Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 404, Series of Option Contracts Open for Trading To Amend the Short Term Option Series Program, 73054-73058 [2022-25787]

Download as PDF 73054 Federal Register / Vol. 87, No. 227 / Monday, November 28, 2022 / Notices Acceptance Date: November 21, 2022; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Christopher C. Mohr; Comments Due: December 1, 2022. This Notice will be published in the Federal Register. Erica A. Barker, Secretary. [FR Doc. 2022–25826 Filed 11–25–22; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96367; File No. SR– PEARL–2022–52] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 404, Series of Option Contracts Open for Trading To Amend the Short Term Option Series Program November 21, 2022. Pursuant to the provisions of 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 November 17, 2022, MIAX PEARL, LLC (‘‘MIAX Pearl’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a 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 is filing a proposal to amend Exchange Rule 404, Series of Option Contracts Open for Trading. The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rulefilings/pearl at MIAX Pearl’s principal office, and at the Commission’s Public Reference Room. khammond on DSKJM1Z7X2PROD with NOTICES II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 19:33 Nov 25, 2022 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose BILLING CODE 7710–FW–P 1 15 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. Jkt 259001 The Exchange proposes to amend Exchange Rule 404, Series of Option Contracts Open for Trading. Specifically, the Exchange proposes to amend Interpretations and Polices .02 of Rule 404 to (i) 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 (ii) 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 the definition of a Short Term Option Series contained in Exchange Rule 100. 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 first business day immediately prior to that Friday. Today, with respect to Wednesday SPY, QQQ, and IWM Expirations, the PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 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 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 Interpretations and Policies .02 of Exchange Rule 404. 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 Expiration 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 3 The Exchange proposes to list the two front months for Short Term Option Daily Expirations. E:\FR\FM\28NON1.SGM 28NON1 Federal Register / Vol. 87, No. 227 / Monday, November 28, 2022 / Notices proposes to include a table, labeled ‘‘Table 1,’’ within Interpretations and Policies .02 of Rule 404, 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 Policy .02 of Exchange Rule 404, khammond on DSKJM1Z7X2PROD with NOTICES 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 Policy .02 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 Policy .02 of Exchange Rule 404, 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 VerDate Sep<11>2014 19:33 Nov 25, 2022 Jkt 259001 73055 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 Policy .02 of Exchange Rule 404. 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 the definition of Short Term Option Series in Exchange Rule 100 to accommodate the listing of options series that expire on Tuesdays and Thursdays. Specifically, the Exchange proposes to add Tuesday and Thursday 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 Policy .02 of Exchange Rule 404, 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, and IWM Short Term Option Daily Expirations within Policy .02 of Exchange Rule 404, 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. With respect to the Short Term Option Series Program, a Tuesday or Thursday expiration series shall expire on the first business day immediately 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. 5 See Interpretations and Policies .02(e) of Exchange Rule 404. 6 See Interpretations and Policies .02(e) of Exchange Rule 404. Expiration Dates, are collectively ‘‘Short Term Option Expiration Dates.’’ 4 Tuesday and Thursday Expirations PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 E:\FR\FM\28NON1.SGM 28NON1 khammond on DSKJM1Z7X2PROD with NOTICES 73056 Federal Register / Vol. 87, No. 227 / Monday, November 28, 2022 / Notices 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.7 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.8 The thirty (30) series restriction does not include series that are opened by other securities exchanges under their respective weekly rules; the Exchange may list these additional series that are listed by other exchanges.9 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 Policy .02(b) of Exchange Rule 404, 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 7 See Interpretations and Policies .02 of Exchange Rule 404. 8 See Interpretations and Policies .02(c) of Exchange Rule 404. 9 See Interpretations and Policies .02(a) of Exchange Rule 404. VerDate Sep<11>2014 19:33 Nov 25, 2022 Jkt 259001 Series expire.10 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 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. The Exchange’s proposal mirrors that of Nasdaq ISE, which was recently approved by the Commission.11 In its proposal Nasdaq ISE provides an analysis of the impact of the proposal which the Exchange does not dispute. Implementation 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 Interpretations and Policies .02 of Exchange Rule 404. 2. Statutory Basis The Exchange believes that its proposed rule change is consistent with Section 6(b) of the Act 12 in general, and furthers the objectives of Section 6(b)(5) 10 While the Exchange proposes to add rule text within Policy .02 of Exchange Rule 404 with respect to Monday Expirations, Tuesday Expirations, and Wednesday 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. 11 See Securities Exchange Act Release No. 96281 (November 9, 2022), 87 FR 68769 (November 16, 2022) (SR–ISE–2022–18) (Order Granting Approval of a Proposed Rule Change to Amend the Short Term Option Series Program). 12 15 U.S.C. 78f(b). PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 of the Act 13 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. The proposal is consistent with the Act as this proposal reduces the number of Short term Option Expirations to be listed on the Exchange. This reduction would remove impediments to and perfect the mechanism of a free and open market by encouraging Market Makers 14 to continue to deploy capital more efficiently and improve displayed market quality.15 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. 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 13 15 U.S.C. 78f(b)(5). term ‘‘Market Maker’’ or ‘‘MM’’ means a Member registered with the Exchange for the purposes of making markets in options contracts traded on the Exchange and that is vested with the rights and responsibilities specified in Chapter VI of MIAX Pearl Rules. See Exchange Rule 100. 15 Today, Market Makers are required to quote a specified time in the series in which the Market Maker is registered. See Exchange Rule 605(d)(1). 14 The E:\FR\FM\28NON1.SGM 28NON1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 87, No. 227 / Monday, November 28, 2022 / Notices SPY and QQQ listed pursuant to the Short Term Option Series Program, 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. The Exchange currently lists Monday and Wednesday SPY, QQQ, and IWM Expirations (renamed SPY, QQQ, and IWM Monday and Wednesday Short Term Daily Expirations).16 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 the 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 16 See Interpretations and Policies .02 of Exchange Rule 404. VerDate Sep<11>2014 19:33 Nov 25, 2022 Jkt 259001 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 Policy .02 of Exchange Rule 404 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 the Exchange. 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.17 17 See PO 00000 supra note 15. Frm 00098 Fmt 4703 Sfmt 4703 73057 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. 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 the Exchange.18 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 Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 19 and Rule 19b–4(f)(6) thereunder.20 Because the foregoing proposed rule change does 18 See Interpretations and Policies .02 of Exchange Rule 404. 19 15 U.S.C. 78s(b)(3)(A)(iii). 20 17 CFR 240.19b–4(f)(6). E:\FR\FM\28NON1.SGM 28NON1 73058 Federal Register / Vol. 87, No. 227 / Monday, November 28, 2022 / Notices not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 21 and subparagraph (f)(6) of Rule 19b–4 thereunder.22 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 23 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 24 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 requested that the Commission waive the 30-day operative delay so that the proposed rule change may become operative upon filing. The Commission notes that it recently approved Nasdaq ISE’s substantially similar proposal.25 The Exchange has stated that waiver of the 30-day operative delay will allow the Exchange to implement the proposal at the same time as competitor exchanges. For these reasons, the Commission believes that the proposed rule change presents no novel issues and that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.26 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 21 15 U.S.C. 78s(b)(3)(A)(iii). 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. 23 17 CFR 240.19b–4(f)(6). 24 17 CFR 240.19b–4(f)(6)(iii). 25 See Securities Exchange Act Release No. 96281 (November 9, 2022), 87 FR 68769 (November 11, 2022) (SR–ISE–2022–18). 26 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). khammond on DSKJM1Z7X2PROD with NOTICES 22 17 VerDate Sep<11>2014 19:33 Nov 25, 2022 Jkt 259001 to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–25787 Filed 11–25–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Electronic Comments Sunshine Act Meetings • 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– PEARL–2022–52 on the subject line. 2:00 p.m. on Thursday, December 1, 2022. PLACE: The meeting will be held via remote means and/or at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. STATUS: This meeting will be closed to the public. MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the Commission’s website at https:// www.sec.gov. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. The subject matter of the closed meeting will consist of the following topics: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Resolution of litigation claims; and Other matters relating to examinations and enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters. CONTACT PERSON FOR MORE INFORMATION: For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. 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–PEARL–2022–52. 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 such 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–PEARL–2022–52 and should be submitted on or before December 19, 2022. PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 TIME AND DATE: (Authority: 5 U.S.C. 552b.) 27 17 E:\FR\FM\28NON1.SGM CFR 200.30–3(a)(12), (59). 28NON1

Agencies

[Federal Register Volume 87, Number 227 (Monday, November 28, 2022)]
[Notices]
[Pages 73054-73058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25787]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96367; File No. SR-PEARL-2022-52]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 404, Series of Option Contracts Open for Trading To Amend the 
Short Term Option Series Program

November 21, 2022.
    Pursuant to the provisions of 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 November 17, 2022, MIAX PEARL, LLC (``MIAX 
Pearl'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') a 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 is filing a proposal to amend Exchange Rule 404, 
Series of Option Contracts Open for Trading.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxoptions.com/rule-filings/pearl at MIAX 
Pearl's principal office, 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 Exchange Rule 404, Series of Option 
Contracts Open for Trading. Specifically, the Exchange proposes to 
amend Interpretations and Polices .02 of Rule 404 to (i) 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 (ii) 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 the definition of a Short Term 
Option Series contained in Exchange Rule 100.
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 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 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 Interpretations and Policies .02 
of Exchange Rule 404.
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 
Expiration 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

[[Page 73055]]

proposes to include a table, labeled ``Table 1,'' within 
Interpretations and Policies .02 of Rule 404, 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 Policy .02 of Exchange Rule 404,

    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 Policy .02

    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 Policy .02 of Exchange Rule 404, 
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 Policy .02 of 
Exchange Rule 404.
    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 the definition of Short Term Option 
Series in Exchange Rule 100 to accommodate the listing of options 
series that expire on Tuesdays and Thursdays. Specifically, the 
Exchange proposes to add Tuesday and Thursday 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 Policy .02 
of Exchange Rule 404, 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, and IWM Short Term Option Daily Expirations within 
Policy .02 of Exchange Rule 404, 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 Interpretations and Policies .02(e) of Exchange Rule 
404.
    \6\ See Interpretations and Policies .02(e) of Exchange Rule 
404.
---------------------------------------------------------------------------

    With respect to the Short Term Option Series Program, a Tuesday or 
Thursday expiration series shall expire on the first business day 
immediately

[[Page 73056]]

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.\7\
---------------------------------------------------------------------------

    \7\ See Interpretations and Policies .02 of Exchange Rule 404.
---------------------------------------------------------------------------

    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.\8\ 
The thirty (30) series restriction does not include series that are 
opened by other securities exchanges under their respective weekly 
rules; the Exchange may list these additional series that are listed by 
other exchanges.\9\ 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.
---------------------------------------------------------------------------

    \8\ See Interpretations and Policies .02(c) of Exchange Rule 
404.
    \9\ See Interpretations and Policies .02(a) of Exchange Rule 
404.
---------------------------------------------------------------------------

    Finally, the Exchange is amending Policy .02(b) of Exchange Rule 
404, 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.\10\ 
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.
---------------------------------------------------------------------------

    \10\ While the Exchange proposes to add rule text within Policy 
.02 of Exchange Rule 404 with respect to Monday Expirations, Tuesday 
Expirations, and Wednesday 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 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.
    The Exchange's proposal mirrors that of Nasdaq ISE, which was 
recently approved by the Commission.\11\ In its proposal Nasdaq ISE 
provides an analysis of the impact of the proposal which the Exchange 
does not dispute.
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 96281 (November 9, 
2022), 87 FR 68769 (November 16, 2022) (SR-ISE-2022-18) (Order 
Granting Approval of a Proposed Rule Change to Amend the Short Term 
Option Series Program).
---------------------------------------------------------------------------

Implementation
    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 Interpretations and Policies .02 of Exchange Rule 404.
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \12\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \13\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanisms of a free and open market and a national market 
system and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposal is consistent with the Act as this proposal reduces 
the number of Short term Option Expirations to be listed on the 
Exchange. This reduction would remove impediments to and perfect the 
mechanism of a free and open market by encouraging Market Makers \14\ 
to continue to deploy capital more efficiently and improve displayed 
market quality.\15\ 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.
---------------------------------------------------------------------------

    \14\ The term ``Market Maker'' or ``MM'' means a Member 
registered with the Exchange for the purposes of making markets in 
options contracts traded on the Exchange and that is vested with the 
rights and responsibilities specified in Chapter VI of MIAX Pearl 
Rules. See Exchange Rule 100.
    \15\ Today, Market Makers are required to quote a specified time 
in the series in which the Market Maker is registered. See Exchange 
Rule 605(d)(1).
---------------------------------------------------------------------------

    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

[[Page 73057]]

SPY and QQQ listed pursuant to the Short Term Option Series Program, 
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. The Exchange currently lists Monday and Wednesday SPY, 
QQQ, and IWM Expirations (renamed SPY, QQQ, and IWM Monday and 
Wednesday Short Term Daily Expirations).\16\
---------------------------------------------------------------------------

    \16\ See Interpretations and Policies .02 of Exchange Rule 404.
---------------------------------------------------------------------------

    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 
the 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 
Policy .02 of Exchange Rule 404 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 the Exchange. 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.\17\ 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.
---------------------------------------------------------------------------

    \17\ See supra note 15.
---------------------------------------------------------------------------

    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 the Exchange.\18\
---------------------------------------------------------------------------

    \18\ See Interpretations and Policies .02 of Exchange Rule 404.
---------------------------------------------------------------------------

    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

    Written comments were neither solicited nor received.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \19\ and Rule 19b-4(f)(6) thereunder.\20\ 
Because the foregoing proposed rule change does

[[Page 73058]]

not: (i) significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \21\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\22\
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \23\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \24\ 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 requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. The 
Commission notes that it recently approved Nasdaq ISE's substantially 
similar proposal.\25\ The Exchange has stated that waiver of the 30-day 
operative delay will allow the Exchange to implement the proposal at 
the same time as competitor exchanges. For these reasons, the 
Commission believes that the proposed rule change presents no novel 
issues and that waiver of the 30-day operative delay is consistent with 
the protection of investors and the public interest. Accordingly, the 
Commission hereby waives the operative delay and designates the 
proposed rule change operative upon filing.\26\
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    \23\ 17 CFR 240.19b-4(f)(6).
    \24\ 17 CFR 240.19b-4(f)(6)(iii).
    \25\ See Securities Exchange Act Release No. 96281 (November 9, 
2022), 87 FR 68769 (November 11, 2022) (SR-ISE-2022-18).
    \26\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 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-PEARL-2022-52 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-PEARL-2022-52. 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 such 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-PEARL-2022-52 and should be submitted on 
or before December 19, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12), (59).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-25787 Filed 11-25-22; 8:45 am]
BILLING CODE 8011-01-P
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