), most of which remove redundant provisions that
are already covered under the umbrella of a Market-Maker's
obligation to engage in dealing to maintain fair and orderly
markets. No specific argument is provided with respect to removing
this provision. See Securities Exchange Act 87024 (September 19,
2019), 84 FR 50545 (September 25, 2019) (SR-CBOE-2019-059) (Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Certain Rules Relating To Market-Makers Upon Migration to the
Trading System Used by Cboe Affiliated Exchanges).
\6\ See Nasdaq Phlx LLC, The Nasdaq Options Market LLC and
Nasdaq BX, Inc. at Options 2, Section 4 (Obligations of Market
Makers).
\7\ See Options 7 (Option Pricing). ISE offers lower fees and
rebates to Market Makers based on the percentage of time spent on
the National Best Bid or National Best Offer (``NBBO'') for certain
qualifying series.
\8\ See Options 3, Section 10 (Priority of Quotes and Orders).
Primary Market Makers are offered an enhanced allocation provided
the Primary Market Maker is quoting at same price as a non-Priority
Customer Order or Market Maker quote.
\9\ See Options 2, Section 4. ISE Market Makers must for
example: (1) Compete with other Market Makers to improve the market
in all series of options classes to which the Market Maker is
appointed; (2) make markets that, absent changed market conditions,
will be honored for the number of contracts entered into the
Exchange's System in all series of options classes to which the
Market Maker is appointed; (3) update market quotations in response
to changed market conditions in all series of options classes to
which the Market Maker is appointed; and (4) price options contracts
fairly by, among other things, bidding and offering so as to create
differences of no more than $5 between the bid and offer following
the opening rotation in an equity or index options contract. See
Options 2, Section 4(b).
\10\ See Options 2, Section 5 (Electronic Market Maker
Obligations and Quoting Requirements). Further, Options 3, Section
8(c)(3) requires Primary Market Makers to submit a Valid Width Quote
during the Opening Process.
\11\ See Options 3, Section 20 (Nullification and Adjustment of
Options Transactions including Obvious Errors).
\12\ See Options 3, Section 4(b)(6).
---------------------------------------------------------------------------
Bid/Ask Differentials
The Exchange proposes to amend Options 2, Section 4(b)(4) and
Options 4A, Section 12(b)(i) to relocate text concerning bid/ask
differentials for long-term option series. Currently, Options 4,
Section 8(a) describes the bid/ask differentials for long-term options
series for equity options and exchange-traded products and Options 4A,
Section 12(b)(i) describes the bid/ask differentials for long-term
options series for indexes. Currently, the bid/ask differentials shall
not apply to any options series until the time to expiration is less
than nine (9) months for equity options and exchange-traded funds as
provided for within Options 4, Section 8(a). Currently, bid/ask
differentials shall not apply to any options series until the time to
expiration is less than twelve (12) months for index options as
provided for within Options 4A, Section 12(b)(i).
The Exchange proposes to centralize the bid/ask differentials
within new Options 2, Section 4(b)(4)(iii) and add a sentence to both
Options 4, Section 8(a) and Options 4A, Section 12(b)(i) that cites to
Options 2, Section 4(b)(4)(iii) for information on bid/ask
differentials for the various products. The Exchange believes that this
relocation will provide Primary Market Makers and Competitive Market
Makers with centralized information regarding their bid/ask
differential requirements. The Exchange is not amending the bid/ask
differentials; the rule text is simply being relocated.
Business Continuity and Disaster Recovery Plan
The Exchange proposes to relocate Supplementary Material .02 to
Options 2, Section 4, concerning business continuity and disaster
recovery plans, to General 2, Section 12, which is currently reserved.
The Exchange proposes to title General 2, Section 12 as ``Business
Continuity and Disaster Recovery Plan Testing Requirements for Members
Pursuant to Regulation SCI.'' The rule text is being relocated without
change. The Exchange proposes to relocate this rule text to harmonize
ISE's rules with that of Nasdaq PHLX LLC (``Phlx''), Nasdaq BX, Inc.
and The Nasdaq Stock Market LLC which all have business continuity and
disaster recovery plans located within General 2, Section 12 of their
respective rulebooks.\13\ The Exchange also proposes to reserve
Sections 7-10 and 13-22 within General 2.\14\ Harmonizing the rule
locations of the rules of the Nasdaq affiliated markets will make it
easier for market participants to review and compare the rules of each
Nasdaq market.
---------------------------------------------------------------------------
\13\ Similar rule changes will also be made for Nasdaq GEMX, LLC
and Nasdaq MRX, LLC.
\14\ General 2, Sections 5 and 6 are currently reserved. These
sections are proposed to be deleted. The proposed text would instead
reflect General 2, Sections 5-10 are reserved.
---------------------------------------------------------------------------
Options 4, Section 3
The Exchange proposes to remove the following products from Options
4, Section 3(h): The ETFS Silver Trust, the ETFS Palladium Trust, the
ETFS Platinum Trust or the Sprott Physical Gold Trust. The Exchange no
longer lists these products and proposes to remove them the products
from its listing rules. The Exchange will file a proposal with the
Commission if it determines to list these products in the future.
The Exchange proposes to amend Options 4, Section 3(h) by removing
the rule text at the end of the paragraph which provides, ``all of the
following conditions are met.'' Paragraph (h) would simply end with
``provided that:'' and direct market participants to subparagraphs (1)
and (2). The Exchange also proposes to capitalize ``the'' at the
beginning of Options 4, Section 3(h)(1) and remove ``; and'' at the end
of the paragraph and instead at a period so that subparagraphs (1) and
(2) are not linked, but rather read independently. Today, Options 4,
Section 3(h)(1) applies to all Exchange-Traded Fund Shares. The
Exchange proposes to clarify that Options 4, Section 3(h)(2) applies to
only international or global Exchange-Traded Fund Shares. Specifically,
the Exchange proposes to amend Options 4, Section 3(h)(2) to provide,
``Exchange-Traded Fund Shares based on international or global indexes,
or portfolios that include non-U.S. securities, shall meet the
following criteria.'' Phlx Options 4, Section 3(h) currently has
similar rule text.\15\ Proposed Options 4, Sections 3(h) generally
concerns securities deemed appropriate for options trading. The
proposed new rule text adds language stating that subparagraph (h)(2)
of Options 4, Section 3 applies to the extent the Exchange-Traded Fund
Share is based on international or global indexes, or portfolios that
include non-U.S. securities. This language is
[[Page 34098]]
intended to serve as a guidepost and clarify that (1) subparagraph
(h)(2) does not apply to an Exchange-Traded Fund Shares based on a U.S.
domestic index or portfolio, and (2) subparagraph (h)(2) includes
Exchange-Traded Fund Shares that track a portfolio and do not track an
index.
---------------------------------------------------------------------------
\15\ Phlx will also file to conform its rule text to the
proposed text within Options 4, Section 3(h)(2).
---------------------------------------------------------------------------
The Exchange proposes to amend Options 4, Section 3(h)(2)(A) to
remove the phrase ``for series of portfolio depositary receipts and
index fund shares based on international or global indexes,''. Today,
Options 4, Section 3(h), subparagraphs (h)(1) \16\ and (h)(v) \17\
permit the Exchange to list options on Exchange-Traded Fund Shares
based on generic listing standards for portfolio depositary receipts
and index fund shares without applying component based requirements in
subparagraphs (h)(2)(B)-(D). By removing the proposed rule text, the
Exchange would make clear that subparagraph (h)(2)(A) applies to
Exchange-Traded Fund Shares based on international or global indexes,
or portfolios that include non-U.S. securities, that are listed
pursuant to generic listing standards and comply with Options 4,
Section 3(h) and subparagraph (h)(1).
---------------------------------------------------------------------------
\16\ Subsection (h)(i) concerns passive Exchange-Traded Fund
Shares. Subsection (h)(1) provides, ``represent interests in
registered investment companies (or series thereof) organized as
open-end management investment companies, unit investment trusts or
similar entities that hold portfolios of securities and/or financial
instruments, including, but not limited to, stock index futures
contracts, options on futures, options on securities and indices,
equity caps, collars and floors, swap agreements, forward contracts,
repurchase agreements and reverse repurchase agreements (the
``Financial Instruments''), and money market instruments, including,
but not limited to, U.S. government securities and repurchase
agreements (the ``Money Market Instruments'') comprising or
otherwise based on or representing investments in broad-based
indexes or portfolios of securities and/or Financial Instruments and
Money Market Instruments (or that hold securities in one or more
other registered investment companies that themselves hold such
portfolios of securities and/or Financial Instruments and Money
Market Instruments).''
\17\ Subsection (h)(v) concerns active Exchange-Traded Fund
Shares. Subsection (h)(v) Provides, ``represents an interest in a
registered investment company (``Investment Company'') organized as
an open-end management company or similar entity, that invests in a
portfolio of securities selected by the Investment Company's
investment adviser consistent with the Investment Company's
investment objectives and policies, which is issued in a specified
aggregate minimum number in return for a deposit of a specified
portfolio of securities and/or a cash amount with a value equal to
the next determined net asset value (``NAV''), and when aggregated
in the same specified minimum number, may be redeemed at a holder's
request, which holder will be paid a specified portfolio of
securities and/or cash with a value equal to the next determined NAV
(``Managed Fund Share'').
---------------------------------------------------------------------------
The Exchange also proposes to amend the term ``comprehensive
surveillance agreement'' within Options 4, Section 3(h)(2)(A)-(D) to
instead provide ``comprehensive surveillance sharing agreement.'' This
amendment will bring greater clarity to the term.
Further, the Exchange proposes to add the phrase ``if not available
or applicable, the Exchange-Traded Fund's'' within Options 4, Section
3(h)(2)(B), (C), and (D) to clarify that when component securities are
not available, the portfolio of securities upon which the Exchange-
Traded Fund Share is based can be used instead. The Exchange notes that
``not available'' is intended for cases where the Exchange does not
have access to the index components, in those cases the Exchange would
look to the portfolio components. The term ``not applicable'' is
intended if the fund is active and does not track an index and only the
portfolio is available. As noted above, this rule text currently exists
within Phlx Options 4, Section 3(h).
The Exchange also proposes to wordsmith Options 4, Section
3(h)(2)(B) to amend the phrase to provide, ``any non-U.S. component
securities of an index on which the Exchange-Traded Fund Shares are
based or if not available or applicable, the Exchange-Traded Fund's
portfolio of securities that are not subject to comprehensive
surveillance sharing agreements do not in the aggregate represent more
than 50% of the weight of the index or portfolio;''. The Exchange
believes that the revised wording will bring greater clarity to the
rule text.
Similarly, the Exchange proposes to wordsmith Options 4, Section
3(h)(2)(C) and (D) to relocate the phrase ``on which the Exchange-
Traded Fund Shares are based'' and add ``or portfolio'' to bring
greater clarity to the rule text by conforming the rule text of (C) and
(D) to the language within (B).
Technical Amendments
The Exchange proposes a non-substantive technical amendment to
Options 4, Section 3(C)(2)(A)(ii) to correct a typographical error by
changing a ``than'' to a ``that''. The Exchange proposes a non-
substantive technical amendment to Options 4, Section 3(g)(2) to
capitalize ``section''. The Exchange proposes a non-substantive
technical amendment to Options 4, Section 3(h)(1) to change ``In'' to
``in''.
Finally, the Exchange proposes to add new Options 4C and mark it as
reserved. Phlx added a 4C to its Rulebook and this rule change will
harmonize ISE's Rulebook structure to Phlx's Rulebook Structure.\18\
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\18\ See Securities Exchange Act Release No. 91488 (April 6,
2021), 86 FR 19037 (April 12, 2021) (SR-Phlx-2021-14) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
the Phlx Options Rules at Options 4 Under the Options 4 Title in the
Exchanges Rulebooks Shell Structure).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\19\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\20\ 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.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Options 2, Section 4(a)
The Exchange's proposal to remove certain rule text from Options 2,
Section 4(a) that refrains Market Makers from purchasing a call option
or a put option at a price more than $0.25 below parity is consistent
with the Act. The Exchange desires to remove this restriction on Market
Makers which does not exist on Cboe or other Nasdaq affiliated
markets.\21\ The proposed rule text is currently waived on ISE pursuant
to Options 2, Section 4(a)(2). The Exchange believes that this market
maker provision is no longer necessary. Today, ISE incentivizes Market
Makers through pricing \22\ and allocation \23\ to quote tightly in
their assigned options series. Primary Market Makers and Competitive
Market Makers also have other obligations with respect to market making
\24\ in addition to other quoting obligations \25\ that they must abide
by when quoting on ISE. Also, since the adoption of the rule, the
Exchange has adopted the obvious error rule \26\ which permits the
Exchange to review a transaction as potentially erroneous based on a
theoretical price. Also, ISE orders are subject to trade-through
compliance, thereby limiting the prices at which orders may
execute.\27\ Market Makers are relied upon to provide liquidity on ISE,
which benefits other Members who have an opportunity to interact with
the order flow. The Exchange believes that the obligation to refrain
from purchasing a call option or
[[Page 34099]]
a put option at a price more than $0.25 below parity places yet another
obligation on ISE Market Makers that is not required on Cboe or other
Nasdaq markets. The Exchange believes that this additional obligation
is not necessary to maintain fair and orderly markets and notes the
Exchange has waived this obligation and the removal of this provision
would remove an impediment to and perfect the mechanism of a free and
open market and a national market system.
---------------------------------------------------------------------------
\21\ See supra note 5.
\22\ See supra note 7.
\23\ See supra note 8.
\24\ See supra note 9.
\25\ See supra note 10.
\26\ See supra note 11.
\27\ See supra note 12.
---------------------------------------------------------------------------
Bid/Ask Differentials
The Exchange's proposal to amend Options 2, Section 4(b)(4) and
Options 4A, Section 12(b)(i) to relocate text concerning bid/ask
differentials for long-term option series is consistent with the Act.
The Exchange's proposal will centralize the bid/ask differentials
within new Options 2, Section 4(b)(4)(iii) and add a sentence to both
Options 4, Section 8(a) and Options 4A, Section 12(b)(i) that cites to
Options 2, Section 4(b)(4)(iii) for information on bid/ask
differentials for the various products. The Exchange is not amending
the bid/ask differentials; the rule text is simply being relocated. The
Exchange believes that this relocation will provide Primary Market
Makers and Competitive Market Makers with centralized information
regarding their bid/ask differential requirements.
Business Continuity and Disaster Recovery Plan
The Exchange's proposal to relocate Supplementary Material .02 to
Options 2, Section 4, concerning business continuity and disaster
recovery plans, to General 2, Section 12, which is currently reserved,
is consistent with the Act. This rule text will harmonize ISE's rules
with that of Phlx, Nasdaq BX, Inc. and The Nasdaq Stock Market LLC
which all have business continuity and disaster recovery plans located
within General 2, Section 12 of their respective rulebooks.\28\
Harmonizing the rule locations of the rules of the Nasdaq affiliated
markets will make it easier for market participants to review and
compare the rules of each Nasdaq market. The Exchange also proposes to
reserve Sections 7-10 and 13-22 within General 2. These changes are
non-substantive as the rule text is not being amended.
---------------------------------------------------------------------------
\28\ See supra note 13.
---------------------------------------------------------------------------
Options 4, Section 3
The Exchange's proposal to remove the following products from
Options 4, Section 3(h): The ETFS Silver Trust, the ETFS Palladium
Trust, the ETFS Platinum Trust or the Sprott Physical Gold Trust is
consistent with the Act because the Exchange no longer lists these
products and proposes to remove them the products from its listing
rules. The Exchange will file a proposal with the Commission if it
determines to list these products in the future.
The Exchange's proposal to amend Options 4, Section 3(h) by
removing the rule text at the end of the paragraph which provides,
``all of the following conditions are met,'' and creating separate
paragraphs for Options 4, Section 3(h)(1) and (2) is consistent with
the Act. These amendments will de-link these subparagraphs so they are
read independently. Today, Options 4, Section 3(h)(1) applies to all
Exchange-Traded Fund Shares. The Exchange's proposal to clarify that
Options 4, Section 3(h)(2) applies to only international or global
indexes or portfolios that include non-U.S. securities will bring
greater clarity to the qualification standards for listing options on
Exchange-Traded Fund Shares. Phlx Options 4, Section 3(h) currently has
similar rule text.\29\ Proposed Options 4, Sections 3(h) generally
concerns securities deemed appropriate for options trading. The
proposed new rule text adds language stating that subparagraph (h)(2)
of Options 4, Section 3 applies to the extent the Exchange-Traded Fund
Share is based on international or global indexes or portfolios that
include non-U.S. securities. This language is intended to serve as a
guidepost and clarify that (1) subparagraph (h)(2) does not apply to an
Exchange-Traded Fund Shares based on a U.S. domestic index or
portfolio, and (2) subparagraph (h)(2) includes Exchange-Traded Fund
Shares that track a portfolio and do not track an index.
---------------------------------------------------------------------------
\29\ Phlx will also file to conform its rule text to the
proposed text within Options 4, Section 3(h)(2).
---------------------------------------------------------------------------
The Exchange's proposal to amend Options 4, Section 3(h)(2)(A) to
remove the phrase ``for series of portfolio depositary receipts and
index fund shares based on international or global indexes,'' is
consistent with the Act. Today, Options 4, Section 3(h), subparagraphs
(h)(1) \30\ and (h)(v) \31\ permit the Exchange to list options on
Exchange-Traded Fund Shares based on generic listing standards for
portfolio depositary receipts and index fund shares without applying
component based requirements in subparagraphs (h)(2)(B)-(D). By
removing the proposed rule text, the Exchange would make clear that
subparagraph (h)(2)(A) applies to Exchange-Traded Fund Shares based on
international or global indexes, or portfolios that include non-U.S.
securities, that are listed pursuant to generic listing standards and
comply with Options 4, Section 3(h) and subparagraph (h)(1).
---------------------------------------------------------------------------
\30\ See supra note 16.
\31\ See supra note 17.
---------------------------------------------------------------------------
The Exchange's proposal to amend the term ``comprehensive
surveillance agreement'' within Options 4, Section 3(h)(2) (A)-(D) to
instead provide ``comprehensive surveillance sharing agreement'' is
consistent with the Act as the amendment will bring greater clarity to
the term.
The Exchange's proposal to add the phrase ``if not available or
applicable, the Exchange-Traded Fund's'' to Options 4, Section
3(h)(2)(B), (C), and (D) is consistent with the Act as it will clarify
that when component securities are not available, the portfolio of
securities upon which the Exchange-Traded Fund Share is based can be
used instead. This rule text currently exists within Phlx Options 4,
Section 3(h).
The Exchange's proposal to amend and relocate the rule text within
Options 4, Section 3(h)(2)(B), (C), and (D) will bring greater clarity
to the current rule text by explicitly providing that the index being
referenced is the one on which the Exchange-Traded Fund Shares is
based. Also, adding ``or portfolio'' to Options 4, Section 3(h)(2)(C),
and (D) will bring greater clarity to the rule text by conforming the
rule text of (C) and (D) to the language within (B).
Technical Amendments
The Exchange's proposal to make certain non-substantive technical
amendment to Options 4, Section 3(C)(2)(A)(ii), Options 4, Section
3(g)(2) and Options 4, Section 3(h)(1) are consistent with the Act.
Also, adding Options 4C and reserving it within the rules is a non-
substantive amendment which will harmonize ISE's Rulebook structure to
Phlx's Rulebook Structure.\32\
---------------------------------------------------------------------------
\32\ See supra note 18.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Options 2, Section 4(a)
The Exchange's proposal to remove certain rule text from Options 2,
Section 4(a) that refrains Market Makers from purchasing a call option
or a put option at a price more than $0.25 below parity
[[Page 34100]]
does not impose an undue burden on competition. The Exchange desires to
remove this restriction on Market Makers which does not exist on Cboe
or other Nasdaq affiliated markets.\33\ The proposed rule text is
currently waived on ISE pursuant to Options 2, Section 4(a)(2). Market
Makers are relied upon to provide liquidity on ISE, which benefits
other Members who have an opportunity to interact with the order flow.
The Exchange believes that the obligation to refrain from purchasing a
call option or a put option at a price more than $0.25 below parity
places yet another obligation on ISE Market Makers that is not required
on Cboe or other Nasdaq markets. The Exchange believes that this
additional obligation is not necessary to maintain fair and orderly
markets and notes the Exchange has waived this obligation.
---------------------------------------------------------------------------
\33\ See supra note 5.
---------------------------------------------------------------------------
Bid/Ask Differentials
The Exchange's proposal to amend Options 2, Section 4(b)(4) and
Options 4A, Section 12(b)(i) to relocate text concerning bid/ask
differentials for long-term option series does not impose an undue
burden on competition. The Exchange's proposal will centralize the bid/
ask differentials within new Options 2, Section 4(b)(4)(iii) and add a
sentence to both Options 4, Section 8(a) and Options 4A, Section
12(b)(i) that cites to Options 2, Section 4(b)(4)(iii) for information
on bid/ask differentials for the various products. The Exchange
believes that this relocation will provide Primary Market Makers and
Competitive Market Makers with centralized information regarding their
bid/ask differential requirements.
Business Continuity and Disaster Recovery Plan
The Exchange's proposal to relocate Supplementary Material .02 to
Options 2, Section 4, concerning business continuity and disaster
recovery plans, to General 2, Section 12, which is currently reserved,
does not impose an undue burden on competition. This rule text will
harmonize ISE's rules with that of Phlx, Nasdaq BX, Inc. and The Nasdaq
Stock Market LLC which all have business continuity and disaster
recovery plans located within General 2, Section 12 of their respective
rulebooks.\34\ Harmonizing the rule locations of the rules of the
Nasdaq affiliated markets will make it easier for market participants
to review and compare the rules of each Nasdaq market. This change is
non-substantive as the rule text is not being amended.
---------------------------------------------------------------------------
\34\ See supra note 13.
---------------------------------------------------------------------------
Options 4, Section 3
The Exchange's proposal to remove the following products from
Options 4, Section 3(h): The ETFS Silver Trust, the ETFS Palladium
Trust, the ETFS Platinum Trust or the Sprott Physical Gold Trust does
not impose an undue burden on competition because the Exchange no
longer lists these products and proposes to remove them the products
from its listing rules. No Member will be permitted to trade these
products on ISE.
The Exchange's proposal to amend Options 4, Section 3(h) by
removing the rule text at the end of the paragraph which provides,
``all of the following conditions are met,'' and creating separate
paragraphs for Options 4, Section 3(h)(1) and (2) does not impose an
undue burden on competition. These amendments will de-link these
subparagraphs so they are read independently. Today, Options 4, Section
3(h)(1) applies to all Exchange-Traded Fund Shares. The Exchange's
proposal to clarify that Options 4, Section 3(h)(2) applies to only
international or global Exchange-Traded Fund Shares that include non-
U.S. securities will bring greater clarity to the qualification
standards for listing options on Exchange-Traded Fund Shares.
Specifically, this language is intended to serve as a guidepost and
clarify that (1) subparagraph (h)(2) does not apply to an Exchange-
Traded Fund Shares based on a U.S. domestic index or portfolio, and (2)
subparagraph (h)(2) includes Exchange-Traded Fund Shares that track a
portfolio and do not track an index. This amendment will uniformly
apply the criteria within Options 4, Section 3 when it lists options
products on ISE.
The Exchange's proposal to amend Options 4, Section 3(h)(2)(A) to
remove the phrase ``for series of portfolio depositary receipts and
index fund shares based on international or global indexes,'' does not
impose an undue burden on competition. Today, Options 4, Section 3(h),
subparagraphs (h)(1) \35\ and (h)(v) \36\ permit the Exchange to list
options on Exchange-Traded Fund Shares based on generic listing
standards for portfolio depositary receipts and index fund shares
without applying component based requirements in subparagraphs
(h)(2)(B)-(D). By removing the proposed rule text, the Exchange would
make clear that subparagraph (h)(2)(A) applies to Exchange-Traded Fund
Shares based on international or global indexes, or portfolios that
include non-U.S. securities, that are listed pursuant to generic
listing standards and comply with Options 4, Section 3(h) and
subparagraph (h)(1). This amendment will uniformly apply the criteria
within Options 4, Section 3 when it lists options products on ISE.
---------------------------------------------------------------------------
\35\ See supra note 16.
\36\ See supra note 17.
---------------------------------------------------------------------------
The Exchange's proposal to amend the term ``comprehensive
surveillance agreement'' within Options 4, Section 3(h)(2) (A)-(D) to
instead provide ``comprehensive surveillance sharing agreement'' does
not impose an undue burden on competition as the amendment will bring
greater clarity to the term.
The Exchange's proposal to add the phrase ``if not available or
applicable, the Exchange-Traded Fund's'' to Options 4, Section
3(h)(2)(B), (C), and (D) does not impose an undue burden on competition
as it will clarify that when component securities are not available,
the portfolio of securities upon which the Exchange-Traded Fund Share
is based can be used instead.
The Exchange's proposal to amend and relocate the rule text within
Options 4, Section 3(h)(2)(B), (C), and (D) will bring greater clarity
to the current rule text by explicitly providing that the index being
referenced is the one on which the Exchange-Traded Fund Shares is
based. Also, adding ``or portfolio'' to Options 4, Section 3(h)(2)(C),
and (D) will bring greater clarity to the rule text by conforming the
rule text of (C) and (D) to the language within (B).
Technical Amendments
The Exchange's proposal to make certain non-substantive technical
amendment to Options 4, Section 3(C)(2)(A)(ii), Options 4, Section
3(g)(2) and Options 4, Section 3(h)(1) does no impose an undue burden
on competition. Also, adding Options 4C and reserving it within the
rules is a non-substantive amendment which will harmonize ISE's
Rulebook structure to Phlx's Rulebook Structure.\37\
---------------------------------------------------------------------------
\37\ See supra note 18.
---------------------------------------------------------------------------
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.
[[Page 34101]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \38\ and Rule 19b-4(f)(6) \39\ thereunder.
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 \40\ and Rule 19b-4(f)(6) \41\
thereunder.
---------------------------------------------------------------------------
\38\ 15 U.S.C. 78(b)(3)(A).
\39\ 17 CFR 240.19b-4(f)(6).
\40\ 15 U.S.C. 78s(b)(3)(A).
\41\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \42\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\43\ the Commission
may designate a shorter time if such action is consistent with
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative upon filing. The Exchange's proposal
does not raise any new or novel issues. Therefore, the Commission
believes that waving the 30-day operative delay is consistent with the
protection of investors and the public interest. Accordingly, the
Commission designates the proposed rule change to be operative on upon
filing.\44\
---------------------------------------------------------------------------
\42\ 17 CFR 240.19b-4(f)(6).
\43\ 17 CFR 240.19b-4(f)(6).
\44\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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)(iii) of the Act \45\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\46\
---------------------------------------------------------------------------
\45\ 15 U.S.C. 78s(b)(3)(A)(iii).
\46\ 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.
---------------------------------------------------------------------------
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 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-ISE-2021-14 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-ISE-2021-14. 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-ISE-2021-14 and should be submitted on
or before July 19, 2021.
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\47\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\47\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13654 Filed 6-25-21; 8:45 am]
BILLING CODE 8011-01-P
