Self-Regulatory Organizations; NYSE Arca, Inc.; 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, 40111-40114 [2021-15832]

Download as PDF Federal Register / Vol. 86, No. 140 / Monday, July 26, 2021 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION [Release No. 34–92453; File No. SR– NYSEArca–2021–63] Self-Regulatory Organizations; NYSE Arca, Inc.; 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 July 21, 2021. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on July 12, 2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. 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 Rule 6.4–O to permit Monday and Wednesday expirations for options listed pursuant to the Short Term Options Series Program on the Invesco QQQ TrustTM Series (‘‘QQQ’’) ETF Trust. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. jbell on DSKJLSW7X2PROD with NOTICES II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those 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 parts of such statements. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 VerDate Sep<11>2014 17:10 Jul 23, 2021 Jkt 253001 1. Purpose The purpose of this filing is to amend Rule 6.4–O, Series of Options Open for Trading, to permit Monday and Wednesday expirations for options listed pursuant to the Short Term Options Series Program (‘‘Program’’) on QQQ. A Short Term Options Series is a series in an option class that is approved for listing and trading on the Exchange in which the series is opened for trading on any Monday, Tuesday, Wednesday, Thursday or Friday that is a business day and that expires on the Monday, Wednesday or Friday of the next business week, or, in the case of a series that is listed on a Friday and expires on a Monday, is listed one business week and one business day prior to that expiration.4 The Exchange is proposing to amend Rule 6.4–O Commentary .07(g) to permit the listing of options series that expire on Mondays and Wednesdays in QQQ. Monday Expirations As proposed, with respect to Monday QQQ Expirations within Rule 6.4–O Commentary .07, 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.5 Wednesday Expirations As proposed, with respect to Wednesday QQQ Expirations within Rule 6.4–O Commentary .07, the Exchange may open for trading on any Tuesday or Wednesday that is a 4 See NYSE Arca Rule 6.1–O(b)41. Short Term Option Series. 5 The Exchange proposes to make a clarifying change to Rule 6.4–O Commentary .07(g) to make clear that the Exchange may have no more than a total of five each of Wednesday SPY Expirations and Wednesday QQQ Expirations and a total of five each of Monday SPY Expirations and Monday QQQ Expirations. The Exchange also proposes to make a non-substantive change to add the word ‘‘business’’ before ‘‘day’’ in the first sentence of Rule 6.4–O Commentary .07(g). PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 40111 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.6 Specifically, the Monday and Wednesday QQQ Expirations will have a $0.50 strike interval minimum.7 As is the case with other equity options series listed pursuant to the Program, the Monday and Wednesday QQQ Expirations series will be P.M. settled. Pursuant to Rule 6.1–O,8 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 Rule 6.1–O 9 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. Nasdaq PHLX LLC (‘‘Phlx’’) uses the same procedure for QQQ with Monday and Wednesday expirations.10 Nasdaq Phlx 11 and Nasdaq ISE, LLC (‘‘ISE’’) 12 also use the same procedure for options on the Nasdaq-100® (‘‘NDX’’) with Monday expirations that are listed pursuant to its Nonstandard Expirations 6 See NYSE Arca Rule 6.4–O Commentary .07(g). NYSE Arca Rule 6.4–O Commentary .07(e). 8 Rule 6.1–O, Definition of ‘‘Short Term Option Series.’’ 9 Id. 10 See Securities Exchange Act Release No. 91238 (March 2, 2021), 86 FR 13404 (March 8, 2021) (SR– Phlx–2021–10). 11 See Phlx Options 4A, Section 12(b)(5). 12 See ISE Supplementary Material .07 to Options 4A, Section 12. 7 See E:\FR\FM\26JYN1.SGM 26JYN1 40112 Federal Register / Vol. 86, No. 140 / Monday, July 26, 2021 / Notices jbell on DSKJLSW7X2PROD with NOTICES Pilot Programs, respectively. Cboe Exchange, Inc. (‘‘Cboe’’) uses the same procedure for options on the S&P500 index (‘‘SPX’’) with Monday expirations that are listed pursuant to its Nonstandard Expirations Pilot Program and that are scheduled to expire on a holiday.13 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.14 The thirty (30) series restriction does not include series that are open by other securities exchanges under their respective short term options rules; the Exchange may list these additional series that are listed by other exchanges.15 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 Rule 6.4–O Commentary .07(a), which addresses the listing of Short Term Options Series that expire in the same week as monthly or quarterly options series. Currently, that rule states that no Short Term Option Series may expire in the same week in which monthly option series on the same class expire (with the exception of Monday and Wednesday SPY Expirations) or, in the case of Quarterly Options Series, on an expiration that coincides with an expiration of Quarterly Options Series on the same class.16 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 13 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.’’ 14 See NYSE Arca Rule 6.4–O Commentary .07. 15 Id. 16 See NYSE Arca Rule 6.4–O Commentary .07(a). VerDate Sep<11>2014 17:10 Jul 23, 2021 Jkt 253001 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. The Exchange currently 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 Monday and Wednesday QQQ 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 its proposed rule change is consistent with Section 6(b) of the Act 17 in general, and furthers the objectives of Section 6(b)(5) of the Act 18 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. The proposed rule change is intended to provide 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 PO 00000 17 15 18 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00123 Fmt 4703 Sfmt 4703 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. The Exchange currently lists Monday and Wednesday SPY Expirations.19 Also, Cboe 20 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 21 and ISE 22 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 currently treated in this manner.23 Cboe 24 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 25 and ISE 26 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 NYSE Arca Rule 6.4–O Commentary .07 that currently apply to Monday and Wednesday SPY 19 Supra note 14. note 13. 21 Supra note 11. 22 Supra note 12. 23 Supra note 14. 24 Supra note 13. 25 Supra note 11. 26 Supra note 12. 20 Supra E:\FR\FM\26JYN1.SGM 26JYN1 Federal Register / Vol. 86, No. 140 / Monday, July 26, 2021 / Notices jbell on DSKJLSW7X2PROD with NOTICES 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 NYSE Arca Rule 6.4–O Commentary .07 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 novel proposal, as Monday and Wednesday SPY Expirations are currently listed on the Exchange.27 Cboe 28 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 29 and ISE 30 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 27 Supra note 14. note 13. 29 Supra note 11. 30 Supra note 12. 28 Supra VerDate Sep<11>2014 17:10 Jul 23, 2021 Jkt 253001 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 solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 31 and Rule 19b– 4(f)(6) thereunder.32 A proposed rule change filed under Rule 19b–4(f)(6) 33 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),34 the Commission may 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.35 The Exchange has stated that waiver of the operative delay is consistent with the protection of investors and the public interest as it would encourage fair competition among exchanges by allowing the Exchange to compete effectively with Phlx by having the ability to list and trade the same Monday and Wednesday QQQ Expirations that Phlx is able to list and U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its 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. 33 17 CFR 240.19b–4(f)(6). 34 17 CFR 240.19b–4(f)(6)(iii). 35 See Securities Exchange Act Release No. 91614 (April 20, 2021), 86 FR 22082 (April 26, 2021) (SR– Phlx–2021–10). PO 00000 31 15 32 17 Frm 00124 Fmt 4703 Sfmt 4703 40113 trade. 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.36 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– NYSEArca–2021–63 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–NYSEArca–2021–63. 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 36 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). E:\FR\FM\26JYN1.SGM 26JYN1 40114 Federal Register / Vol. 86, No. 140 / Monday, July 26, 2021 / Notices 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–NYSEArca–2021–63, and should be submitted on or before August 16, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.37 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–15832 Filed 7–23–21; 8:45 am] U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. The subject matter of the closed meeting will consist of the following topics: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Resolution of litigation claims; and Other matters relating to examinations and enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters. CONTACT PERSON FOR MORE INFORMATION: For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. Dated: July 22, 2021. Vanessa A. Countryman, Secretary. [FR Doc. 2021–15936 Filed 7–22–21; 11:15 am] BILLING CODE 8011–01–P BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings Sunshine Act Meeting; Cancellation TIME AND DATE: 2:00 p.m. on Thursday, July 29, 2021. The meeting will be held via remote means and/or at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. STATUS: This meeting will be closed to the public. MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the Commission’s website at https:// www.sec.gov. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 jbell on DSKJLSW7X2PROD with NOTICES PLACE: 37 17 FEDERAL REGISTER CITATION OF PREVIOUS ANNOUNCEMENT: 86 FR 38391, July 20, 2021. PREVIOUSLY ANNOUNCED TIME AND DATE OF THE MEETING: Thursday, July 22, 2021 at 2:00 p.m. The Closed Meeting scheduled for Thursday, July 22, 2021 at 2:00 p.m., has been cancelled. CHANGES IN THE MEETING: CONTACT PERSON FOR MORE INFORMATION: For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. Dated: July 21, 2021. Vanessa A. Countryman, Secretary. [FR Doc. 2021–15907 Filed 7–22–21; 11:15 am] BILLING CODE 8011–01–P CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:10 Jul 23, 2021 Jkt 253001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–92451; File No. 4–698] Joint Industry Plan; Order Instituting Proceedings To Determine Whether To Approve or Disapprove an Amendment to the National Market System Plan Governing the Consolidated Audit Trail July 20, 2021. I. Introduction On March 31, 2021, the Operating Committee for Consolidated Audit Trail, LLC (‘‘CAT LLC’’ or the ‘‘Company’’), on behalf of the following parties to the National Market System Plan Governing the Consolidated Audit Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’): 1 BOX Exchange LLC; Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe C2 Exchange, Inc., Cboe Exchange, Inc., Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’), Investors Exchange LLC, Long-Term Stock Exchange, Inc., Miami International Securities Exchange LLC, MEMX, LLC, MIAX Emerald, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National, Inc. (collectively, the ‘‘Participants,’’ ‘‘selfregulatory organizations,’’ or ‘‘SROs’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) pursuant to Section 11A(a)(3) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’),2 and Rule 608 thereunder,3 a proposed amendment (‘‘Proposed Amendment’’) to the CAT NMS Plan to implement a revised funding model (‘‘Proposed Funding Model’’) for the consolidated audit trail (‘‘CAT’’) and to establish a fee schedule for Participant CAT fees in accordance with the Proposed Funding Model (‘‘Participant Fee Schedule’’). The Proposed Amendment was published for comment in the Federal Register on April 21, 2021.4 1 The CAT NMS Plan is a national market system plan approved by the Commission pursuant to Section 11A of the Exchange Act and the rules and regulations thereunder. See Securities Exchange Act Release No. 79318 (November 15, 2016), 81 FR 84696 (November 23, 2016). 2 15 U.S.C. 78k–1(a)(3). 3 17 CFR 242.608. 4 See Notice of Filing of Amendment to the National Market System Plan Governing the Consolidated Audit Trail, Release No. 91555 (April 14, 2021), 86 FR 21050 (‘‘Notice’’). Comments received in response to the Notice can be found on E:\FR\FM\26JYN1.SGM 26JYN1

Agencies

[Federal Register Volume 86, Number 140 (Monday, July 26, 2021)]
[Notices]
[Pages 40111-40114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15832]



[[Page 40111]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92453; File No. SR-NYSEArca-2021-63]


Self-Regulatory Organizations; NYSE Arca, Inc.; 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

July 21, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on July 12, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 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 amend Rule 6.4-O to permit Monday and 
Wednesday expirations for options listed pursuant to the Short Term 
Options Series Program on the Invesco QQQ TrustTM Series 
(``QQQ'') ETF Trust. The proposed rule change is available on the 
Exchange's website at www.nyse.com, 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 self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to amend Rule 6.4-O, Series of 
Options Open for Trading, to permit Monday and Wednesday expirations 
for options listed pursuant to the Short Term Options Series Program 
(``Program'') on QQQ.
    A Short Term Options Series is a series in an option class that is 
approved for listing and trading on the Exchange in which the series is 
opened for trading on any Monday, Tuesday, Wednesday, Thursday or 
Friday that is a business day and that expires on the Monday, Wednesday 
or Friday of the next business week, or, in the case of a series that 
is listed on a Friday and expires on a Monday, is listed one business 
week and one business day prior to that expiration.\4\ The Exchange is 
proposing to amend Rule 6.4-O Commentary .07(g) to permit the listing 
of options series that expire on Mondays and Wednesdays in QQQ.
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    \4\ See NYSE Arca Rule 6.1-O(b)41. Short Term Option Series.
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Monday Expirations
    As proposed, with respect to Monday QQQ Expirations within Rule 
6.4-O Commentary .07, 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.\5\
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    \5\ The Exchange proposes to make a clarifying change to Rule 
6.4-O Commentary .07(g) to make clear that the Exchange may have no 
more than a total of five each of Wednesday SPY Expirations and 
Wednesday QQQ Expirations and a total of five each of Monday SPY 
Expirations and Monday QQQ Expirations. The Exchange also proposes 
to make a non-substantive change to add the word ``business'' before 
``day'' in the first sentence of Rule 6.4-O Commentary .07(g).
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Wednesday Expirations
    As proposed, with respect to Wednesday QQQ Expirations within Rule 
6.4-O Commentary .07, 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.\6\ Specifically, the Monday and Wednesday 
QQQ Expirations will have a $0.50 strike interval minimum.\7\ As is the 
case with other equity options series listed pursuant to the Program, 
the Monday and Wednesday QQQ Expirations series will be P.M. settled.
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    \6\ See NYSE Arca Rule 6.4-O Commentary .07(g).
    \7\ See NYSE Arca Rule 6.4-O Commentary .07(e).
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    Pursuant to Rule 6.1-O,\8\ 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 Rule 6.1-O \9\ 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. Nasdaq PHLX LLC (``Phlx'') uses the same procedure for QQQ 
with Monday and Wednesday expirations.\10\ Nasdaq Phlx \11\ and Nasdaq 
ISE, LLC (``ISE'') \12\ also use the same procedure for options on the 
Nasdaq-100[supreg] (``NDX'') with Monday expirations that are listed 
pursuant to its Nonstandard Expirations

[[Page 40112]]

Pilot Programs, respectively. Cboe Exchange, Inc. (``Cboe'') uses the 
same procedure for options on the S&P500 index (``SPX'') with Monday 
expirations that are listed pursuant to its Nonstandard Expirations 
Pilot Program and that are scheduled to expire on a holiday.\13\
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    \8\ Rule 6.1-O, Definition of ``Short Term Option Series.''
    \9\ Id.
    \10\ See Securities Exchange Act Release No. 91238 (March 2, 
2021), 86 FR 13404 (March 8, 2021) (SR-Phlx-2021-10).
    \11\ See Phlx Options 4A, Section 12(b)(5).
    \12\ See ISE Supplementary Material .07 to Options 4A, Section 
12.
    \13\ 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.''
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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.\14\ The thirty (30) series 
restriction does not include series that are open by other securities 
exchanges under their respective short term options rules; the Exchange 
may list these additional series that are listed by other 
exchanges.\15\ 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.
---------------------------------------------------------------------------

    \14\ See NYSE Arca Rule 6.4-O Commentary .07.
    \15\ Id.
---------------------------------------------------------------------------

    Finally, the Exchange is amending Rule 6.4-O Commentary .07(a), 
which addresses the listing of Short Term Options Series that expire in 
the same week as monthly or quarterly options series. Currently, that 
rule states that no Short Term Option Series may expire in the same 
week in which monthly option series on the same class expire (with the 
exception of Monday and Wednesday SPY Expirations) or, in the case of 
Quarterly Options Series, on an expiration that coincides with an 
expiration of Quarterly Options Series on the same class.\16\ 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.
---------------------------------------------------------------------------

    \16\ See NYSE Arca Rule 6.4-O Commentary .07(a).
---------------------------------------------------------------------------

    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. The Exchange currently 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 Monday and Wednesday QQQ 
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 its proposed rule change is consistent 
with Section 6(b) of the Act \17\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \18\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanisms of a free and open market and a national market system and, 
in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change is intended to provide 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. The 
Exchange currently lists Monday and Wednesday SPY Expirations.\19\ 
Also, Cboe \20\ 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 \21\ and 
ISE \22\ currently permit Monday and Wednesday expirations for other 
options with a weekly expiration on NDX pursuant to its Nonstandard 
Expirations Pilot Programs, respectively.
---------------------------------------------------------------------------

    \19\ Supra note 14.
    \20\ Supra note 13.
    \21\ Supra note 11.
    \22\ Supra note 12.
---------------------------------------------------------------------------

    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 currently treated in this 
manner.\23\ Cboe \24\ 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 \25\ and ISE \26\ for NDX options with Monday 
expirations that are listed pursuant to their Nonstandard Expirations 
Pilot Programs, respectively.
---------------------------------------------------------------------------

    \23\ Supra note 14.
    \24\ Supra note 13.
    \25\ Supra note 11.
    \26\ Supra note 12.
---------------------------------------------------------------------------

    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 NYSE Arca Rule 6.4-O 
Commentary .07 that currently apply to Monday and Wednesday SPY

[[Page 40113]]

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 NYSE Arca Rule 
6.4-O Commentary .07 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 novel proposal, as 
Monday and Wednesday SPY Expirations are currently listed on the 
Exchange.\27\ Cboe \28\ 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 \29\ and ISE \30\ for NDX options with Monday 
expirations that are listed pursuant to their Nonstandard Expirations 
Pilot Programs, respectively.
---------------------------------------------------------------------------

    \27\ Supra note 14.
    \28\ Supra note 13.
    \29\ Supra note 11.
    \30\ Supra note 12.
---------------------------------------------------------------------------

    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 solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \31\ and Rule 19b-
4(f)(6) thereunder.\32\
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    \31\ 15 U.S.C. 78s(b)(3)(A).
    \32\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its 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) \33\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\34\ the Commission 
may 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.\35\ The Exchange has stated that waiver of the operative 
delay is consistent with the protection of investors and the public 
interest as it would encourage fair competition among exchanges by 
allowing the Exchange to compete effectively with Phlx by having the 
ability to list and trade the same Monday and Wednesday QQQ Expirations 
that Phlx is able to list and trade. 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.\36\
---------------------------------------------------------------------------

    \33\ 17 CFR 240.19b-4(f)(6).
    \34\ 17 CFR 240.19b-4(f)(6)(iii).
    \35\ See Securities Exchange Act Release No. 91614 (April 20, 
2021), 86 FR 22082 (April 26, 2021) (SR-Phlx-2021-10).
    \36\ 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 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-NYSEArca-2021-63 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-NYSEArca-2021-63. 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

[[Page 40114]]

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-
NYSEArca-2021-63, and should be submitted on or before August 16, 2021.
---------------------------------------------------------------------------

    \37\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15832 Filed 7-23-21; 8:45 am]
BILLING CODE 8011-01-P
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