Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing of Proposed Rule Change To Amend the Short Term Option Series Program, 58399-58405 [2022-20731]

Download as PDF Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–CboeBZX–2022–048, and should be submitted on or before October 17, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 J. Matthew DeLesDernier, Deputy Secretary. 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: [FR Doc. 2022–20730 Filed 9–23–22; 8:45 am] 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– CboeBZX–2022–048 on the subject line. Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing of Proposed Rule Change To Amend the Short Term Option Series Program Paper Comment • 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–CboeBZX–2022–048. 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 VerDate Sep<11>2014 16:43 Sep 23, 2022 Jkt 256001 BILLING CODE 8011–01–P 58399 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 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95841; File No. SR–ISE– 2022–18] September 20, 2022. 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 September 9, 2022, Nasdaq ISE, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Short Term Option Series Program within Options 4, Section 5, ‘‘Series of Options Contracts Open for Trading.’’ The Exchange also proposes to amend Options 1, Section 1(a)(49) which defines a Short Term Option Series. 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 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 The Exchange proposes to amend Supplementary Material .03 of Options 4, Section 5, ‘‘Series of Options Contracts Open for Trading.’’ Specifically, the Exchange proposes to amend the Short Term Option Series Rules to: (1) limit the number of Short Term Option Expiration Dates for options on SPDR S&P 500 ETF Trust (SPY), the INVESCO QQQ TrustSM, Series 1 (QQQ), and iShares Russell 2000 ETF (IWM) from five to two expirations for Monday and Wednesday expirations; and (2) expand the Short Term Option Series program to permit the listing and trading of options series with Tuesday and Thursday expirations for options on SPY and QQQ listed pursuant to the Short Term Option Series Program, subject to the same proposed limitation of two expirations. The Exchange also proposes to amend Options 1, Section 1(a)(49) which defines a Short Term Option Series. Curtail Short Term Option Expiration Dates Currently, after an option class has been approved for listing and trading on the Exchange, the Exchange may open for trading on any Thursday or Friday that is a business day (‘‘Short Term Option Opening Date’’) series of options on that class that expire at the close of business on each of the next five Fridays that are business days and are not Fridays in which monthly options series or Quarterly Options Series expire (‘‘Short Term Option Expiration Dates’’). 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. Further, if the Exchange is not open for business on the respective Thursday or Friday, the Short Term Option Opening Date will be the first business day immediately prior to that respective Thursday or Friday. Similarly, if the Exchange is not open for business on a Friday, the Short Term Option Expiration Date will be the E:\FR\FM\26SEN1.SGM 26SEN1 58400 Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices first business day immediately prior to that Friday. Today, with respect to Wednesday SPY, QQQ, and IWM Expirations, the Exchange may open for trading on any Tuesday or Wednesday that is a business day series of options on SPY, QQQ, and IWM to expire on any Wednesday of the month that is a business day and is not a Wednesday in which Quarterly Options Series expire (‘‘Wednesday SPY Expirations,’’ ‘‘Wednesday QQQ Expirations,’’ and ‘‘Wednesday IWM Expirations’’). With respect to Monday SPY, QQQ, and IWM Expirations, the Exchange may open for trading on any Friday or Monday that is a business day series of options on the SPY, QQQ, or IWM to expire on any Monday of the month that is a business day and is not a Monday in which Quarterly Options Series expire (‘‘Monday SPY Expirations,’’ ‘‘Monday QQQ Expirations,’’ and ‘‘Monday IWM Expirations’’), provided that Monday SPY Expirations, Monday QQQ Expirations, and Monday IWM Expirations that are listed on a Friday must be listed at least one business week and one business day prior to the expiration. The Exchange may list up to five consecutive Wednesday SPY Expirations, Wednesday QQQ Expirations, and Wednesday IWM Expirations and five consecutive Monday SPY Expirations, Monday QQQ Expirations, and Monday IWM Expirations at one time; the Exchange may have no more than a total of five each of Wednesday SPY Expirations, Wednesday QQQ Expirations, and Wednesday IWM Expirations and a total of five each of Monday SPY Expirations, Monday QQQ Expirations, and Monday IWM Expirations. Monday and Wednesday SPY Expirations, Monday and Wednesday QQQ Expirations, and Monday and Wednesday IWM Expirations will be subject to the provisions of Supplementary Material .03 to Options 4, Section 5. Proposal At this time, the Exchange proposes to curtail the number of Short Term Option Expiration Dates from five to two 3 for SPY, QQQ and IWM for Monday and Wednesday Expirations, as well as the proposed Tuesday and Thursday Expirations in SPY and QQQ (‘‘Short Term Option Daily Expirations’’). The Exchange proposes to create a new category of Short Term Option Expirations Dates called ‘‘Short Term Option Daily Expirations’’ which will 3 The Exchange proposes to list the two front months for Short Term Option Daily Expirations. VerDate Sep<11>2014 16:43 Sep 23, 2022 Jkt 256001 only permit two Short Term Option Expiration Dates for each of Monday, Tuesday, Wednesday, and Thursday expirations at one time. The Exchange proposes to include a table, labelled ‘‘Table 1’’, within Supplementary Material .03 to Options 4, Section 5 which specifies each symbol that qualifies as a Short Term Option Daily Expiration. The table would note the number of expirations for each symbol as well as expiration days. The Exchange proposes to include Monday and Wednesday expirations for SPY, QQQ, and IWM and Tuesday and Thursday expirations for SPY and QQQ and list the number of expirations as ‘‘2’’ for these symbols. The Exchange’s proposal to permit Tuesday and Thursday expirations for options on SPY and QQQ listed pursuant to the Short Term Option Series Program is explained below in more detail. In the event Short Term Option Daily Expirations expire on the same day in the same class as a monthly options series or a Quarterly Options Series the Exchange would skip that week’s listing and instead list the following week; the two weeks of Short Term Option Expiration Dates would therefore not be consecutive. Specifically, the Exchange proposes to state within Supplementary Material .03 to Options 4, Section 5, In addition to the above, the Exchange may open for trading series of options on the symbols provided in Table 1 below that expire at the close of business on each of the next two Mondays, Tuesdays, Wednesdays, and Thursdays, respectively, that are business days and are not business days in which monthly options series or Quarterly Options Series expire (‘‘Short Term Option Daily Expirations’’). The Exchange may have no more than a total of two Short Term Option Daily Expirations for each of Monday, Tuesday, Wednesday, and Thursday expirations at one time. Short Term Option Daily Expirations would be subject to this Supplementary Material .03. SPY, QQQ, and IWM Friday expirations and other option symbols expiring on a Friday that are not noted in Table 1 will continue to have a total of five Short Term Option Expiration Dates provided those Friday expirations are not Fridays in which monthly options series or Quarterly Options Series expire (‘‘Friday Short Term Option Expiration Dates’’). These expirations would be referred to as ‘‘Short Term Option Weekly Expirations’’ to distinguish them from the proposed expirations that would be subject to Short Term Option Daily Expirations. The Exchange proposes to add rule text to Supplementary Material .03 to Options 4, Section 5 which states that Monday Short Term Option Expiration Dates, PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 Tuesday Short Term Option Expiration Dates, Wednesday Short Term Option Expiration Dates, and Thursday Short Term Option Expiration Dates, together with Friday Short Term Option Expiration Dates, are collectively ‘‘Short Term Option Expiration Dates.’’ 4 Tuesday and Thursday Expirations At this time, the Exchange proposes to expand the Short Term Option Series Program to permit the listing and trading of no more than a total of two consecutive Tuesday and Thursday ‘‘Tuesday Short Term Option Daily Expirations’’ and ‘‘Thursday Short Term Option Daily Expirations’’ each for SPY and QQQ at one time. Tuesday and Thursday Short Term Option Daily Expirations would be subject to Supplementary Material .03 of Options 4, Section 5. A Short Term Option Series means a series in an option class that is approved for listing and trading on the Exchange in which the series is opened for trading on any Monday, Tuesday, Wednesday, Thursday or Friday that is a business day and that expires on the Monday, Wednesday or Friday of the following business week that is a business day, or, in the case of a series that is listed on a Friday and expires on a Monday, is listed one business week and one business day prior to that expiration. If a Tuesday, Wednesday, Thursday or Friday is not a business day, the series may be opened (or shall expire) on the first business day immediately prior to that Tuesday, Wednesday, Thursday or Friday. For a series listed pursuant to this section for Monday expiration, if a Monday is not a business day, the series shall expire on the first business day immediately following that Monday. The Exchange proposes to amend this definition at Options 1, Section 1(a)(49) to accommodate the listing of options series that expire on Tuesdays and Thursdays. Specifically, the Exchange proposes to add Tuesday and Thursdays to the permitted expiration days, which currently include Monday, Wednesday, and Friday, that it may open for trading. The Exchange also proposes corresponding changes within Supplementary Material .03 to Options 4, Section 5, which sets forth the requirements for SPY and QQQ options that are listed pursuant to the Short Term Option Series Program as Short Term Option Daily Expirations. Similar to Monday and Wednesday SPY, QQQ, 4 Defining the term ‘‘Short Term Option Expiration Dates’’ will make clear that this term includes expiration dates for each day Short Term Options are listed. E:\FR\FM\26SEN1.SGM 26SEN1 Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices and IWM Short Term Option Daily Expirations within Supplementary Material .03 to Options 4, Section 5, the Exchange proposes that it may open for trading on any Monday or Tuesday that is a business day series of options on the symbols provided in Table 1 that expire at the close of business on each of the next two Tuesdays that are business days and are not business days in which monthly options series or Quarterly Options Series expire (‘‘Tuesday Short Term Option Expiration Date’’). Likewise, the Exchange proposes that it may open for trading on any Wednesday or Thursday that is a business day series of options on symbols provided in Table 1 that expire at the close of business on each of the next two Thursdays that are business days and are not business days in which monthly options series or Quarterly Options Series expire (‘‘Thursday Short Term Option Expiration Date’’). In the event that options on SPY and QQQ expire on a Tuesday or Thursday and that Tuesday or Thursday is the same day that a monthly option series or Quarterly Options Series expires, the Exchange would skip that week’s listing and instead list the following week; the two weeks would therefore not be consecutive. Today, Monday and Wednesday Expirations in SPY, QQQ, and IWM skip the weekly listing in the event the weekly listing expires on the same day in the same class as a Quarterly Options Series. Currently, there is no rule text provision that states that Monday and Wednesday Expirations in SPY, QQQ, and IWM skip the weekly listing in the event the weekly listing expires on the same day in the same class as a monthly option series. Practically speaking, Monday and Wednesday Expirations in SPY, QQQ, and IWM would not expire on the same day as a monthly expiration. The interval between strike prices for the proposed Tuesday and Thursday SPY and QQQ Short Term Option Daily Expirations will be the same as those for the current Short Term Option Series for Monday, Wednesday and Friday expirations applicable to the Short Term Option Series Program.5 Specifically, the Tuesday and Thursday SPY and QQQ Short Term Option Daily Expirations will have a $0.50 strike interval minimum.6 As is the case with other equity options series listed pursuant to the Short Term Option Series Program, the Tuesday and Thursday SPY and QQQ Short Term Option Daily Expiration series will be P.M.-settled. Pursuant to Options 1, Section 1(a)(49), with respect to the Short Term Option Series Program, a Tuesday or Thursday expiration series shall expire on the first business day immediately prior to that Tuesday or Thursday, e.g., Monday or Wednesday of that week, respectively, if the Tuesday or Thursday is not a business day. Currently, for each option class eligible for participation in the Short Term Option Series Program, the Exchange is limited to opening thirty (30) series for each expiration date for the specific class.7 The thirty (30) series restriction does not include series that are open by other securities exchanges under their respective weekly rules; the Exchange may list these additional series that are listed by other options exchanges.8 This thirty (30) series restriction would apply to Tuesday and Thursday SPY and QQQ Short Term Option Daily Expiration series as well. In addition, the Exchange will be able to list series that are listed by other exchanges, assuming they file similar rules with the Commission to list SPY and QQQ options expiring on Tuesdays and Thursdays with a limit of two Tuesday Short Term Daily Expirations and two Thursday Short Term Daily Expirations. Finally, the Exchange is amending Supplementary Material .03(b) to Options 4, Section 5, to conform the rule text to the usage of the term ‘‘Short Term Option Daily Expirations.’’ Today, with the exception of Monday and Wednesday SPY Expirations, Monday and Wednesday QQQ Expirations, and Monday and Wednesday IWM Expirations, no Short Term Option Series may expire in the same week in which monthly option series on the same class expire. With this proposal, Tuesday and Thursday SPY Expirations and Tuesday and Thursday QQQ Expirations would be treated similarly to existing Monday and Wednesday SPY, QQQ, and IWM Expirations. With respect to monthly option series, Short Term Option Daily Expirations will be permitted to expire in the same week in which monthly option series on the same class expire. Not listing Short Term Option Daily Expirations for one week every month because there was a monthly on that same class on the Friday of that week would create investor confusion. 5 See ISE Supplementary Material .03(e) to Options 4, Section 5. 6 See ISE Supplementary Material .03(e) to Options 4, Section 5. 7 See ISE Supplementary Material .03(a) to Options 4, Section 5. 8 See ISE Supplementary Material .03(a) to Options 4, Section 5. VerDate Sep<11>2014 16:43 Sep 23, 2022 Jkt 256001 PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 58401 Further, as with Monday and Wednesday SPY, QQQ, and IWM Expirations, the Exchange would not permit Tuesday and Thursday Short Term Option Daily Expirations to expire on a business day in which monthly options series or Quarterly Options Series expire.9 Therefore, all Short Term Option Daily Expirations would expire at the close of business on each of the next two Mondays, Tuesdays, Wednesdays, and Thursdays, respectively, that are business days and are not business days in which monthly options series or Quarterly Options Series expire. The Exchange believes that it is reasonable to not permit two expirations on the same day in which a monthly options series or a Quarterly Options Series would expire. The Exchange proposes to amend Supplementary Material .03(e) of Options 4, Section 5 to remove the phrase ‘‘on the Short Term Option Opening Date that expire on the Short Term Option Expiration Date’’ within the second sentence of Supplementary Material .03(e). The phrase is being removed because a Short Term Option is defined in this paragraph as referring to the rules within Supplementary Material .03(e) of Options 4, Section 5 which define ‘‘Short Term Option Opening Date’’ and ‘‘Short Term Option Expiration Date.’’ The phrase is not necessary. The Exchange does not believe that any market disruptions will be encountered with the introduction of P.M.-settled Tuesday and Thursday Short Term Option Daily Expirations. The Exchange has the necessary capacity and surveillance programs in place to support and properly monitor trading in the proposed Tuesday and Thursday Short Term Option Daily Expirations. The Exchange currently trades P.M.-settled Short Term Option Series that expire Monday and Wednesday for SPY, QQQ and IWM and has not experienced any market disruptions nor issues with capacity. Today, the Exchange has surveillance programs in place to support and properly monitor trading in Short Term Option Series that expire Monday and Wednesday for SPY, QQQ and IWM. Impact of Proposal The Exchange notes that listings in the Short Term Option Series Program 9 While the Exchange proposes to add rule text within Supplementary Material .03 of Options 4, Section 5 with respect to Monday Expirations, Tuesday Expirations, and Wednesdays Expirations stating that those expirations would not expire on business days that are business days in which monthly options series expire, practically speaking this would not occur. E:\FR\FM\26SEN1.SGM 26SEN1 58402 Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices comprise a significant part of the standard listing in options markets. The below diagrams demonstrate the percentage of weekly listings as compared to monthly, quarterly, and Long-Term Option Series in 2020 and 2022 in the options industry.10 The weekly strikes decreased from 24% to 19% in these two years. The Exchange notes that during this timeframe all options exchanges mitigated weekly strike intervals. BILLING CODE 8011–01–P NUMBER OF STRIKES - 2020 NUMBER OF STRIKES .. 2022 lEAP 17" By limiting the number of Short Term Option Daily Expirations for SPY, QQQ, and IWM to two expirations for Monday and Wednesday expirations, and expanding the Short Term Option Series Program to permit Tuesday, and Thursday expirations for SPY and QQQ, the Exchange anticipates that it would overall reduce the number of weekly expiration dates. With respect to SPY, the reduction from five to two expirations will reduce 11.80% of strikes on SPY with Monday and Wednesday expirations. With respect to QQQ, the reduction from five to two expirations will reduce 12.86% of strikes on QQQ with Monday and Wednesday expirations. With respect to IWM, the reduction from five to two expirations will reduce 11.86% of strikes on IWM with Monday and Wednesday expirations. Additionally, 10 The Exchange sourced this information from The Options Clearing Corporation (‘‘OCC’’). The information includes time averaged data for all 16 options markets up to August 18, 2022. 11 The Exchange sourced this information, which are estimates, from LiveVol®. The information includes data for all 16 options markets as of August 18, 2022. VerDate Sep<11>2014 16:43 Sep 23, 2022 Jkt 256001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 expanding the Short Term Option Series Program to permit the listing of Tuesday and Thursday expirations in SPY and QQQ will account for the addition of 7.86% of strikes in SPY and the addition of 8.57% of strikes in QQQ. Therefore, the total net reduction would be 3.94% for SPY and 4.29% for QQQ.11 The overall reduction offered by this proposal reduces the number of Short Term Option Expirations to be listed on E:\FR\FM\26SEN1.SGM 26SEN1 EN26SE22.001</GPH> BILLING CODE 8011–01–C Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices without reducing the classes of options available for trading on the Exchange. The Exchange believes that despite the proposed curtailment of expirations, Members will continue to be able to expand hedging tools because all days BILLING CODE 8011–01–C within Supplementary Material .03 of Options 4, Section 5. Weeklies comprise 48% of the total volume of options listings.13 Similar to SPY, QQQ and IWM Monday and Wednesday Expirations, the introduction of SPY and QQQ Tuesday and Thursday expirations will, among other things, expand hedging tools available to market participants and continue the reduction of the premium cost of buying protection. The Exchange believes that SPY and QQQ Tuesday and Thursday expirations will allow market participants to purchase SPY and QQQ options based on their timing as needed and allow them to tailor their investment and hedging needs more effectively. Implementation The Exchange proposes to implement this rule change on or before November 14, 2022. The Exchange will issue an Options Trader Alert to notify Members of the implementation date. Notwithstanding this implementation, Monday and Wednesday Expirations in SPY, QQQ, and IWM that were listed prior to the date of implementation will continue to be listed on the Exchange until those options expire pursuant to current Short Term Option Series rules 12 Today, Primary Market Makers and Market Makers are required to quote a specified time in their assigned options series. See ISE Options 2, Section 5. 13 The chart represents industry volume. Weeklies comprise 48% of volume while only being VerDate Sep<11>2014 16:43 Sep 23, 2022 Jkt 256001 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,14 in general, and furthers the objectives of Section 6(b)(5) of the Act,15 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. The proposal is consistent with the Act as the overall reduction offered by this proposal reduces the number of Short Term Option Expirations to be listed on ISE. This reduction would remove impediments to and perfect the mechanism of a free and open market by encouraging Market Makers to continue to deploy capital more efficiently and improve displayed market quality.16 Also, the Exchange’s proposal curtails the number of Monday, Tuesday, Wednesday, and Thursday expirations in SPY, QQQ, and IWM without reducing the classes of options available for trading on the Exchange. The 19% of the strikes. The Exchange sourced this information from OCC. The information includes data for all 16 options markets as of August 18, 2022. 14 15 U.S.C. 78f(b). PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 of the week would be available to permit Members to tailor their investment and hedging needs more effectively in SPY, QQQ, and IWM. BILLING CODE 8011–01–P Exchange believes that despite the proposed curtailment of expirations, Members will continue to be able to expand hedging tools and tailor their investment and hedging needs more effectively in SPY, QQQ, and IWM. Similar to SPY, QQQ and IWM Monday and Wednesday Expirations (proposed to be SPY, QQQ and IWM Monday and Wednesday Short Term Daily Expirations), the introduction of SPY and QQQ Tuesday and Thursday Short Term Daily Expirations is consistent with the Act as it will, among other things, expand hedging tools available to market participants and continue the reduction of the premium cost of buying protection. The Exchange believes that SPY and QQQ Tuesday and Thursday expirations (renamed SPY and QQQ Tuesday and Thursday Short Term Daily Expirations) will allow market participants to purchase SPY and QQQ options based on their timing as needed and allow them to tailor their investment and hedging needs more effectively. Further, the proposal to permit Tuesday and Thursday Short Term Daily Expirations for options on SPY and QQQ listed pursuant to the Short Term Option Series Program, 15 15 U.S.C. 78f(b)(5). Primary Market Makers and Market Makers are required to quote a specified time in their assigned options series. See ISE Options 2, Section 5. 16 Today, E:\FR\FM\26SEN1.SGM 26SEN1 EN26SE22.002</GPH> ISE and should encourage Market Makers to continue to deploy capital more efficiently and improve displayed market quality.12 Also, the Exchange’s proposal curtails the number of expirations in SPY, QQQ, and IWM 58403 58404 Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices subject to the proposed limitation of two expirations, would protect investors and the public interest by providing the investing public and other market participants more flexibility to closely tailor their investment and hedging decisions in SPY and QQQ options, thus allowing them to better manage their risk exposure. In particular, the Exchange believes the Short Term Option Series Program has been successful to date and that Tuesday and Thursday SPY and QQQ Short Term Daily Expirations should simply expand the ability of investors to hedge risk against market movements stemming from economic releases or market events that occur throughout the month in the same way that the Short Term Option Series Program has expanded the landscape of hedging. Similarly, the Exchange believes Tuesday and Thursday SPY and QQQ Short Term Daily Expirations should create greater trading and hedging opportunities and flexibility, and will provide customers with the ability to tailor their investment objectives more effectively. ISE currently lists Monday and Wednesday SPY, QQQ, and IWM Expirations (renamed SPY, QQQ, and IWM Monday and Wednesday Short Term Daily Expirations).17 Today, with the exception of Monday and Wednesday SPY Expirations, Monday and Wednesday QQQ Expirations, and Monday and Wednesday IWM Expirations, no Short Term Option Series may expire in the same week in which monthly option series on the same class expire. With this proposal, Tuesday and Thursday SPY Expirations and Tuesday and Thursday QQQ Expirations would be treated similarly to existing Monday and Wednesday SPY, QQQ, and IWM Expirations. The Exchange believes that permitting Short Term Option Daily Expirations to expire in the same week that standard monthly options expire on Fridays is consistent with Act. Not listing Short Term Option Daily Expirations for one week every month because there was a monthly on that same class on the Friday of that week would create investor confusion. Further, as with Monday and Wednesday SPY, QQQ, and IWM Expirations, the Exchange would not permit Tuesday and Thursday Short Term Option Daily Expirations to expire on a business day in which monthly options series or Quarterly Options Series expire. Therefore, all Short Term Option Daily Expirations would expire at the close of business on each of the 17 See ISE Supplementary Material .03 at Options 4, Section 5. VerDate Sep<11>2014 16:43 Sep 23, 2022 Jkt 256001 next two Mondays, Tuesdays, Wednesdays, and Thursdays, respectively, that are business days and are not business days in which monthly options series or Quarterly Options Series expire. The Exchange believes that it is consistent with the Act to not permit two expirations on the same day in which a monthly options series or a Quarterly Options Series would expire similar to Monday and Wednesday SPY, QQQ, and IWM Expirations. There are no material differences in the treatment of Wednesday SPY and QQQ expirations for Short Term Option Series as compared to the proposed Tuesday and Thursday SPY and QQQ Short Term Daily Expirations. Given the similarities between Wednesday SPY, QQQ and IWM Expirations and the proposed Tuesday and Thursday SPY and QQQ Short Term Daily Expirations, the Exchange believes that applying the provisions in Supplementary Material .03 to Options 4, Section 5 that currently apply to Wednesday SPY, QQQ and IWM Expirations to Tuesday and Thursday SPY and QQQ Short Term Daily Expirations is justified. Finally, the Exchange represents that it has an adequate surveillance program in place to detect manipulative trading in the proposed Tuesday and Thursday SPY and QQQ Short Term Daily Expirations, in the same way that it monitors trading in the current Short Term Option Series and trading in Monday and Wednesday SPY, QQQ, and IWM Expirations. The Exchange also represents that it has the necessary systems capacity to support the new options series. Finally, the Exchange does not believe that any market disruptions will be encountered with the introduction of Tuesday and Thursday SPY and QQQ Short Term Daily Expirations. of weekly expirations in SPY, QQQ, and IWM without reducing the classes of options available for trading on the Exchange. The Exchange believes that despite the proposed curtailment of weekly expirations, Members will continue to be able to expand hedging tools and tailor their investment and hedging needs more effectively in SPY, QQQ, and IWM. Similar to SPY, QQQ and IWM Monday and Wednesday Expirations, the introduction of SPY and QQQ Tuesday and Thursday Short Term Daily Expirations does not impose an undue burden on competition. The Exchange believes that it will, among other things, expand hedging tools available to market participants and continue the reduction of the premium cost of buying protection. The Exchange believes that SPY and QQQ Tuesday and Thursday Short Term Daily Expirations will allow market participants to purchase SPY and QQQ options based on their timing as needed and allow them to tailor their investment and hedging needs more effectively. The Exchange does not believe the proposal will impose any burden on inter-market competition, as nothing prevents the other options exchanges from proposing similar rules to list and trade Short-Term Option Series with Tuesday and Thursday Short Term Daily Expirations. The Exchange notes that having Tuesday and Thursday SPY and QQQ expirations is not a novel proposal, as Wednesday SPY, QQQ and IWM Expirations are currently listed on ISE.19 Further, the Exchange does not believe the proposal will impose any burden on intra-market competition, as all market participants will be treated in the same manner under this proposal. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposal will provide an overall reduction in the number of Short Term Option Expirations to be listed on ISE. The Exchange believes this reduction will not impose an undue burden on competition, rather, it should encourage Market Makers to continue to deploy capital more efficiently and improve displayed market quality.18 Also, the Exchange’s proposal curtails the number 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. 18 Today, Primary Market Makers and Market Makers are required to quote a specified time in their assigned options series. See ISE Options 2, Section 5. PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days of such date (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange 19 See ISE Supplementary Material .03 at Options 4, Section 5. E:\FR\FM\26SEN1.SGM 26SEN1 Federal Register / Vol. 87, No. 185 / Monday, September 26, 2022 / Notices consents, the Commission will: (a) by order approve or disapprove such proposed rule change, or (b) institute proceedings to determine whether the proposed rule change should be 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 submitted on or before October 17, 2022. SECURITIES AND EXCHANGE COMMISSION For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 J. Matthew DeLesDernier, Deputy Secretary. [SEC File No. 270–453, OMB Control No. 3235–0510] [FR Doc. 2022–20731 Filed 9–23–22; 8:45 am] Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the existing collection of information provided for in Rule 302 (17 CFR 242.302) of Regulation ATS (17 CFR 242.300 et seq.) under the Securities and Exchange Act of 1934 (‘‘Act’’) (15 U.S.C. 78a et seq.). The Commission plans to submit this existing collection of information to the Office of Management and Budget (‘‘OMB’’) for extension and approval. Regulation ATS sets forth a regulatory regime for ‘‘alternative trading systems’’ (‘‘ATSs’’). An entity that meets the definition of an exchange must register, pursuant to Section 5 of the Exchange Act, as a national securities exchange under Section 6 of the Exchange Act 1 or operate pursuant to an appropriate exemption.2 One of the available exemptions is for ATSs.3 Exchange Act Rule 3a1–1(a)(2) exempts from the definition of ‘‘exchange’’ under Section 3(a)(1) an organization, association, or group of persons that complies with Regulation ATS.4 Regulation ATS requires an ATS to, among other things, register as a broker-dealer with the Securities and Exchange Commission (‘‘SEC’’), file a Form ATS with the Commission to notice its operations, and establish written safeguards and procedures to protect subscribers’ confidential trading information. An ATS that complies with Regulation ATS and operates pursuant to the Rule 3a1– BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95843; File No. SR–MEMX– 2022–20] • 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–2022–18 on the subject line. Self-Regulatory Organizations; MEMX LLC; Notice of Withdrawal of a Proposed Rule Change To Update Exchange Rule 13.4(a) Regarding the Exchange’s Usage of Data Feeds Paper Comments On July 26, 2022, MEMX LLC (‘‘MEMX’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 1 and Rule 19b–4 thereunder,2 a proposed rule change to update Exchange Rule 13.4(a) regarding the sources of data that the Exchange utilizes for the handling, execution and routing of orders, as well as for surveillance necessary to monitor compliance with applicable securities laws and Exchange rules, with respect to certain market centers. The filing was immediately effective upon filing with the Commission pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b– 4(f)(6) thereunder.4 The proposed rule change was published for comment in the Federal Register on August 4, 2022.5 On September 19, 2022, MEMX withdrew the proposed rule change (SR–MEMX–2022–20). • 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–2022–18. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–ISE–2022–18 and should be VerDate Sep<11>2014 16:43 Sep 23, 2022 Jkt 256001 58405 September 20, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–20733 Filed 9–23–22; 8:45 am] BILLING CODE 8011–01–P 20 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 5 See Securities Exchange Act Release No. 95395 (July 29, 2022), 87 FR 47799. 6 17 CFR 200.30–3(a)(12). 1 15 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 Proposed Collection; Comment Request; Extension: Rule 302 1 See 15 U.S.C. 78e and 78f. A ‘‘national securities exchange’’ is an exchange registered as such under Section 6 of the Exchange Act. 2 15 U.S.C. 78a et seq. 3 Rule 300(a) of Regulation ATS provides that an ATS is ‘‘any organization, association, person, group of persons, or system: (1) [t]hat constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange within the meaning of [Exchange Act Rule 3b–16]; and (2) [t]hat does not: (i) [s]et rules governing the conduct of subscribers other than the conduct of subscribers’ trading on such [ATS]; or (ii) [d]iscipline subscribers other than by exclusion from trading.’’ 4 See 17 CFR 240.3a1–1(a)(2). E:\FR\FM\26SEN1.SGM 26SEN1

Agencies

[Federal Register Volume 87, Number 185 (Monday, September 26, 2022)]
[Notices]
[Pages 58399-58405]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20731]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95841; File No. SR-ISE-2022-18]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
of Proposed Rule Change To Amend the Short Term Option Series Program

September 20, 2022.
    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 September 9, 2022, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Short Term Option Series Program 
within Options 4, Section 5, ``Series of Options Contracts Open for 
Trading.''
    The Exchange also proposes to amend Options 1, Section 1(a)(49) 
which defines a Short Term Option Series.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/ise/rules, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to amend Supplementary Material .03 of 
Options 4, Section 5, ``Series of Options Contracts Open for Trading.'' 
Specifically, the Exchange proposes to amend the Short Term Option 
Series Rules to: (1) limit the number of Short Term Option Expiration 
Dates for options on SPDR S&P 500 ETF Trust (SPY), the INVESCO QQQ 
Trust\SM\, Series 1 (QQQ), and iShares Russell 2000 ETF (IWM) from five 
to two expirations for Monday and Wednesday expirations; and (2) expand 
the Short Term Option Series program to permit the listing and trading 
of options series with Tuesday and Thursday expirations for options on 
SPY and QQQ listed pursuant to the Short Term Option Series Program, 
subject to the same proposed limitation of two expirations.
    The Exchange also proposes to amend Options 1, Section 1(a)(49) 
which defines a Short Term Option Series.
Curtail Short Term Option Expiration Dates
    Currently, after an option class has been approved for listing and 
trading on the Exchange, the Exchange may open for trading on any 
Thursday or Friday that is a business day (``Short Term Option Opening 
Date'') series of options on that class that expire at the close of 
business on each of the next five Fridays that are business days and 
are not Fridays in which monthly options series or Quarterly Options 
Series expire (``Short Term Option Expiration Dates''). 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. Further, if the Exchange is not open for business on the 
respective Thursday or Friday, the Short Term Option Opening Date will 
be the first business day immediately prior to that respective Thursday 
or Friday. Similarly, if the Exchange is not open for business on a 
Friday, the Short Term Option Expiration Date will be the

[[Page 58400]]

first business day immediately prior to that Friday.
    Today, with respect to Wednesday SPY, QQQ, and IWM Expirations, the 
Exchange may open for trading on any Tuesday or Wednesday that is a 
business day series of options on SPY, QQQ, and IWM to expire on any 
Wednesday of the month that is a business day and is not a Wednesday in 
which Quarterly Options Series expire (``Wednesday SPY Expirations,'' 
``Wednesday QQQ Expirations,'' and ``Wednesday IWM Expirations''). With 
respect to Monday SPY, QQQ, and IWM Expirations, the Exchange may open 
for trading on any Friday or Monday that is a business day series of 
options on the SPY, QQQ, or IWM to expire on any Monday of the month 
that is a business day and is not a Monday in which Quarterly Options 
Series expire (``Monday SPY Expirations,'' ``Monday QQQ Expirations,'' 
and ``Monday IWM Expirations''), provided that Monday SPY Expirations, 
Monday QQQ Expirations, and Monday IWM Expirations that are listed on a 
Friday must be listed at least one business week and one business day 
prior to the expiration. The Exchange may list up to five consecutive 
Wednesday SPY Expirations, Wednesday QQQ Expirations, and Wednesday IWM 
Expirations and five consecutive Monday SPY Expirations, Monday QQQ 
Expirations, and Monday IWM Expirations at one time; the Exchange may 
have no more than a total of five each of Wednesday SPY Expirations, 
Wednesday QQQ Expirations, and Wednesday IWM Expirations and a total of 
five each of Monday SPY Expirations, Monday QQQ Expirations, and Monday 
IWM Expirations. Monday and Wednesday SPY Expirations, Monday and 
Wednesday QQQ Expirations, and Monday and Wednesday IWM Expirations 
will be subject to the provisions of Supplementary Material .03 to 
Options 4, Section 5.
Proposal
    At this time, the Exchange proposes to curtail the number of Short 
Term Option Expiration Dates from five to two \3\ for SPY, QQQ and IWM 
for Monday and Wednesday Expirations, as well as the proposed Tuesday 
and Thursday Expirations in SPY and QQQ (``Short Term Option Daily 
Expirations'').
---------------------------------------------------------------------------

    \3\ The Exchange proposes to list the two front months for Short 
Term Option Daily Expirations.
---------------------------------------------------------------------------

    The Exchange proposes to create a new category of Short Term Option 
Expirations Dates called ``Short Term Option Daily Expirations'' which 
will only permit two Short Term Option Expiration Dates for each of 
Monday, Tuesday, Wednesday, and Thursday expirations at one time. The 
Exchange proposes to include a table, labelled ``Table 1'', within 
Supplementary Material .03 to Options 4, Section 5 which specifies each 
symbol that qualifies as a Short Term Option Daily Expiration. The 
table would note the number of expirations for each symbol as well as 
expiration days. The Exchange proposes to include Monday and Wednesday 
expirations for SPY, QQQ, and IWM and Tuesday and Thursday expirations 
for SPY and QQQ and list the number of expirations as ``2'' for these 
symbols. The Exchange's proposal to permit Tuesday and Thursday 
expirations for options on SPY and QQQ listed pursuant to the Short 
Term Option Series Program is explained below in more detail. In the 
event Short Term Option Daily Expirations expire on the same day in the 
same class as a monthly options series or a Quarterly Options Series 
the Exchange would skip that week's listing and instead list the 
following week; the two weeks of Short Term Option Expiration Dates 
would therefore not be consecutive. Specifically, the Exchange proposes 
to state within Supplementary Material .03 to Options 4, Section 5,

    In addition to the above, the Exchange may open for trading 
series of options on the symbols provided in Table 1 below that 
expire at the close of business on each of the next two Mondays, 
Tuesdays, Wednesdays, and Thursdays, respectively, that are business 
days and are not business days in which monthly options series or 
Quarterly Options Series expire (``Short Term Option Daily 
Expirations''). The Exchange may have no more than a total of two 
Short Term Option Daily Expirations for each of Monday, Tuesday, 
Wednesday, and Thursday expirations at one time. Short Term Option 
Daily Expirations would be subject to this Supplementary Material 
.03.

SPY, QQQ, and IWM Friday expirations and other option symbols expiring 
on a Friday that are not noted in Table 1 will continue to have a total 
of five Short Term Option Expiration Dates provided those Friday 
expirations are not Fridays in which monthly options series or 
Quarterly Options Series expire (``Friday Short Term Option Expiration 
Dates''). These expirations would be referred to as ``Short Term Option 
Weekly Expirations'' to distinguish them from the proposed expirations 
that would be subject to Short Term Option Daily Expirations. The 
Exchange proposes to add rule text to Supplementary Material .03 to 
Options 4, Section 5 which states that Monday Short Term Option 
Expiration Dates, Tuesday Short Term Option Expiration Dates, Wednesday 
Short Term Option Expiration Dates, and Thursday Short Term Option 
Expiration Dates, together with Friday Short Term Option Expiration 
Dates, are collectively ``Short Term Option Expiration Dates.'' \4\
---------------------------------------------------------------------------

    \4\ Defining the term ``Short Term Option Expiration Dates'' 
will make clear that this term includes expiration dates for each 
day Short Term Options are listed.
---------------------------------------------------------------------------

Tuesday and Thursday Expirations
    At this time, the Exchange proposes to expand the Short Term Option 
Series Program to permit the listing and trading of no more than a 
total of two consecutive Tuesday and Thursday ``Tuesday Short Term 
Option Daily Expirations'' and ``Thursday Short Term Option Daily 
Expirations'' each for SPY and QQQ at one time. Tuesday and Thursday 
Short Term Option Daily Expirations would be subject to Supplementary 
Material .03 of Options 4, Section 5.
    A Short Term Option Series means a series in an option class that 
is approved for listing and trading on the Exchange in which the series 
is opened for trading on any Monday, Tuesday, Wednesday, Thursday or 
Friday that is a business day and that expires on the Monday, Wednesday 
or Friday of the following business week that is a business day, or, in 
the case of a series that is listed on a Friday and expires on a 
Monday, is listed one business week and one business day prior to that 
expiration. If a Tuesday, Wednesday, Thursday or Friday is not a 
business day, the series may be opened (or shall expire) on the first 
business day immediately prior to that Tuesday, Wednesday, Thursday or 
Friday. For a series listed pursuant to this section for Monday 
expiration, if a Monday is not a business day, the series shall expire 
on the first business day immediately following that Monday.
    The Exchange proposes to amend this definition at Options 1, 
Section 1(a)(49) to accommodate the listing of options series that 
expire on Tuesdays and Thursdays. Specifically, the Exchange proposes 
to add Tuesday and Thursdays to the permitted expiration days, which 
currently include Monday, Wednesday, and Friday, that it may open for 
trading.
    The Exchange also proposes corresponding changes within 
Supplementary Material .03 to Options 4, Section 5, which sets forth 
the requirements for SPY and QQQ options that are listed pursuant to 
the Short Term Option Series Program as Short Term Option Daily 
Expirations. Similar to Monday and Wednesday SPY, QQQ,

[[Page 58401]]

and IWM Short Term Option Daily Expirations within Supplementary 
Material .03 to Options 4, Section 5, the Exchange proposes that it may 
open for trading on any Monday or Tuesday that is a business day series 
of options on the symbols provided in Table 1 that expire at the close 
of business on each of the next two Tuesdays that are business days and 
are not business days in which monthly options series or Quarterly 
Options Series expire (``Tuesday Short Term Option Expiration Date'').
    Likewise, the Exchange proposes that it may open for trading on any 
Wednesday or Thursday that is a business day series of options on 
symbols provided in Table 1 that expire at the close of business on 
each of the next two Thursdays that are business days and are not 
business days in which monthly options series or Quarterly Options 
Series expire (``Thursday Short Term Option Expiration Date'').
    In the event that options on SPY and QQQ expire on a Tuesday or 
Thursday and that Tuesday or Thursday is the same day that a monthly 
option series or Quarterly Options Series expires, the Exchange would 
skip that week's listing and instead list the following week; the two 
weeks would therefore not be consecutive. Today, Monday and Wednesday 
Expirations in SPY, QQQ, and IWM skip the weekly listing in the event 
the weekly listing expires on the same day in the same class as a 
Quarterly Options Series. Currently, there is no rule text provision 
that states that Monday and Wednesday Expirations in SPY, QQQ, and IWM 
skip the weekly listing in the event the weekly listing expires on the 
same day in the same class as a monthly option series. Practically 
speaking, Monday and Wednesday Expirations in SPY, QQQ, and IWM would 
not expire on the same day as a monthly expiration.
    The interval between strike prices for the proposed Tuesday and 
Thursday SPY and QQQ Short Term Option Daily Expirations will be the 
same as those for the current Short Term Option Series for Monday, 
Wednesday and Friday expirations applicable to the Short Term Option 
Series Program.\5\ Specifically, the Tuesday and Thursday SPY and QQQ 
Short Term Option Daily Expirations will have a $0.50 strike interval 
minimum.\6\ As is the case with other equity options series listed 
pursuant to the Short Term Option Series Program, the Tuesday and 
Thursday SPY and QQQ Short Term Option Daily Expiration series will be 
P.M.-settled.
---------------------------------------------------------------------------

    \5\ See ISE Supplementary Material .03(e) to Options 4, Section 
5.
    \6\ See ISE Supplementary Material .03(e) to Options 4, Section 
5.
---------------------------------------------------------------------------

    Pursuant to Options 1, Section 1(a)(49), with respect to the Short 
Term Option Series Program, a Tuesday or Thursday expiration series 
shall expire on the first business day immediately prior to that 
Tuesday or Thursday, e.g., Monday or Wednesday of that week, 
respectively, if the Tuesday or Thursday is not a business day.
    Currently, for each option class eligible for participation in the 
Short Term Option Series Program, the Exchange is limited to opening 
thirty (30) series for each expiration date for the specific class.\7\ 
The thirty (30) series restriction does not include series that are 
open by other securities exchanges under their respective weekly rules; 
the Exchange may list these additional series that are listed by other 
options exchanges.\8\ This thirty (30) series restriction would apply 
to Tuesday and Thursday SPY and QQQ Short Term Option Daily Expiration 
series as well. In addition, the Exchange will be able to list series 
that are listed by other exchanges, assuming they file similar rules 
with the Commission to list SPY and QQQ options expiring on Tuesdays 
and Thursdays with a limit of two Tuesday Short Term Daily Expirations 
and two Thursday Short Term Daily Expirations.
---------------------------------------------------------------------------

    \7\ See ISE Supplementary Material .03(a) to Options 4, Section 
5.
    \8\ See ISE Supplementary Material .03(a) to Options 4, Section 
5.
---------------------------------------------------------------------------

    Finally, the Exchange is amending Supplementary Material .03(b) to 
Options 4, Section 5, to conform the rule text to the usage of the term 
``Short Term Option Daily Expirations.'' Today, with the exception of 
Monday and Wednesday SPY Expirations, Monday and Wednesday QQQ 
Expirations, and Monday and Wednesday IWM Expirations, no Short Term 
Option Series may expire in the same week in which monthly option 
series on the same class expire. With this proposal, Tuesday and 
Thursday SPY Expirations and Tuesday and Thursday QQQ Expirations would 
be treated similarly to existing Monday and Wednesday SPY, QQQ, and IWM 
Expirations. With respect to monthly option series, Short Term Option 
Daily Expirations will be permitted to expire in the same week in which 
monthly option series on the same class expire. Not listing Short Term 
Option Daily Expirations for one week every month because there was a 
monthly on that same class on the Friday of that week would create 
investor confusion.
    Further, as with Monday and Wednesday SPY, QQQ, and IWM 
Expirations, the Exchange would not permit Tuesday and Thursday Short 
Term Option Daily Expirations to expire on a business day in which 
monthly options series or Quarterly Options Series expire.\9\ 
Therefore, all Short Term Option Daily Expirations would expire at the 
close of business on each of the next two Mondays, Tuesdays, 
Wednesdays, and Thursdays, respectively, that are business days and are 
not business days in which monthly options series or Quarterly Options 
Series expire. The Exchange believes that it is reasonable to not 
permit two expirations on the same day in which a monthly options 
series or a Quarterly Options Series would expire.
---------------------------------------------------------------------------

    \9\ While the Exchange proposes to add rule text within 
Supplementary Material .03 of Options 4, Section 5 with respect to 
Monday Expirations, Tuesday Expirations, and Wednesdays Expirations 
stating that those expirations would not expire on business days 
that are business days in which monthly options series expire, 
practically speaking this would not occur.
---------------------------------------------------------------------------

    The Exchange proposes to amend Supplementary Material .03(e) of 
Options 4, Section 5 to remove the phrase ``on the Short Term Option 
Opening Date that expire on the Short Term Option Expiration Date'' 
within the second sentence of Supplementary Material .03(e). The phrase 
is being removed because a Short Term Option is defined in this 
paragraph as referring to the rules within Supplementary Material 
.03(e) of Options 4, Section 5 which define ``Short Term Option Opening 
Date'' and ``Short Term Option Expiration Date.'' The phrase is not 
necessary.
    The Exchange does not believe that any market disruptions will be 
encountered with the introduction of P.M.-settled Tuesday and Thursday 
Short Term Option Daily Expirations. The Exchange has the necessary 
capacity and surveillance programs in place to support and properly 
monitor trading in the proposed Tuesday and Thursday Short Term Option 
Daily Expirations. The Exchange currently trades P.M.-settled Short 
Term Option Series that expire Monday and Wednesday for SPY, QQQ and 
IWM and has not experienced any market disruptions nor issues with 
capacity. Today, the Exchange has surveillance programs in place to 
support and properly monitor trading in Short Term Option Series that 
expire Monday and Wednesday for SPY, QQQ and IWM.
Impact of Proposal
    The Exchange notes that listings in the Short Term Option Series 
Program

[[Page 58402]]

comprise a significant part of the standard listing in options markets. 
The below diagrams demonstrate the percentage of weekly listings as 
compared to monthly, quarterly, and Long-Term Option Series in 2020 and 
2022 in the options industry.\10\ The weekly strikes decreased from 24% 
to 19% in these two years. The Exchange notes that during this 
timeframe all options exchanges mitigated weekly strike intervals.
---------------------------------------------------------------------------

    \10\ The Exchange sourced this information from The Options 
Clearing Corporation (``OCC''). The information includes time 
averaged data for all 16 options markets up to August 18, 2022.
---------------------------------------------------------------------------

BILLING CODE 8011-01-P
[GRAPHIC] [TIFF OMITTED] TN26SE22.001

BILLING CODE 8011-01-C
    By limiting the number of Short Term Option Daily Expirations for 
SPY, QQQ, and IWM to two expirations for Monday and Wednesday 
expirations, and expanding the Short Term Option Series Program to 
permit Tuesday, and Thursday expirations for SPY and QQQ, the Exchange 
anticipates that it would overall reduce the number of weekly 
expiration dates. With respect to SPY, the reduction from five to two 
expirations will reduce 11.80% of strikes on SPY with Monday and 
Wednesday expirations. With respect to QQQ, the reduction from five to 
two expirations will reduce 12.86% of strikes on QQQ with Monday and 
Wednesday expirations. With respect to IWM, the reduction from five to 
two expirations will reduce 11.86% of strikes on IWM with Monday and 
Wednesday expirations. Additionally, expanding the Short Term Option 
Series Program to permit the listing of Tuesday and Thursday 
expirations in SPY and QQQ will account for the addition of 7.86% of 
strikes in SPY and the addition of 8.57% of strikes in QQQ. Therefore, 
the total net reduction would be 3.94% for SPY and 4.29% for QQQ.\11\
---------------------------------------------------------------------------

    \11\ The Exchange sourced this information, which are estimates, 
from LiveVol[reg]. The information includes data for all 16 options 
markets as of August 18, 2022.
---------------------------------------------------------------------------

    The overall reduction offered by this proposal reduces the number 
of Short Term Option Expirations to be listed on

[[Page 58403]]

ISE and should encourage Market Makers to continue to deploy capital 
more efficiently and improve displayed market quality.\12\ Also, the 
Exchange's proposal curtails the number of expirations in SPY, QQQ, and 
IWM without reducing the classes of options available for trading on 
the Exchange. The Exchange believes that despite the proposed 
curtailment of expirations, Members will continue to be able to expand 
hedging tools because all days of the week would be available to permit 
Members to tailor their investment and hedging needs more effectively 
in SPY, QQQ, and IWM.
---------------------------------------------------------------------------

    \12\ Today, Primary Market Makers and Market Makers are required 
to quote a specified time in their assigned options series. See ISE 
Options 2, Section 5.
---------------------------------------------------------------------------

BILLING CODE 8011-01-P
[GRAPHIC] [TIFF OMITTED] TN26SE22.002

BILLING CODE 8011-01-C
    Weeklies comprise 48% of the total volume of options listings.\13\
---------------------------------------------------------------------------

    \13\ The chart represents industry volume. Weeklies comprise 48% 
of volume while only being 19% of the strikes. The Exchange sourced 
this information from OCC. The information includes data for all 16 
options markets as of August 18, 2022.
---------------------------------------------------------------------------

    Similar to SPY, QQQ and IWM Monday and Wednesday Expirations, the 
introduction of SPY and QQQ Tuesday and Thursday expirations will, 
among other things, expand hedging tools available to market 
participants and continue the reduction of the premium cost of buying 
protection. The Exchange believes that SPY and QQQ Tuesday and Thursday 
expirations will allow market participants to purchase SPY and QQQ 
options based on their timing as needed and allow them to tailor their 
investment and hedging needs more effectively.
Implementation
    The Exchange proposes to implement this rule change on or before 
November 14, 2022. The Exchange will issue an Options Trader Alert to 
notify Members of the implementation date. Notwithstanding this 
implementation, Monday and Wednesday Expirations in SPY, QQQ, and IWM 
that were listed prior to the date of implementation will continue to 
be listed on the Exchange until those options expire pursuant to 
current Short Term Option Series rules within Supplementary Material 
.03 of Options 4, Section 5.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\14\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\15\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposal is consistent with the Act as the overall reduction 
offered by this proposal reduces the number of Short Term Option 
Expirations to be listed on ISE. This reduction would remove 
impediments to and perfect the mechanism of a free and open market by 
encouraging Market Makers to continue to deploy capital more 
efficiently and improve displayed market quality.\16\ Also, the 
Exchange's proposal curtails the number of Monday, Tuesday, Wednesday, 
and Thursday expirations in SPY, QQQ, and IWM without reducing the 
classes of options available for trading on the Exchange. The Exchange 
believes that despite the proposed curtailment of expirations, Members 
will continue to be able to expand hedging tools and tailor their 
investment and hedging needs more effectively in SPY, QQQ, and IWM.
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    \16\ Today, Primary Market Makers and Market Makers are required 
to quote a specified time in their assigned options series. See ISE 
Options 2, Section 5.
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    Similar to SPY, QQQ and IWM Monday and Wednesday Expirations 
(proposed to be SPY, QQQ and IWM Monday and Wednesday Short Term Daily 
Expirations), the introduction of SPY and QQQ Tuesday and Thursday 
Short Term Daily Expirations is consistent with the Act as it will, 
among other things, expand hedging tools available to market 
participants and continue the reduction of the premium cost of buying 
protection. The Exchange believes that SPY and QQQ Tuesday and Thursday 
expirations (renamed SPY and QQQ Tuesday and Thursday Short Term Daily 
Expirations) will allow market participants to purchase SPY and QQQ 
options based on their timing as needed and allow them to tailor their 
investment and hedging needs more effectively. Further, the proposal to 
permit Tuesday and Thursday Short Term Daily Expirations for options on 
SPY and QQQ listed pursuant to the Short Term Option Series Program,

[[Page 58404]]

subject to the proposed limitation of two expirations, would protect 
investors and the public interest by providing the investing public and 
other market participants more flexibility to closely tailor their 
investment and hedging decisions in SPY and QQQ options, thus allowing 
them to better manage their risk exposure.
    In particular, the Exchange believes the Short Term Option Series 
Program has been successful to date and that Tuesday and Thursday SPY 
and QQQ Short Term Daily Expirations should simply expand the ability 
of investors to hedge risk against market movements stemming from 
economic releases or market events that occur throughout the month in 
the same way that the Short Term Option Series Program has expanded the 
landscape of hedging. Similarly, the Exchange believes Tuesday and 
Thursday SPY and QQQ Short Term Daily Expirations should create greater 
trading and hedging opportunities and flexibility, and will provide 
customers with the ability to tailor their investment objectives more 
effectively. ISE currently lists Monday and Wednesday SPY, QQQ, and IWM 
Expirations (renamed SPY, QQQ, and IWM Monday and Wednesday Short Term 
Daily Expirations).\17\
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    \17\ See ISE Supplementary Material .03 at Options 4, Section 5.
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    Today, with the exception of Monday and Wednesday SPY Expirations, 
Monday and Wednesday QQQ Expirations, and Monday and Wednesday IWM 
Expirations, no Short Term Option Series may expire in the same week in 
which monthly option series on the same class expire. With this 
proposal, Tuesday and Thursday SPY Expirations and Tuesday and Thursday 
QQQ Expirations would be treated similarly to existing Monday and 
Wednesday SPY, QQQ, and IWM Expirations. The Exchange believes that 
permitting Short Term Option Daily Expirations to expire in the same 
week that standard monthly options expire on Fridays is consistent with 
Act. Not listing Short Term Option Daily Expirations for one week every 
month because there was a monthly on that same class on the Friday of 
that week would create investor confusion.
    Further, as with Monday and Wednesday SPY, QQQ, and IWM 
Expirations, the Exchange would not permit Tuesday and Thursday Short 
Term Option Daily Expirations to expire on a business day in which 
monthly options series or Quarterly Options Series expire. Therefore, 
all Short Term Option Daily Expirations would expire at the close of 
business on each of the next two Mondays, Tuesdays, Wednesdays, and 
Thursdays, respectively, that are business days and are not business 
days in which monthly options series or Quarterly Options Series 
expire. The Exchange believes that it is consistent with the Act to not 
permit two expirations on the same day in which a monthly options 
series or a Quarterly Options Series would expire similar to Monday and 
Wednesday SPY, QQQ, and IWM Expirations.
    There are no material differences in the treatment of Wednesday SPY 
and QQQ expirations for Short Term Option Series as compared to the 
proposed Tuesday and Thursday SPY and QQQ Short Term Daily Expirations. 
Given the similarities between Wednesday SPY, QQQ and IWM Expirations 
and the proposed Tuesday and Thursday SPY and QQQ Short Term Daily 
Expirations, the Exchange believes that applying the provisions in 
Supplementary Material .03 to Options 4, Section 5 that currently apply 
to Wednesday SPY, QQQ and IWM Expirations to Tuesday and Thursday SPY 
and QQQ Short Term Daily Expirations is justified.
    Finally, the Exchange represents that it has an adequate 
surveillance program in place to detect manipulative trading in the 
proposed Tuesday and Thursday SPY and QQQ Short Term Daily Expirations, 
in the same way that it monitors trading in the current Short Term 
Option Series and trading in Monday and Wednesday SPY, QQQ, and IWM 
Expirations. The Exchange also represents that it has the necessary 
systems capacity to support the new options series. Finally, the 
Exchange does not believe that any market disruptions will be 
encountered with the introduction of Tuesday and Thursday SPY and QQQ 
Short Term Daily Expirations.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.
    The proposal will provide an overall reduction in the number of 
Short Term Option Expirations to be listed on ISE. The Exchange 
believes this reduction will not impose an undue burden on competition, 
rather, it should encourage Market Makers to continue to deploy capital 
more efficiently and improve displayed market quality.\18\ Also, the 
Exchange's proposal curtails the number of weekly expirations in SPY, 
QQQ, and IWM without reducing the classes of options available for 
trading on the Exchange. The Exchange believes that despite the 
proposed curtailment of weekly expirations, Members will continue to be 
able to expand hedging tools and tailor their investment and hedging 
needs more effectively in SPY, QQQ, and IWM.
---------------------------------------------------------------------------

    \18\ Today, Primary Market Makers and Market Makers are required 
to quote a specified time in their assigned options series. See ISE 
Options 2, Section 5.
---------------------------------------------------------------------------

    Similar to SPY, QQQ and IWM Monday and Wednesday Expirations, the 
introduction of SPY and QQQ Tuesday and Thursday Short Term Daily 
Expirations does not impose an undue burden on competition. The 
Exchange believes that it will, among other things, expand hedging 
tools available to market participants and continue the reduction of 
the premium cost of buying protection. The Exchange believes that SPY 
and QQQ Tuesday and Thursday Short Term Daily Expirations will allow 
market participants to purchase SPY and QQQ options based on their 
timing as needed and allow them to tailor their investment and hedging 
needs more effectively.
    The Exchange does not believe the proposal will impose any burden 
on inter-market competition, as nothing prevents the other options 
exchanges from proposing similar rules to list and trade Short-Term 
Option Series with Tuesday and Thursday Short Term Daily Expirations. 
The Exchange notes that having Tuesday and Thursday SPY and QQQ 
expirations is not a novel proposal, as Wednesday SPY, QQQ and IWM 
Expirations are currently listed on ISE.\19\
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    \19\ See ISE Supplementary Material .03 at Options 4, Section 5.
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    Further, the Exchange does not believe the proposal will impose any 
burden on intra-market competition, as all market participants will be 
treated in the same manner under this proposal.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days of such 
date (i) as the Commission may designate if it finds such longer period 
to be appropriate and publishes its reasons for so finding or (ii) as 
to which the Exchange

[[Page 58405]]

consents, the Commission will: (a) by order approve or disapprove such 
proposed rule change, or (b) institute proceedings to determine whether 
the proposed rule change should be 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-2022-18 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-2022-18. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-ISE-2022-18 and should be submitted on 
or before October 17, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20731 Filed 9-23-22; 8:45 am]
BILLING CODE 8011-01-P
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