Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Extend the Exchange's Nonstandard Expirations Pilot Program, 60952-60955 [2021-24013]

Download as PDF 60952 Federal Register / Vol. 86, No. 211 / Thursday, November 4, 2021 / Notices For similar reasons, there will be no adverse competitive impact associated with the Exchange’s proposal to present Discretionary IOCs associated with Discretionary Orders without Routing in price-time priority, rather than in random order, as is currently the case and as will remain the case for Discretionary IOCs associated with Discretionary Orders with Routing. Whereas RASH is unable to present Discretionary IOCs in time-price [sic] priority, the Exchange’s system will be capable of doing so, and thus it will do so when it assumes responsibility for handling Discretionary Orders without routing. Insofar as RASH will continue to handle Discretionary Orders with Routing, existing randomized processes for presenting Discretionary IOCs associated with those Orders for routing will continue to apply. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 18 and Rule 19b– 4(f)(6) thereunder.19 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. lotter on DSK11XQN23PROD with NOTICES1 18 15 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. 19 17 VerDate Sep<11>2014 17:57 Nov 03, 2021 Jkt 256001 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: • 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– BX–2021–049 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–BX–2021–049. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street, NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–BX–2021–049 and should be submitted on or before November 26, 2021. Frm 00162 Fmt 4703 [FR Doc. 2021–24016 Filed 11–3–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments PO 00000 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 J. Matthew DeLesDernier, Assistant Secretary. Sfmt 4703 [Release No. 34–93464; File No. SR–Phlx– 2021–65] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Extend the Exchange’s Nonstandard Expirations Pilot Program October 29, 2021. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on October 28, 2021, Nasdaq PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend the pilot period for the Exchange’s nonstandard expirations pilot program, currently set to expire on November 4, 2021. The Exchange also proposes a technical amendment to Options 4, Section 5, Series of Options Contracts Open for Trading. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/phlx/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 20 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\04NON1.SGM 04NON1 Federal Register / Vol. 86, No. 211 / Thursday, November 4, 2021 / Notices 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 lotter on DSK11XQN23PROD with NOTICES1 1. Purpose On December 15, 2017, the Commission approved a rule change for the listing and trading on the Exchange, on a twelve month pilot basis, of p.m.settled options on broad-based indexes with nonstandard expirations dates (‘‘Program’’).3 The Program permits both Weekly Expirations and End of Month (‘‘EOM’’) expirations similar to those of the a.m.-settled broad-based index options, except that the exercise settlement value of the options subject to the pilot are based on the index value derived from the closing prices of component stocks. This pilot was extended various times and is currently extended through November 4, 2021.4 Pursuant to Phlx Options 4A, Section 12(b)(5)(A) the Exchange may open for trading Weekly Expirations on any broad-based index eligible for standard options trading to expire on any Monday, Wednesday, or Friday (other than the third Friday-of-the-month or days that coincide with an EOM expiration). Weekly Expirations are subject to all provisions of Options 4A, Section 12 and are treated the same as options on the same underlying index that expire on the third Friday of the expiration month. Unlike the standard monthly options, however, Weekly Expirations are p.m.-settled. Similarly, pursuant to Options 4A, Section 12(b)(5)(B) the Exchange may open for trading EOM expirations on any broad-based index eligible for standard options trading to expire on the last trading day of the month. EOM 3 See Securities Exchange Act Release No. 82341 (December 15, 2017), 82 FR 60651 (December 21, 2017) (approving SR–Phlx–2017–79) (Order Approving a Proposed Rule Change, as Modified by Amendment No. 1 and Granting Accelerated Approval of Amendment No. 2, of a Proposed Rule Change To Establish a Nonstandard Expirations Pilot Program). 4 See Securities Exchange Act Release Nos. 84835 (December 17, 2018), 83 FR 65773 (December 21, 2018) (SR–Phlx–2018–80); 85669 (April 17, 2019), 84 FR 16913 (April 23, 2019) (SR–Phlx–2019–13); 87381 (October 22, 2019), 84 FR 57788 (October 28, 2019) (SR–Phlx–2019–43); 88684 (April 17, 2020), 85 FR 22781 (April 23, 2020) (SR–Phlx–2020–24); 90256 (October 22, 2020), 85 FR 68393 (October 28, 2020) (SR–Phlx–2020–48); and 91484 (April 6, 2021), 86 FR 19050 (April 12, 2021) (SR–Phlx– 2021–21). VerDate Sep<11>2014 17:57 Nov 03, 2021 Jkt 256001 expirations are subject to all provisions of Options 4A, Section 12 and treated the same as options on the same underlying index that expire on the third Friday of the expiration month. However, the EOM expirations are p.m.settled. The Exchange now proposes to amend Options 4A, Section 12(b)(5)(C) so that the duration of the Program for these nonstandard expirations will be through May 4, 2022. The Exchange continues to have sufficient systems capacity to handle p.m.-settled options on broadbased indexes with nonstandard expirations dates and has not encountered any issues or adverse market effects as a result of listing them. Additionally, there is continued investor interest in these products. The Exchange will continue to make public on its website any data and analysis it submits to the Commission under the Program. The Exchange will be submitting a rule change to request that the pilot program become permanent. In lieu of submitting any additional annual reports, the Exchange would provide additional information requested by the Commission in connection with the permanency rule change for this Program. The Exchange would continue to provide the Commission with ongoing data unless and until the Program is made permanent or discontinued. The Exchange believes that the proposed extension of the Program will not have an adverse impact on capacity. Technical Amendment The Exchange proposes a technical amendment to Options 4, Section 5, Series of Options Contracts Open for Trading. Specifically, the Exchange proposes to amend the second sentence of Supplementary Material .03 to Options 4, Section 5, related to the Short Term Options Series Program, which states, ‘‘The Exchange may have no more than a total of five Short Term Option Expiration Dates, not including any Monday or Wednesday SPY Expirations as provided below.’’ The Exchange proposes to amend the sentence to instead provide, ‘‘The Exchange may have no more than a total of five Short Term Option Expiration Dates, not including any Monday or Wednesday SPY, QQQ and IWM Expirations as provided below.’’ The Exchange previously filed to permit Monday and Wednesday expirations for options listed pursuant to the Short Term Options Program on the Invesco QQQ TrustSM Series ETF Trust PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 60953 (‘‘QQQ’’),5 and recently filed and was approved to permit Monday and Wednesday expirations for options listed pursuant to the Short Term Options Program on the iShares Russell 2000 ETF (‘‘IWM’’).6 The Exchange inadvertently omitted the references to ‘‘QQQ’’ and ‘‘IWM’’ in the rule text for those filings. At this time, the Exchange proposes to add ‘‘QQQ and IWM’’ to the rule text within Supplementary Material .03 to Options 4, Section 5 for clarity. This amendment is non-substantive as it proposes to make clear that Monday and Wednesday expirations are not included in determining the maximum number of Short Term Option Expiration Dates that may be listed on the Exchange. Short Term Options Series expire, by definition, on Friday. To avoid any confusion, the proposed amendment makes clear which Monday and Wednesday expirations are specifically being excluded by the Exchange. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,7 in general, and furthers the objectives of Section 6(b)(5) of the Act,8 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. The Exchange believes the proposed rule change will protect investors and the public interest by providing the Exchange, the Commission and investors the benefit of additional time to analyze nonstandard expiration options. In particular, the Exchange believes that the Program has been successful to date. The Exchange has not encountered any problems with the Program. By extending the Program, investors may continue to benefit from a wider array of investment opportunities. Additionally, both the Exchange and the Commission may continue to monitor the potential for adverse market effects of p.m.settlement on the market, including the 5 See Securities Exchange Act Release No. 91614 (April 20, 2021), 86 FR 22082 (April 26, 2021) (SR– Phlx–2021–10) (Order Approving a Proposed Rule Change To Permit Monday and Wednesday Expirations for Options Listed Pursuant to the Short Term Options Program on the Invesco QQQ TrustSM Series ETF Trust). 6 See Securities Exchange Act Release No. 93157 (September 28, 2021), 86 FR 54749 (October 4, 2021) (SR–PHLX–2021–43) (Order Approving a Proposed Rule Change To Permit Monday and Wednesday Expirations for Options Listed Pursuant to the Short Term Options Program on the iShares Russell 2000 ETF (IWM)). 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). E:\FR\FM\04NON1.SGM 04NON1 60954 Federal Register / Vol. 86, No. 211 / Thursday, November 4, 2021 / Notices underlying cash equities market, at the expiration of these options. Technical Amendment The Exchange’s proposal to amend Supplementary Material .03 to Options 4, Section 5, related to the Short Term Options Series Program, to add rule text related to Monday and Wednesday expirations for options listed pursuant to the Short Term Options Program on QQQ and IWM, which was inadvertently omitted, is consistent with the Act. Adding references to ‘‘QQQ’’ and ‘‘IWM’’ within the second sentence of Supplementary Material .03 to Options 4, Section 5 will bring greater clarity to the Exchange’s rules by explicitly stating which Monday and Wednesday expirations are specifically being excluded by the Exchange. This amendment is non-substantive and is intended to promote clarity and avoid investor confusion. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Options with nonstandard expirations would be available for trading to all market participants. Technical Amendment lotter on DSK11XQN23PROD with NOTICES1 The Exchange’s proposal to amend Supplementary Material .03 to Options 4, Section 5, related to the Short Term Options Series Program, to add rule text related to Monday and Wednesday expirations for options listed pursuant to the Short Term Options Program on QQQ and IWM, which was inadvertently omitted, does not impose an undue burden on competition as adding references to ‘‘QQQ’’ and ‘‘IWM’’ within the second sentence of Supplementary Material .03 to Options 4, Section 5 will bring greater clarity to the Exchange’s rules by explicitly stating which Monday and Wednesday expirations are specifically being excluded by the Exchange. This amendment is non-substantive and is intended to promote clarity and avoid investor confusion. 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. VerDate Sep<11>2014 17:57 Nov 03, 2021 Jkt 256001 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the 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 9 and subparagraph (f)(6) of Rule 19b–4 thereunder.10 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 11 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 12 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that it may immediately extend the Program prior to the current expiration date so that the pilot may continue uninterrupted. In addition, the Exchange states the nonsubstantive technical amendment to Supplementary Material .03 to Options 4, Section 5, will promote clarity and avoid investor confusion. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest as it will allow the Program to continue uninterrupted, thereby avoiding investor confusion that could result from a temporary interruption in the Program, and will allow the Exchange to immediately update its rules to reflect the technical amendment. Accordingly, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.13 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if 9 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule19b– 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. 11 17 CFR 240.19b–4(f)(6). 12 17 CFR 240.19b–4(f)(6)(iii). 13 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). 10 17 PO 00000 Frm 00164 Fmt 4703 Sfmt 4703 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– Phlx–2021–65 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–Phlx–2021–65. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish E:\FR\FM\04NON1.SGM 04NON1 Federal Register / Vol. 86, No. 211 / Thursday, November 4, 2021 / Notices to make available publicly. All submissions should refer to File Number SR–Phlx–2021–65, and should be submitted on or before November 26, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–24013 Filed 11–3–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–93466; File No. SR– NYSEArca–2021–68] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings to Determine Whether to Approve or Disapprove a Proposed Rule Change to Adopt New Exchange Rule 6.91P–O October 29, 2021. I. Introduction On July 23, 2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to adopt new Exchange Rule 6.91P–O to govern the trading of Electronic Complex Orders (‘‘Electronic Complex Orders’’ or ‘‘ECOs’’) on the Exchange’s Pillar trading platform and to make conforming amendments to Exchange Rule 6.47A–O.3 The proposed rule change was published for comment in the Federal Register on August 4, 2021.4 On September 20, 2021, pursuant to Section 19(b)(2) of the Act,5 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change.6 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 The proposal defines an Electronic Complex Order or ECO as ‘‘a Complex Order as defined in Rule 6.62P–O(f) or a Stock/Option Order or Stock/ Complex Order as defined in Rule 6.62P– O(h)(6)(A), (B), respectively, that is submitted electronically to the Exchange.’’ See proposed Exchange Rule 6.91P–O(a)(1). 4 Securities Exchange Act Release No. 92563 (August 4, 2021), 86 FR 43704 (August 10, 2021) (File No. SR–NYSEArca–2021–68) (‘‘Notice’’). 5 15 U.S.C. 78s(b)(2). 6 See Securities Exchange Act Release No. 93057 (September 20, 2021), 86 FR 53128 (September 24, lotter on DSK11XQN23PROD with NOTICES1 1 15 VerDate Sep<11>2014 17:57 Nov 03, 2021 Jkt 256001 The Commission has received no comments regarding the proposed rule change. This order institutes proceedings pursuant to Section 19(b)(2)(B) of the Act 7 to determine whether to approve or disapprove the proposed rule change. II. Description of the Proposal Background As described more fully in the Notice, the Exchange plans to transition its options trading platform to its Pillar technology platform. The cash equity markets of the Exchange and its national securities exchange affiliates are currently operating on Pillar.8 For the transition, the Exchange proposes to use the same Pillar technology already in operation for its cash equity market, thereby allowing the Exchange to offer common trading functions and common specifications for connecting to its cash equity and equity options markets. The Exchange plans to roll out the new technology platform over a period of time based on a range of symbols. The Exchange has filed a proposal (the ‘‘Single-Leg Pillar Filing’’) to add new rules describing how single-leg options will trade on the Exchange once Pillar is implemented.9 The current proposal describes how ECOs will trade on the Exchange once Pillar is implemented. As the Exchange transitions to Pillar, certain rules will continue to be applicable to symbols trading on the current trading platform, but will not be applicable to symbols that have transitioned to trading on Pillar.10 Proposed Exchange Rule 6.91P– O, which will govern the trading of Electronic Complex Orders in options symbols that have migrated to the Pillar 2021). The Commission designated November 8, 2021, as the date by which the Commission shall approve or disapprove, or institute proceedings to determine whether to approve or disapprove, the proposed rule change. 7 15 U.S.C. 78s(b)(2)(B). 8 The Exchange’s national securities exchange affiliates are the New York Stock Exchange LLC (‘‘NYSE’’), NYSE American LLC (‘‘NYSE American’’), NYSE National, Inc. (‘‘NYSE National’’), and NYSE Chicago, Inc. (‘‘NYSE Chicago’’). 9 See Securities Exchange Act Release Nos. 92304 (June 30, 2021), 86 FR 36440 (July 9, 2021) (notice of filing of File No. SR–NYSEArca–2021–47). The Commission extended the time for Commission action on the Single-Leg Pillar Filing and instituted proceedings to determine whether to approve or disapprove that proposal. See Securities Exchange Act Release Nos. 92696 (August 18, 2021), 86 FR 47350 (August 24, 2021) (extending the time for Commission action on the Single-Leg Pillar Filing); and 93193 (September 29, 2021), 86 FR 55926 (October 7, 2021) (order instituting proceedings to determine whether to approve or disapprove the Single-Leg Pillar Filing). 10 The Exchange will announce by Trader Update when symbols are trading on the Pillar trading platform. PO 00000 Frm 00165 Fmt 4703 Sfmt 4703 60955 platform, will have the same number as the current Electronic Complex Order Trading rule, but with the modifier ‘‘P’’ appended to the rule number. Current Exchange Rule 6.91–O will remain unchanged and continue to apply to any trading in symbols on the current system. The proposed rule will use terminology that is based on Exchange Rule 7–E and will introduce new functionality for Electronic Complex Order trading. The Exchange intends to transition ECO trading on Pillar at the same time it transitions single-leg trading to Pillar. Proposed Exchange Rule 6.91P–O: Electronic Complex Order Trading Exchange Rule 6.91–O describes how the Exchange currently processes ECOs submitted to the Exchange. The Exchange proposes new Exchange Rule 6.91P–O to describe the processing of ECOs after the transition to Pillar. Definitions. Proposed Exchange Rule 6.91P–O(a) defines terms that will apply to the trading of ECOs on Pillar, including the following: • ‘‘ECO Order Instruction’’ will mean a request to cancel, cancel and replace, or modify an ECO; 11 • ‘‘leg’’ or ‘‘leg market’’ will mean each of the component option series that comprise an ECO; 12 • ‘‘Complex NBBO’’ will mean the derived national best bid and derived national best offer for a complex strategy calculated using the NBB and NBO for each component leg of a complex strategy; 13 • ‘‘Complex strategy’’ will mean a particular combination of leg components and their ratios to one another. New complex strategies can be created when the Exchange receives a request to create a new complex strategy or an ECO with a new complex strategy; 14 • ‘‘DBBO’’ will mean the derived best bid (‘‘DBB’’) and derived best offer (‘‘DBO’’) for a complex strategy calculated using the Exchange BBO 15 for each leg (or the Away Market NBBO 16 for a leg if there is no Exchange 11 See proposed Exchange Rule 6.91P–O(a)(2). proposed Exchange Rule 6.91P–O(a)(3). 13 See proposed Exchange Rule 6.91P–O(a)(4). 14 See proposed Exchange Rule 6.91P–O(a)(5). 15 The term BBO when used with respect to options traded on the Exchange will mean ‘‘the best displayed bid or best displayed offer on the Exchange.’’ See Single-Leg Pillar Filing, proposed Exchange Rule 1.1. 16 In the Single-Leg Pillar Filing, the Exchange proposes that the term ‘‘Away Market NBBO’’ will refer to a calculation of the NBBO that excludes the Exchange’s BBO. See Single-Leg Pillar Filing (defining Away Market NBBO in proposed Exchange Rule 1.1). 12 See E:\FR\FM\04NON1.SGM 04NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 211 (Thursday, November 4, 2021)]
[Notices]
[Pages 60952-60955]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24013]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93464; File No. SR-Phlx-2021-65]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change to Extend the 
Exchange's Nonstandard Expirations Pilot Program

October 29, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on October 28, 2021, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the pilot period for the Exchange's 
nonstandard expirations pilot program, currently set to expire on 
November 4, 2021.
    The Exchange also proposes a technical amendment to Options 4, 
Section 5, Series of Options Contracts Open for Trading.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/phlx/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

[[Page 60953]]

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
    On December 15, 2017, the Commission approved a rule change for the 
listing and trading on the Exchange, on a twelve month pilot basis, of 
p.m.-settled options on broad-based indexes with nonstandard 
expirations dates (``Program'').\3\ The Program permits both Weekly 
Expirations and End of Month (``EOM'') expirations similar to those of 
the a.m.-settled broad-based index options, except that the exercise 
settlement value of the options subject to the pilot are based on the 
index value derived from the closing prices of component stocks. This 
pilot was extended various times and is currently extended through 
November 4, 2021.\4\
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    \3\ See Securities Exchange Act Release No. 82341 (December 15, 
2017), 82 FR 60651 (December 21, 2017) (approving SR-Phlx-2017-79) 
(Order Approving a Proposed Rule Change, as Modified by Amendment 
No. 1 and Granting Accelerated Approval of Amendment No. 2, of a 
Proposed Rule Change To Establish a Nonstandard Expirations Pilot 
Program).
    \4\ See Securities Exchange Act Release Nos. 84835 (December 17, 
2018), 83 FR 65773 (December 21, 2018) (SR-Phlx-2018-80); 85669 
(April 17, 2019), 84 FR 16913 (April 23, 2019) (SR-Phlx-2019-13); 
87381 (October 22, 2019), 84 FR 57788 (October 28, 2019) (SR-Phlx-
2019-43); 88684 (April 17, 2020), 85 FR 22781 (April 23, 2020) (SR-
Phlx-2020-24); 90256 (October 22, 2020), 85 FR 68393 (October 28, 
2020) (SR-Phlx-2020-48); and 91484 (April 6, 2021), 86 FR 19050 
(April 12, 2021) (SR-Phlx-2021-21).
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    Pursuant to Phlx Options 4A, Section 12(b)(5)(A) the Exchange may 
open for trading Weekly Expirations on any broad-based index eligible 
for standard options trading to expire on any Monday, Wednesday, or 
Friday (other than the third Friday-of-the-month or days that coincide 
with an EOM expiration). Weekly Expirations are subject to all 
provisions of Options 4A, Section 12 and are treated the same as 
options on the same underlying index that expire on the third Friday of 
the expiration month. Unlike the standard monthly options, however, 
Weekly Expirations are p.m.-settled.
    Similarly, pursuant to Options 4A, Section 12(b)(5)(B) the Exchange 
may open for trading EOM expirations on any broad-based index eligible 
for standard options trading to expire on the last trading day of the 
month. EOM expirations are subject to all provisions of Options 4A, 
Section 12 and treated the same as options on the same underlying index 
that expire on the third Friday of the expiration month. However, the 
EOM expirations are p.m.-settled.
    The Exchange now proposes to amend Options 4A, Section 12(b)(5)(C) 
so that the duration of the Program for these nonstandard expirations 
will be through May 4, 2022. The Exchange continues to have sufficient 
systems capacity to handle p.m.-settled options on broad-based indexes 
with nonstandard expirations dates and has not encountered any issues 
or adverse market effects as a result of listing them. Additionally, 
there is continued investor interest in these products. The Exchange 
will continue to make public on its website any data and analysis it 
submits to the Commission under the Program.
    The Exchange will be submitting a rule change to request that the 
pilot program become permanent. In lieu of submitting any additional 
annual reports, the Exchange would provide additional information 
requested by the Commission in connection with the permanency rule 
change for this Program. The Exchange would continue to provide the 
Commission with ongoing data unless and until the Program is made 
permanent or discontinued.
    The Exchange believes that the proposed extension of the Program 
will not have an adverse impact on capacity.
Technical Amendment
    The Exchange proposes a technical amendment to Options 4, Section 
5, Series of Options Contracts Open for Trading. Specifically, the 
Exchange proposes to amend the second sentence of Supplementary 
Material .03 to Options 4, Section 5, related to the Short Term Options 
Series Program, which states, ``The Exchange may have no more than a 
total of five Short Term Option Expiration Dates, not including any 
Monday or Wednesday SPY Expirations as provided below.'' The Exchange 
proposes to amend the sentence to instead provide, ``The Exchange may 
have no more than a total of five Short Term Option Expiration Dates, 
not including any Monday or Wednesday SPY, QQQ and IWM Expirations as 
provided below.'' The Exchange previously filed to permit Monday and 
Wednesday expirations for options listed pursuant to the Short Term 
Options Program on the Invesco QQQ Trust\SM\ Series ETF Trust 
(``QQQ''),\5\ and recently filed and was approved to permit Monday and 
Wednesday expirations for options listed pursuant to the Short Term 
Options Program on the iShares Russell 2000 ETF (``IWM'').\6\ The 
Exchange inadvertently omitted the references to ``QQQ'' and ``IWM'' in 
the rule text for those filings. At this time, the Exchange proposes to 
add ``QQQ and IWM'' to the rule text within Supplementary Material .03 
to Options 4, Section 5 for clarity. This amendment is non-substantive 
as it proposes to make clear that Monday and Wednesday expirations are 
not included in determining the maximum number of Short Term Option 
Expiration Dates that may be listed on the Exchange. Short Term Options 
Series expire, by definition, on Friday. To avoid any confusion, the 
proposed amendment makes clear which Monday and Wednesday expirations 
are specifically being excluded by the Exchange.
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    \5\ See Securities Exchange Act Release No. 91614 (April 20, 
2021), 86 FR 22082 (April 26, 2021) (SR-Phlx-2021-10) (Order 
Approving a Proposed Rule Change To Permit Monday and Wednesday 
Expirations for Options Listed Pursuant to the Short Term Options 
Program on the Invesco QQQ Trust\SM\ Series ETF Trust).
    \6\ See Securities Exchange Act Release No. 93157 (September 28, 
2021), 86 FR 54749 (October 4, 2021) (SR-PHLX-2021-43) (Order 
Approving a Proposed Rule Change To Permit Monday and Wednesday 
Expirations for Options Listed Pursuant to the Short Term Options 
Program on the iShares Russell 2000 ETF (IWM)).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to promote 
just and equitable principles of trade, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general to protect investors and the public interest. 
The Exchange believes the proposed rule change will protect investors 
and the public interest by providing the Exchange, the Commission and 
investors the benefit of additional time to analyze nonstandard 
expiration options. In particular, the Exchange believes that the 
Program has been successful to date. The Exchange has not encountered 
any problems with the Program. By extending the Program, investors may 
continue to benefit from a wider array of investment opportunities. 
Additionally, both the Exchange and the Commission may continue to 
monitor the potential for adverse market effects of p.m.-settlement on 
the market, including the

[[Page 60954]]

underlying cash equities market, at the expiration of these options.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Technical Amendment
    The Exchange's proposal to amend Supplementary Material .03 to 
Options 4, Section 5, related to the Short Term Options Series Program, 
to add rule text related to Monday and Wednesday expirations for 
options listed pursuant to the Short Term Options Program on QQQ and 
IWM, which was inadvertently omitted, is consistent with the Act. 
Adding references to ``QQQ'' and ``IWM'' within the second sentence of 
Supplementary Material .03 to Options 4, Section 5 will bring greater 
clarity to the Exchange's rules by explicitly stating which Monday and 
Wednesday expirations are specifically being excluded by the Exchange. 
This amendment is non-substantive and is intended to promote clarity 
and avoid investor confusion.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. Options with nonstandard 
expirations would be available for trading to all market participants.
Technical Amendment
    The Exchange's proposal to amend Supplementary Material .03 to 
Options 4, Section 5, related to the Short Term Options Series Program, 
to add rule text related to Monday and Wednesday expirations for 
options listed pursuant to the Short Term Options Program on QQQ and 
IWM, which was inadvertently omitted, does not impose an undue burden 
on competition as adding references to ``QQQ'' and ``IWM'' within the 
second sentence of Supplementary Material .03 to Options 4, Section 5 
will bring greater clarity to the Exchange's rules by explicitly 
stating which Monday and Wednesday expirations are specifically being 
excluded by the Exchange. This amendment is non-substantive and is 
intended to promote clarity and avoid investor confusion.

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 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 \9\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule19b-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.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \11\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that it 
may immediately extend the Program prior to the current expiration date 
so that the pilot may continue uninterrupted. In addition, the Exchange 
states the non-substantive technical amendment to Supplementary 
Material .03 to Options 4, Section 5, will promote clarity and avoid 
investor confusion. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest as it will allow the Program to continue uninterrupted, 
thereby avoiding investor confusion that could result from a temporary 
interruption in the Program, and will allow the Exchange to immediately 
update its rules to reflect the technical amendment. Accordingly, the 
Commission hereby waives the operative delay and designates the 
proposed rule change operative upon filing.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ 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).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2021-65 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-Phlx-2021-65. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish

[[Page 60955]]

to make available publicly. All submissions should refer to File Number 
SR-Phlx-2021-65, and should be submitted on or before November 26, 
2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-24013 Filed 11-3-21; 8:45 am]
BILLING CODE 8011-01-P

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