Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Opening Process, 41105-41109 [2021-16229]
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41105
Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Notices
PROCEDURAL SCHEDULE FOR DOCKET NO. N2021–2—Continued
[Modified by the Presiding Officer, July 26, 2021]
Rebuttal Cases Discovery Responses Due ......................................................................................................................
Filing of Notice of Designations on Rebuttal Discovery Responses .................................................................................
Surrebuttal Case Deadlines (if applicable):
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[FR Doc. 2021–16212 Filed 7–29–21; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL REGULATORY COMMISSION
[Docket Nos. MC2021–116 and CP2021–118]
New Postal Products
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Commission is noticing a
recent Postal Service filing for the
Commission’s consideration concerning
a negotiated service agreement. This
notice informs the public of the filing,
invites public comment, and takes other
administrative steps.
DATES: Comments are due: August 2,
2021.
SUMMARY:
Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Docketed Proceeding(s)
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I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
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dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2021–116 and
CP2021–118; Filing Title: USPS Request
to Add Priority Mail Contract 714 to
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
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August 16, 2021.
August 17, 2021.
August 6, 2021.
August 10, 2021.
August 11, 2021.
August 11–13, 2021.
August 18–20, 2021.
August 20, 2021.
August 27, 2021.
September 29, 2021.
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: July 23, 2021; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Kenneth R. Moeller; Comments Due:
August 2, 2021.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2021–16213 Filed 7–29–21; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92494; File No. SR–ISE–
2021–17]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Opening
Process
July 26, 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 July 19,
2021 Nasdaq ISE, LLC (‘‘ISE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘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
solicit comments on the proposed rule
change from interested persons.
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend ISE
Options 3, Section 8, ‘‘Options Opening
Process.’’
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
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1. Purpose
ISE proposes to amend Options 3,
Section 8, ‘‘Options Opening Process.’’
Specifically, the Exchange proposes to
amend the definition of Valid Width
Quote at Options 3, Section 8(a)(8).
ISE’s Opening Process for an option
series is conducted pursuant to Options
3, Section 8 paragraphs (f)–(j), on or
after 9:30 a.m. Eastern Time if the
ABBO, if any, is not crossed and the
System has received, within two
minutes 3 of the opening trade or quote
on the market for the underlying
security,4 a Valid Width Quote. The
System will accept a Primary Market
Maker’s Valid Width Quote or the Valid
Width Quote of at least one Competitive
Market Maker.5 Today, ISE requires a
Primary Market Maker to enter a Valid
Width Quote in 90% of their assigned
series, not later than one minute
3 The Exchange may designated a shorter time
provided it is disseminated to membership on the
Exchange’s website.
4 In the case of index options, the timing is within
two minutes of the receipt of the opening price in
the underlying index or within two minutes of
market opening for the underlying security in the
case of U.S. dollar-settled foreign currency options.
In both cases the Exchange may designated a
shorter time provided it is disseminated to
membership on the Exchange’s website.
5 The Exchange proposes an amendment within
Options 3, Section 8(c)(1)(B) as described below.
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following the dissemination of a quote
or trade by the market for the
underlying security.6 PMMs must
promptly enter a Valid Width Quote in
the remainder of their assigned series,
which did not open within one minute
following the dissemination of a quote
or trade by the market for the
underlying security.7 In either case, the
Primary Market Maker or Competitive
Market Maker must enter a Valid Width
Quote to open an options series. ISE
Options 3, Section 8(a)(8) defines a
Valid Width Quote as follows:
A ‘‘Valid Width Quote’’ is a two-sided
electronic quotation submitted by a
Market Maker that meets the following
requirements: Differentials shall be no
more than $.25 between the bid and
offer for each options contract for which
the bid is less than $2, no more than
$.40 where the bid is at least $2 but does
not exceed $5, no more than $.50 where
the bid is more than $5 but does not
exceed $10, no more than $.80 where
the bid is more than $10 but does not
exceed $20, and no more than $1 where
the bid is $20 or greater, provided that,
in the case of equity options, the bid/ask
differentials stated above shall not apply
to in-the-money series where the market
for the underlying security is wider than
the differentials set forth above. The
bid/ask differentials for in-the-money
options series may be as wide as the
quotation for the underlying security on
the primary market, or its decimal
equivalent rounded down to the nearest
minimum increment. The Exchange
may establish differences other than the
above for one or more series or classes
of options.
The Exchange proposes to amend a
Valid Width Quote to instead provide:
A ‘‘Valid Width Quote’’ is a two-sided
electronic quotation submitted by a
Market Maker that meets the following
requirements: Differentials shall be no
more than $5, provided that, in the case
of equity options, the bid/ask
differential stated above shall not apply
6 In the case of index options, a Primary Market
Maker must enter a Valid Width Quote in 90% of
their assigned series, not later than one minute
following the receipt of the opening price in the
underlying index. The PMM assigned in a
particular U.S. dollar-settled foreign currency
option must enter a Valid Width Quote, in 90% of
their assigned series, not later than one minute after
the announced market opening. See Options 3,
Section 8(c)(3). The Exchange proposes to make a
technical amendment to Options 3, Section 8(c)(3)
which is described below.
7 In the case of index options, Primary Market
Makers must promptly enter a Valid Width Quote
in the remainder of their assigned series, which did
not open following the receipt of the opening price
in the underlying index or, with respect to U.S.
dollar-settled foreign currency options, following
the announced market opening. See Options 3,
Section 8(c)(3).
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to in-the-money series where the market
for the underlying security is wider than
the differential set forth above. The bid/
ask differentials for in-the-money
options series may be as wide as the
quotation for the underlying security on
the primary market, or its decimal
equivalent rounded down to the nearest
minimum increment. The Exchange
may establish differences other than the
above for one or more series or classes
of options. Such differences will be
posted by the Exchange on its website.
This proposed language is similar to
Nasdaq BX, Inc. (‘‘BX’’).8 The Exchange
proposes to widen the current bid/ask
differentials for several reasons.
First, the proposal would conform the
Valid Width Quote definition of ISE to
that of BX. BX refers to a difference not
to exceed $5 between the bid and offer
within the description of a Valid Width
Quote, similar to BX Options 2, Section
4(f) and 5(d)(2) that describes intra-day
quotes. By amending ISE’s Valid Width
Quote, the Exchange notes that the $5
difference is akin to ISE’s intra-day
requirement within ISE Options 2,
Section 4(b)(4).9
Second, the proposed differential
would simplify the differential for
Primary Market Makers, who would
continue to be required to submit a
Valid Width Quote during the Opening
Process in their assigned options series.
Widening the differentials would allow
Primary Market Makers, and
Competitive Market Makers that elect to
quote during the Opening Process, an
ability to quote wider during the
Opening Process when an underlying is
8 BX Options 3, Section 8(a)(9) provides, ‘‘A
‘Valid Width Quote’ is a two-sided electronic
quotation, submitted by a Market Maker, quoted
with a difference not to exceed $5 between the bid
and offer regardless of the price of the bid.
However, respecting in-the-money series where the
market for the underlying security is wider than $5,
the bid/ask differential may be as wide as the
quotation for the underlying security on the
primary market, or its decimal equivalent rounded
down to the nearest minimum increment. The
Exchange may establish differences other than the
above for one or more series or classes of options.’’
See also Securities Exchange Act Release No. 89731
(September 1, 2020), 85 FR 55524 (September 8,
2020) (SR–BX–2020–016) (Order Approving
Proposed Rule Change To Amend BX’s Opening
Process in Connection With a Technology
Migration).
9 ISE Options 2, Section 4(b)(4) provides, ‘‘. . .To
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. The Exchange may establish
differences other than the above for one or more
series or classes of options.’’ Intra-day, ISE also
distinguishes in-the-money options series where the
underlying securities market is wider than the
differentials set forth above. For these series, the
bid/ask differential may be as wide as the spread
between the national best bid and offer in the
underlying security.
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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Notices
volatile. Today, pursuant to Options 3,
Section 8(a)(8), the Exchange may
establish differences other than the
established bid/ask differentials for one
or more series or classes of options.
With this proposal, the Exchange is not
amending its ability to continue to
establish differences for one or more
series or classes of options, rather the
Exchange may continue to set other
requirements pursuant to current ISE
Options 3, Section 8(a)(8). Today, the
Exchange has established Valid Width
Quote differentials which differ from
those described within Options 3,
Section 8(a)(8),10 they are:
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exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 15 requirement that
the rules of an exchange not be designed
Maximum
to permit unfair discrimination between
Bid price low Bid price high
bid/ask
end of
end of
customers, issuers, brokers, or dealers.
differential
The Exchange believes that the
$0.00
$1.99
$0.75 proposed $5 difference for the Valid
2.00
4.99
1.20 Width Quote is more appropriate
5.00
9.99
1.50 because it reflects the Exchange’s
10.00
19.99
2.40 experience in administering the rule
20.00
20.00+
3.00
and would continue to give Market
Also, options with an expiration more Makers flexibility including during the
Opening Process. The Exchange notes
than nine months away continue to be
that the current standard is not being
permitted a Valid Width Quote bid/ask
applied as the Exchange has established
differential of $5.00. The Exchange will
Valid Width Quote differentials which
continue to utilize the differentials
differ from those described within
currently posted on its website until
Options 3, Section 8(a)(8).16 Widening
such time as it provides notice to
the
Valid Width Quote requirement
Members of a change.
would provide Primary Market Makers,
Third, the Exchange proposes to add
and Competitive Market Makers that
rule text to state that such differences
elect to quote during the Opening
will be posted by the Exchange on its
Process, additional flexibility when
website.11 Posting the current
differentials on its website would allow submitting Valid Width Quotes during
the Opening Process thereby allowing
Members to easily refer to the quoting
these Market Makers the ability to quote
obligations for the Opening Process.
wider in instances where the Exchange
Technical Amendment
has not established Valid Width Quote
differentials which differ from those in
The Exchange proposes to amend
the rule because volatile market
‘‘Quotes’’ to ‘‘Quote’’ within Options 3,
conditions exist or there is news
Section 8(c)(1)(B). The Exchange also
regarding an underlying security which
proposes to remove two incorrect
may impact pricing. Primary Market
citations to Options 3, Section
Makers are integral to the Exchange’s
8(c)(1)(C). The ‘‘C’’ was removed in a
Opening Process as ISE is dependent on
prior rule change.12
receiving a Valid Width Quote to open
2. Statutory Basis
an options series. With this proposal,
The Exchange believes that its
Primary Market Makers would continue
proposal to establish a $5 difference is
to be required to submit a Valid Width
consistent with Section 6(b) of the
Quote during the Opening Process in
Act.13 Specifically, the Exchange
their assigned options series.17
believes the proposed rule change is
The proposal would conform the
consistent with the Section 6(b)(5) 14
Valid Width Quote definition of ISE to
requirements that the rules of an
that of BX.18 BX refers to a difference
10 See https://www.nasdaq.com/docs/2021/03/22/
ISESystemSettings.pdf.
11 Id.
12 See Securities Exchange Act Release No. 88729
(April 22, 2020), 85 FR 23573 (April 28, 2020) (SR–
ISE–2020–15) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Amend
ISE Rules at Options 3, Section 8, Titled Options
Opening Process).
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
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15 Id.
supra note 10.
ISE, Nasdaq GEMX, LLC (‘‘GEMX’’),
Nasdaq MRX, LLC (‘‘MRX’’), Nasdaq Phlx LLC
(‘‘Phlx’’), Miami International Securities Exchange,
LLC (‘‘MIAX’’) and MIAX Emerald, LLC
(‘‘Emerald’’) and are the only options markets that
require a Primary Market Maker, or Lead Market
Maker in the case of Phlx, to submit a quote to open
an options series.
18 See supra note 8.
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16 See
17 Today,
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41107
not to exceed $5 between the bid and
offer within the description of a Valid
Width Quote, similar to BX Options 2,
Section 4(f) and 5(d)(2) that describes
intra-day quotes. By amending ISE’s
Valid Width Quote, the Exchange notes
that the $5 difference is akin to ISE’s
intra-day requirement within ISE
Options 2, Section 4(b)(4).19 Also,
today, MIAX and Emerald require
market makers to enter a valid width
NBBO with a difference of no more than
$5 between the bid and offer.20
Not all options markets have bid/ask
differentials. In 2019, Cboe removed its
quote width requirements while citing
corresponding rules of its affiliated
exchanges.21 Cboe noted in the 2019
Rule Change that the current quote
width requirement at the time for
generally all classes was $10, however,
its Market-Makers consistently
maintained two-sided quotes that were
much tighter than the required width.
Cboe opined that, even if markets
experienced periods of stress or
volatility, they remained obligated to
maintain two sided markets and engage
in a course of dealings that must be
reasonably calculated to contribute to
the maintenance of a fair and orderly
market, which includes refraining from
making bids or offers that are
inconsistent with such course of
dealings and updating quotations in
response to changed market
conditions.22 Cboe noted that it did not
believe that continuing to provide for a
quote width requirement was necessary
nor would it impact the maintenance of
fair and orderly markets because
Market-Makers already quoted at a bid/
ask spread much narrower than the
requirements and were required to
continuously fulfill their obligations to
engage in a course of dealings
reasonably calculated to contribute to
the maintenance of a fair and orderly
market.23
Unlike Cboe, ISE does require its
Market Makers to quote both during the
Opening Process and intra-day within
certain established bid/ask differentials.
19 See
supra note 9.
and Emerald require Market Makers to
submit a valid width NBBO in the opening where
the bid and offer of the NBBO differ no more than
differences outlined in MIAX and Emerald Rule
603(b)(4)(i). MIAX and Emerald Rule 603(b)(4)(i)
provides that bidding and offering so as to create
differences of no more than $5 between the bid and
offer. Rule 603(b)(4)(ii) provides MIAX and Emerald
may establish differences other than the bid/ask
differentials described in (i) above for one or more
option series or classes, respectively. See MIAX and
Emerald Rules 503.
21 See Securities Exchange Act Release No. 87024
(September 19, 2019), 84 FR 50545 (September 25,
2019) (SR–Cboe–2019–059) (‘‘2019 Rule Change’’).
22 Id.
23 Id.
20 MIAX
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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Notices
The Exchange notes that widening its
Valid Width Quote differential during
the Opening Process will not impact the
maintenance of fair and orderly markets
because Market Makers on ISE, unlike
other markets that do not require
quoting during the Opening Process,
will continue to require that its Market
Makers provide Valid Width Quotes
during the Opening Process, thereby
ensuring liquidity. Also, Market Makers
may quote tighter than the defined Valid
Width Quote differential. Finally,
similar to Cboe’s argument in the 2019
Rule Change, Market Makers are
required to continuously fulfill their
obligations to engage in a course of
dealings reasonably calculated to
contribute to the maintenance of a fair
and orderly market.
Today, the Exchange has discretion to
set other differentials,24 similar to MIAX
and Emerald.25 The Exchange currently
is utilizing that discretion to set
different bid/ask differentials based on
its observation of market openings.
Currently, the Exchange requires Market
Makers to submit Valid Width Quotes
which are tighter than the proposed $5
difference.
The Exchange’s robust Opening
Process seeks to encourage quality
markets. As noted herein, unlike a
majority of options markets,26 it requires
Primary Market Makers to quote during
the Opening Process to ensure liquidity
as well as efficient Opening Process
where options series are opened quickly
and at fair prices.
The proposal to add rule text to state
that such differences will be posted by
the Exchange on its website 27 would
allow Members to easily refer to the
quoting obligations for the Opening
Process.
Technical Amendment
The Exchange’s proposal to amend
‘‘Quotes’’ to ‘‘Quote’’ within Options 3,
Section 8(c)(1)(B) and remove two
incorrect citations to Options 3, Section
8(c)(1)(C) will bring greater clarity to the
Exchange’s Rules.
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange’s proposal to require Primary
24 See
Options 3, Section 8(a)(8), the Exchange
may establish differences other than the established
bid/ask differentials for one or more series or
classes of options.
25 See MIAX and Emerald Rules 503.
26 See supra note 17.
27 Id.
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Market Makers and Competitive Market
Makers to bid and/or offer an option
series with differences of no more than
$5 for options on equities and index
options does not impose an undue
burden on competition. All Primary
Market Makers, and Competitive Market
Makers who elect to quote during the
Opening Process, would be subject to
the same requirement to submit a Valid
Width Quote when submitting quotes
during the Opening Process.
Differentials would be available on the
Exchange’s website and therefore
transparent, allowing Members to easily
refer to the quoting obligations for the
Opening Process. Finally, the proposal
would also align quoting requirements
more closely to intra-day requirements
within ISE Options 2, Section 4(b)(4).
With respect to inter-market
competition, the Exchange notes that
most options markets do not require
market makers to quote during the
opening.28 The Exchange notes that
MIAX and Emerald have quoting
requirements in the opening similar to
the differential proposed herein. Also,
GEMX, MRX and Phlx are filing similar
rule changes to this proposal.29
Technical Amendment
The Exchange’s proposal to amend
‘‘Quotes’’ to ‘‘Quote’’ within Options 3,
Section 8(c)(1)(B) and remove two
incorrect citations to Options 3, Section
8(c)(1)(C) will bring greater clarity to the
Exchange’s Rules.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 30 and
subparagraph (f)(6) of Rule 19b–4
thereunder.31
28 See supra note 17 citing the options markets
that require bid/ask differentials.
29 See SR–GEMX–2021–07, SR–MRX–2021–09
and SR–Phlx–2021–42. These rule changes are not
yet noticed.
30 15 U.S.C. 78s(b)(3)(A)(iii).
31 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
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At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
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–
ISE–2021–17 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–2021–17. 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
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.
E:\FR\FM\30JYN1.SGM
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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Notices
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–2021–17 and should be
submitted on or before August 20, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–16229 Filed 7–29–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92506; File No. SR–
NYSEArca–2021–65]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of the Sprott ESG Gold ETF Under
NYSE Arca Rule 8.201–E
July 26, 2021.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on July 19,
2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘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
solicit comments on the proposed rule
change from interested persons.
lotter on DSK11XQN23PROD with NOTICES1
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the Sprott ESG Gold ETF
under NYSE Arca Rule 8.201–E. The
proposed 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.
32 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
17:24 Jul 29, 2021
Jkt 253001
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of 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 Exchange proposes to list and
trade shares (‘‘Shares’’) of the Sprott
ESG Gold ETF (the ‘‘Trust’’), under
NYSE Arca Rule 8.201–E.4 Under NYSE
Arca Rule 8.201–E, the Exchange may
propose to list and/or trade CommodityBased Trust Shares pursuant to unlisted
trading privileges (‘‘UTP’’).5
The Trust will not be registered as an
investment company under the
Investment Company Act of 1940, as
amended,6 and is not required to
register under such act. The Trust is not
a commodity pool for purposes of the
Commodity Exchange Act, as amended.7
4 On February 11, 2021, the Trust submitted to
the Commission its draft registration statement on
Form S–1 under the Securities Act of 1933 (15
U.S.C. 77a) (‘‘Securities Act’’) and on July 1, 2021,
the Trust submitted to the Commission the most
recent amendment to its draft registration statement
(collectively, the ‘‘Registration Statement’’). The
Jumpstart Our Business Startups Act, enacted on
April 5, 2012, added Section 6(e) to the Securities
Act. Section 6(e) of the Securities Act provides that
an ‘‘emerging growth company’’ may confidentially
submit to the Commission a draft registration
statement for confidential, non-public review by the
Commission staff prior to public filing, provided
that the initial confidential submission and all
amendments thereto shall be publicly filed not later
than 21 days before the date on which the issuer
conducts a road show, as such term is defined in
Securities Act Rule 433(h)(4). An emerging growth
company is defined in Section 2(a)(19) of the
Securities Act as an issuer with less than
$1,070,000,000 total annual gross revenues during
its most recently completed fiscal year. The Trust
meets the definition of an emerging growth
company and consequently has submitted its Form
S–1 Registration Statement on a confidential basis
with the Commission. The Registration Statement
in not yet effective and the Shares will not trade
on the Exchange until such time that the
Registration Statement is effective.
5 Commodity-Based Trust Shares are securities
issued by a trust that represent investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the
Trust.
6 15 U.S.C. 80a–1.
7 17 U.S.C. 1.
PO 00000
Frm 00108
Fmt 4703
Sfmt 4703
41109
The Sponsor of the Trust is Sprott
Asset Management LP, a Canadian
limited partnership. The Bank of New
York Mellon serves as the Trust’s
administrator (the ‘‘Administrator’’) and
transfer agent (the ‘‘Transfer Agent’’).
The Delaware Trust Company is the
trustee of the Trust (the ‘‘Trustee’’).8
The Royal Canadian Mint is the
custodian of the Trust’s gold (the ‘‘Gold
Custodian’’ or ‘‘Mint’’).9 The Bank of
New York Mellon will also serve as the
Trust’s cash custodian (the ‘‘Cash
Custodian’’) pursuant to the terms of the
agreement between the Trust and the
Cash Custodian (the ‘‘Cash Custody
Agreement’’). In its capacity as cash
custodian, the Cash Custodian will
maintain a custodial account that holds
cash for the benefit of the Trust for the
purpose of payment of the Sponsor’s fee
in cash or the other expenses of the
Trust.
The Commission has previously
approved listing on the Exchange under
NYSE Arca Rules 5.2–E(j)(5) and 8.201–
E of other precious metals and goldbased commodity trusts, including the
GraniteShares Gold MiniBAR Trust; 10
the GraniteShares Gold Trust; 11 the
8 The Trustee is a fiduciary under the Trust
Agreement and must satisfy the requirements of
Section 3807 of the Delaware Statutory Trust Act.
However, the fiduciary duties, responsibilities and
liabilities of the Trustee are limited by, and are only
those specifically set forth in, the Trust Agreement.
The Trust does not have a Board of Directors or
persons acting in a similar capacity.
9 The Mint operates pursuant to the Royal
Canadian Mint Act (Canada) and is a Canadian
Crown corporation. Crown corporations are
corporations wholly-owned by the Government of
Canada. The Mint is, for all its purposes, an agent
of Her Majesty in right of Canada and, as such, its
obligations generally constitute unconditional
obligations of the Government of Canada. The Gold
Custodian is responsible for safekeeping the gold
owned by the Trust pursuant to gold storage and
custody agreements. The Gold Custodian will hold
gold for the account of the Trust on an allocated
basis (the ‘‘Trust Allocated Account’’), except
where gold is temporarily held in an unallocated
account (the ‘‘Trust Unallocated Account’’). The
Sponsor may cause the Trust to engage unaffiliated
gold brokers to transfer unallocated gold between
the Trust’s custody accounts maintained for the
benefit of the Trust by the Gold Custodian in
Ottawa, Canada and London, United Kingdom
where it can be delivered to a redeeming
Authorized Participant (as defined below) if
additional unallocated gold is needed by the Trust
to satisfy the redeeming Authorized Participant’s
redemption request. The Gold Custodian is
responsible for allocating specific bars of gold to the
Trust Allocated Account. The Gold Custodian will
provide the Trust with regular reports detailing the
gold transfers in and out of the Trust Unallocated
Account with the Gold Custodian and identifying
the gold bars held in the Trust Allocated Account.
10 Securities Exchange Act Release No. 84257
(September 21, 2018), 83 FR 48877 (September 27,
2018) (SR–NYSEArca–2018–55).
11 Securities Exchange Act Release No. 81077
(July 5, 2017), 82 FR 32024 (July 11, 2017) (SR–
NYSEArca–2017–55).
E:\FR\FM\30JYN1.SGM
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]]>Agencies
[Federal Register Volume 86, Number 144 (Friday, July 30, 2021)]
[Notices]
[Pages 41105-41109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16229]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92494; File No. SR-ISE-2021-17]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Opening Process
July 26, 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 July 19, 2021 Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed with
the Securities and Exchange Commission (``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 solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
[[Page 41106]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend ISE Options 3, Section 8, ``Options
Opening Process.''
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
ISE proposes to amend Options 3, Section 8, ``Options Opening
Process.'' Specifically, the Exchange proposes to amend the definition
of Valid Width Quote at Options 3, Section 8(a)(8).
ISE's Opening Process for an option series is conducted pursuant to
Options 3, Section 8 paragraphs (f)-(j), on or after 9:30 a.m. Eastern
Time if the ABBO, if any, is not crossed and the System has received,
within two minutes \3\ of the opening trade or quote on the market for
the underlying security,\4\ a Valid Width Quote. The System will accept
a Primary Market Maker's Valid Width Quote or the Valid Width Quote of
at least one Competitive Market Maker.\5\ Today, ISE requires a Primary
Market Maker to enter a Valid Width Quote in 90% of their assigned
series, not later than one minute following the dissemination of a
quote or trade by the market for the underlying security.\6\ PMMs must
promptly enter a Valid Width Quote in the remainder of their assigned
series, which did not open within one minute following the
dissemination of a quote or trade by the market for the underlying
security.\7\ In either case, the Primary Market Maker or Competitive
Market Maker must enter a Valid Width Quote to open an options series.
ISE Options 3, Section 8(a)(8) defines a Valid Width Quote as follows:
---------------------------------------------------------------------------
\3\ The Exchange may designated a shorter time provided it is
disseminated to membership on the Exchange's website.
\4\ In the case of index options, the timing is within two
minutes of the receipt of the opening price in the underlying index
or within two minutes of market opening for the underlying security
in the case of U.S. dollar-settled foreign currency options. In both
cases the Exchange may designated a shorter time provided it is
disseminated to membership on the Exchange's website.
\5\ The Exchange proposes an amendment within Options 3, Section
8(c)(1)(B) as described below.
\6\ In the case of index options, a Primary Market Maker must
enter a Valid Width Quote in 90% of their assigned series, not later
than one minute following the receipt of the opening price in the
underlying index. The PMM assigned in a particular U.S. dollar-
settled foreign currency option must enter a Valid Width Quote, in
90% of their assigned series, not later than one minute after the
announced market opening. See Options 3, Section 8(c)(3). The
Exchange proposes to make a technical amendment to Options 3,
Section 8(c)(3) which is described below.
\7\ In the case of index options, Primary Market Makers must
promptly enter a Valid Width Quote in the remainder of their
assigned series, which did not open following the receipt of the
opening price in the underlying index or, with respect to U.S.
dollar-settled foreign currency options, following the announced
market opening. See Options 3, Section 8(c)(3).
---------------------------------------------------------------------------
A ``Valid Width Quote'' is a two-sided electronic quotation
submitted by a Market Maker that meets the following requirements:
Differentials shall be no more than $.25 between the bid and offer for
each options contract for which the bid is less than $2, no more than
$.40 where the bid is at least $2 but does not exceed $5, no more than
$.50 where the bid is more than $5 but does not exceed $10, no more
than $.80 where the bid is more than $10 but does not exceed $20, and
no more than $1 where the bid is $20 or greater, provided that, in the
case of equity options, the bid/ask differentials stated above shall
not apply to in-the-money series where the market for the underlying
security is wider than the differentials set forth above. The bid/ask
differentials for in-the-money options series may be as wide as the
quotation for the underlying security on the primary market, or its
decimal equivalent rounded down to the nearest minimum increment. The
Exchange may establish differences other than the above for one or more
series or classes of options.
The Exchange proposes to amend a Valid Width Quote to instead
provide:
A ``Valid Width Quote'' is a two-sided electronic quotation
submitted by a Market Maker that meets the following requirements:
Differentials shall be no more than $5, provided that, in the case of
equity options, the bid/ask differential stated above shall not apply
to in-the-money series where the market for the underlying security is
wider than the differential set forth above. The bid/ask differentials
for in-the-money options series may be as wide as the quotation for the
underlying security on the primary market, or its decimal equivalent
rounded down to the nearest minimum increment. The Exchange may
establish differences other than the above for one or more series or
classes of options. Such differences will be posted by the Exchange on
its website.
This proposed language is similar to Nasdaq BX, Inc. (``BX'').\8\
The Exchange proposes to widen the current bid/ask differentials for
several reasons.
---------------------------------------------------------------------------
\8\ BX Options 3, Section 8(a)(9) provides, ``A `Valid Width
Quote' is a two-sided electronic quotation, submitted by a Market
Maker, quoted with a difference not to exceed $5 between the bid and
offer regardless of the price of the bid. However, respecting in-
the-money series where the market for the underlying security is
wider than $5, the bid/ask differential may be as wide as the
quotation for the underlying security on the primary market, or its
decimal equivalent rounded down to the nearest minimum increment.
The Exchange may establish differences other than the above for one
or more series or classes of options.'' See also Securities Exchange
Act Release No. 89731 (September 1, 2020), 85 FR 55524 (September 8,
2020) (SR-BX-2020-016) (Order Approving Proposed Rule Change To
Amend BX's Opening Process in Connection With a Technology
Migration).
---------------------------------------------------------------------------
First, the proposal would conform the Valid Width Quote definition
of ISE to that of BX. BX refers to a difference not to exceed $5
between the bid and offer within the description of a Valid Width
Quote, similar to BX Options 2, Section 4(f) and 5(d)(2) that describes
intra-day quotes. By amending ISE's Valid Width Quote, the Exchange
notes that the $5 difference is akin to ISE's intra-day requirement
within ISE Options 2, Section 4(b)(4).\9\
---------------------------------------------------------------------------
\9\ ISE Options 2, Section 4(b)(4) provides, ``. . .To 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. The Exchange may establish differences other than
the above for one or more series or classes of options.'' Intra-day,
ISE also distinguishes in-the-money options series where the
underlying securities market is wider than the differentials set
forth above. For these series, the bid/ask differential may be as
wide as the spread between the national best bid and offer in the
underlying security.
---------------------------------------------------------------------------
Second, the proposed differential would simplify the differential
for Primary Market Makers, who would continue to be required to submit
a Valid Width Quote during the Opening Process in their assigned
options series. Widening the differentials would allow Primary Market
Makers, and Competitive Market Makers that elect to quote during the
Opening Process, an ability to quote wider during the Opening Process
when an underlying is
[[Page 41107]]
volatile. Today, pursuant to Options 3, Section 8(a)(8), the Exchange
may establish differences other than the established bid/ask
differentials for one or more series or classes of options. With this
proposal, the Exchange is not amending its ability to continue to
establish differences for one or more series or classes of options,
rather the Exchange may continue to set other requirements pursuant to
current ISE Options 3, Section 8(a)(8). Today, the Exchange has
established Valid Width Quote differentials which differ from those
described within Options 3, Section 8(a)(8),\10\ they are:
---------------------------------------------------------------------------
\10\ See https://www.nasdaq.com/docs/2021/03/22/ISESystemSettings.pdf.
------------------------------------------------------------------------
Maximum bid/ask
Bid price low end of Bid price high end of differential
------------------------------------------------------------------------
$0.00 $1.99 $0.75
2.00 4.99 1.20
5.00 9.99 1.50
10.00 19.99 2.40
20.00 20.00+ 3.00
------------------------------------------------------------------------
Also, options with an expiration more than nine months away
continue to be permitted a Valid Width Quote bid/ask differential of
$5.00. The Exchange will continue to utilize the differentials
currently posted on its website until such time as it provides notice
to Members of a change.
Third, the Exchange proposes to add rule text to state that such
differences will be posted by the Exchange on its website.\11\ Posting
the current differentials on its website would allow Members to easily
refer to the quoting obligations for the Opening Process.
---------------------------------------------------------------------------
\11\ Id.
---------------------------------------------------------------------------
Technical Amendment
The Exchange proposes to amend ``Quotes'' to ``Quote'' within
Options 3, Section 8(c)(1)(B). The Exchange also proposes to remove two
incorrect citations to Options 3, Section 8(c)(1)(C). The ``C'' was
removed in a prior rule change.\12\
---------------------------------------------------------------------------
\12\ See Securities Exchange Act Release No. 88729 (April 22,
2020), 85 FR 23573 (April 28, 2020) (SR-ISE-2020-15) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
ISE Rules at Options 3, Section 8, Titled Options Opening Process).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal to establish a $5
difference is consistent with Section 6(b) of the Act.\13\
Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \14\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \15\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ Id.
---------------------------------------------------------------------------
The Exchange believes that the proposed $5 difference for the Valid
Width Quote is more appropriate because it reflects the Exchange's
experience in administering the rule and would continue to give Market
Makers flexibility including during the Opening Process. The Exchange
notes that the current standard is not being applied as the Exchange
has established Valid Width Quote differentials which differ from those
described within Options 3, Section 8(a)(8).\16\ Widening the Valid
Width Quote requirement would provide Primary Market Makers, and
Competitive Market Makers that elect to quote during the Opening
Process, additional flexibility when submitting Valid Width Quotes
during the Opening Process thereby allowing these Market Makers the
ability to quote wider in instances where the Exchange has not
established Valid Width Quote differentials which differ from those in
the rule because volatile market conditions exist or there is news
regarding an underlying security which may impact pricing. Primary
Market Makers are integral to the Exchange's Opening Process as ISE is
dependent on receiving a Valid Width Quote to open an options series.
With this proposal, Primary Market Makers would continue to be required
to submit a Valid Width Quote during the Opening Process in their
assigned options series.\17\
---------------------------------------------------------------------------
\16\ See supra note 10.
\17\ Today, ISE, Nasdaq GEMX, LLC (``GEMX''), Nasdaq MRX, LLC
(``MRX''), Nasdaq Phlx LLC (``Phlx''), Miami International
Securities Exchange, LLC (``MIAX'') and MIAX Emerald, LLC
(``Emerald'') and are the only options markets that require a
Primary Market Maker, or Lead Market Maker in the case of Phlx, to
submit a quote to open an options series.
---------------------------------------------------------------------------
The proposal would conform the Valid Width Quote definition of ISE
to that of BX.\18\ BX refers to a difference not to exceed $5 between
the bid and offer within the description of a Valid Width Quote,
similar to BX Options 2, Section 4(f) and 5(d)(2) that describes intra-
day quotes. By amending ISE's Valid Width Quote, the Exchange notes
that the $5 difference is akin to ISE's intra-day requirement within
ISE Options 2, Section 4(b)(4).\19\ Also, today, MIAX and Emerald
require market makers to enter a valid width NBBO with a difference of
no more than $5 between the bid and offer.\20\
---------------------------------------------------------------------------
\18\ See supra note 8.
\19\ See supra note 9.
\20\ MIAX and Emerald require Market Makers to submit a valid
width NBBO in the opening where the bid and offer of the NBBO differ
no more than differences outlined in MIAX and Emerald Rule
603(b)(4)(i). MIAX and Emerald Rule 603(b)(4)(i) provides that
bidding and offering so as to create differences of no more than $5
between the bid and offer. Rule 603(b)(4)(ii) provides MIAX and
Emerald may establish differences other than the bid/ask
differentials described in (i) above for one or more option series
or classes, respectively. See MIAX and Emerald Rules 503.
---------------------------------------------------------------------------
Not all options markets have bid/ask differentials. In 2019, Cboe
removed its quote width requirements while citing corresponding rules
of its affiliated exchanges.\21\ Cboe noted in the 2019 Rule Change
that the current quote width requirement at the time for generally all
classes was $10, however, its Market-Makers consistently maintained
two-sided quotes that were much tighter than the required width. Cboe
opined that, even if markets experienced periods of stress or
volatility, they remained obligated to maintain two sided markets and
engage in a course of dealings that must be reasonably calculated to
contribute to the maintenance of a fair and orderly market, which
includes refraining from making bids or offers that are inconsistent
with such course of dealings and updating quotations in response to
changed market conditions.\22\ Cboe noted that it did not believe that
continuing to provide for a quote width requirement was necessary nor
would it impact the maintenance of fair and orderly markets because
Market-Makers already quoted at a bid/ask spread much narrower than the
requirements and were required to continuously fulfill their
obligations to engage in a course of dealings reasonably calculated to
contribute to the maintenance of a fair and orderly market.\23\
---------------------------------------------------------------------------
\21\ See Securities Exchange Act Release No. 87024 (September
19, 2019), 84 FR 50545 (September 25, 2019) (SR-Cboe-2019-059)
(``2019 Rule Change'').
\22\ Id.
\23\ Id.
---------------------------------------------------------------------------
Unlike Cboe, ISE does require its Market Makers to quote both
during the Opening Process and intra-day within certain established
bid/ask differentials.
[[Page 41108]]
The Exchange notes that widening its Valid Width Quote differential
during the Opening Process will not impact the maintenance of fair and
orderly markets because Market Makers on ISE, unlike other markets that
do not require quoting during the Opening Process, will continue to
require that its Market Makers provide Valid Width Quotes during the
Opening Process, thereby ensuring liquidity. Also, Market Makers may
quote tighter than the defined Valid Width Quote differential. Finally,
similar to Cboe's argument in the 2019 Rule Change, Market Makers are
required to continuously fulfill their obligations to engage in a
course of dealings reasonably calculated to contribute to the
maintenance of a fair and orderly market.
Today, the Exchange has discretion to set other differentials,\24\
similar to MIAX and Emerald.\25\ The Exchange currently is utilizing
that discretion to set different bid/ask differentials based on its
observation of market openings. Currently, the Exchange requires Market
Makers to submit Valid Width Quotes which are tighter than the proposed
$5 difference.
---------------------------------------------------------------------------
\24\ See Options 3, Section 8(a)(8), the Exchange may establish
differences other than the established bid/ask differentials for one
or more series or classes of options.
\25\ See MIAX and Emerald Rules 503.
---------------------------------------------------------------------------
The Exchange's robust Opening Process seeks to encourage quality
markets. As noted herein, unlike a majority of options markets,\26\ it
requires Primary Market Makers to quote during the Opening Process to
ensure liquidity as well as efficient Opening Process where options
series are opened quickly and at fair prices.
---------------------------------------------------------------------------
\26\ See supra note 17.
---------------------------------------------------------------------------
The proposal to add rule text to state that such differences will
be posted by the Exchange on its website \27\ would allow Members to
easily refer to the quoting obligations for the Opening Process.
---------------------------------------------------------------------------
\27\ Id.
---------------------------------------------------------------------------
Technical Amendment
The Exchange's proposal to amend ``Quotes'' to ``Quote'' within
Options 3, Section 8(c)(1)(B) and remove two incorrect citations to
Options 3, Section 8(c)(1)(C) will bring greater clarity to the
Exchange's Rules.
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. The Exchange's proposal to
require Primary Market Makers and Competitive Market Makers to bid and/
or offer an option series with differences of no more than $5 for
options on equities and index options does not impose an undue burden
on competition. All Primary Market Makers, and Competitive Market
Makers who elect to quote during the Opening Process, would be subject
to the same requirement to submit a Valid Width Quote when submitting
quotes during the Opening Process. Differentials would be available on
the Exchange's website and therefore transparent, allowing Members to
easily refer to the quoting obligations for the Opening Process.
Finally, the proposal would also align quoting requirements more
closely to intra-day requirements within ISE Options 2, Section
4(b)(4).
With respect to inter-market competition, the Exchange notes that
most options markets do not require market makers to quote during the
opening.\28\ The Exchange notes that MIAX and Emerald have quoting
requirements in the opening similar to the differential proposed
herein. Also, GEMX, MRX and Phlx are filing similar rule changes to
this proposal.\29\
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\28\ See supra note 17 citing the options markets that require
bid/ask differentials.
\29\ See SR-GEMX-2021-07, SR-MRX-2021-09 and SR-Phlx-2021-42.
These rule changes are not yet noticed.
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Technical Amendment
The Exchange's proposal to amend ``Quotes'' to ``Quote'' within
Options 3, Section 8(c)(1)(B) and remove two incorrect citations to
Options 3, Section 8(c)(1)(C) will bring greater clarity to the
Exchange's Rules.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \30\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\31\
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\30\ 15 U.S.C. 78s(b)(3)(A)(iii).
\31\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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-2021-17 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-2021-17. 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
[[Page 41109]]
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-
2021-17 and should be submitted on or before August 20, 2021.
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\32\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-16229 Filed 7-29-21; 8:45 am]
BILLING CODE 8011-01-P
