Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend Rule 903, 10400-10405 [2023-03332]
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10400
Federal Register / Vol. 88, No. 33 / Friday, February 17, 2023 / Notices
CboeEDGX–2023–007 on the subject
line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
[Release No. 34–96902; File No. SR–
NYSEAMER–2023–11]
• 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–CboeEDGX–2023–007. 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–CboeEDGX–2023–007 and
should be submitted on or before March
10, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–03330 Filed 2–16–23; 8:45 am]
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BILLING CODE 8011–01–P
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change To Amend Rule 903
February 13, 2023.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on February
6, 2023, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘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 self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 903 (Series of Options Open for
Trading) and Rule 903, Commentary .10
regarding the Short Term Option Series
Program. The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 903 (Series of Options Open for
Trading) and Rule 903 Commentary .10.
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
CFR 200.30–3(a)(12).
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Curtail Short Term Option Expiration
Dates
Currently, per Rule 903(h), 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 on
which monthly options series or
Quarterly Options Series expire
(hereinafter referred to as ‘‘Short Term
Option Expiration Dates’’). In addition,
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, per Commentary .10(f), 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
4 See Securities and Exchange Act Release No.
96281 (November 9, 2022), 87 FR 68769 (November
16, 2022) (SR–ISE- 2022–18) (‘‘ISE Approval
Order’’).
1 15
25 17
(hereinafter, ‘‘Commentary .10’’).
Specifically, the Exchange proposes to
amend the Short Term Option Series
Program 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.
This is a competitive filing and is
substantially identical to a rule recently
approved on Nasdaq ISE, LLC (‘‘Nasdaq
ISE’’).4
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Expirations,’’ ‘‘Wednesday QQQ
Expirations,’’ and ‘‘Wednesday IWM
Expirations’’). In addition, 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. In addition, 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 are subject to Commentary
.10(f).
Proposal
At this time, the Exchange proposes to
curtail the number of Short Term
Option Expiration Dates from five to
two 5 for SPY, QQQ and IWM for
Monday and Wednesday Expirations, as
well as the proposed Tuesday and
Thursday Expirations in SPY and QQQ,
which expirations are set forth in
Commentary .10(f). To effectuate this
change, the Exchange proposes new
paragraph (f) (which incorporates
current paragraph (f)) as set forth
below.6
Proposed Commentary .10(f), entitled
‘‘Short Term Option Daily Expirations’’,
would limit to two the number of option
series in symbols (set forth in ‘‘Table 1’’)
that expire at the close of business
beyond the current week for each of the
following two Mondays, Tuesdays,
Wednesdays, and Thursdays
(collectively, the ‘‘Short Term
Expiration Dates’’) as set forth below:
*
*
*
*
*
TABLE 1
Number of expirations
Symbol
Monday
SPY ..................................................................................................................
IWM ..................................................................................................................
QQQ .................................................................................................................
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*
*
*
*
*
As shown above, Table 1 sets forth the
number of permissible expirations for
each symbol as well as permissible
expiration days. Specifically, 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 ‘‘2’’ as the number of
permissible expirations 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. To
this end, specifically, the Exchange
proposes to state within Commentary
.10(f):
In addition to the above, the Exchange may
open for trading series of options on the
5 The Exchange proposes to list the two front
weeks for Short Term Options Daily Expirations.
6 See proposed Rule 903, Commentary .10(f).
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Tuesday
2
2
2
symbols provided in Table 1 below that
expire at the close of business on each of the
next two Mondays, Tuesdays, Wednesdays,
and Thursdays beyond the current week,
respectively, that are business days and are
not business days on 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
beyond the current week for each of Monday,
Tuesday, Wednesday, and Thursday
expirations at one time. Short Term Option
Daily Expirations would be subject to this
paragraph (f).
In connection with the foregoing
change, the Exchange proposes to
modify Rule 903 (h) to distinguish the
expirations set forth in Table 1 from
other permissible expirations.
Specifically, 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 on which
monthly options series or Quarterly
Options Series expire and will be
referred to as ‘‘Friday Short Term
Option Expiration Dates’’.7 In addition,
these expirations would be referred to as
7 See
proposed Commentary .10(a).
8 Id.
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Wednesday
2
0
2
Thursday
2
2
2
2
0
2
‘‘Short Term Option Weekly
Expirations’’ to distinguish them from
the proposed expirations that would be
subject to Table 1 (i.e., Short Term
Option Daily Expirations).8
Finally, proposed Commentary .10(f)
would provide 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, would collectively
refer to ‘‘Short Term Option Expiration
Dates.’’ 9
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
expirations (i.e., ‘‘Tuesday Short Term
Option Daily Expirations’’ and
‘‘Thursday Short Term Option Daily
Expirations’’) beyond the current week
each for SPY and QQQ. Tuesday and
Thursday Short Term Option Daily
Expirations would be subject to
proposed Commentary .10(f).
9 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.
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Federal Register / Vol. 88, No. 33 / Friday, February 17, 2023 / Notices
Currently, series listed pursuant to the
Short Term Option Series program are
series in an option class that is
approved for listing and trading on the
Exchange in which the series opened for
trading on any Monday, Tuesday,
Wednesday, Thursday, or Friday (as
applicable) 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 will expire) on the
first business day immediately prior to
that Tuesday, Wednesday, Thursday, or
Friday. For a series listed for Monday
expiration, if a Monday is not a business
day, the series will expire on the first
business day immediately following that
Monday.10
Current (and proposed) Commentary
.10(f), 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, will be modified to
accommodate the listing of options
series that expire on Tuesdays and
Thursdays. Similar to Monday and
Wednesday SPY, QQQ, and IWM Short
Term Option Daily Expirations, per
current (and proposed) Commentary
.10(f), the Exchange proposes that it may
open for trading on any Monday or
Tuesday that is a business day series of
options in symbols set forth in Table 1
that expire at the close of business on
each of the next two Tuesdays beyond
the current week 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’’).11
Likewise, per proposed Commentary
.10(f), the Exchange may open for
trading on any Wednesday or Thursday
that is a business day series of options
on symbols set forth 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.12 Specifically,
the Tuesday and Thursday SPY and
QQQ Short Term Option Daily
Expirations will have a $0.50 strike
interval minimum.13 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 proposed Commentary
.10(f), with respect to the Short Term
Option Series Program, a Tuesday or
Thursday expiration series will 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.14 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.15 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
12 See
Commentary .10(d).
id.
14 See Commentary .10(a).
15 See id.
13 See
10 See
11 See
Commentary .10(f)
proposed Commentary .10(f).
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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 beyond the
current week.
In addition, 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. Specifically, 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 in the
same class expire.16 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.17 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 on 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
16 See
proposed Commentary .10(f).
the Exchange proposes to add rule text
within Commentary .10(f) with respect to Monday
Expirations, Tuesday Expirations, and Wednesday
Expirations stating that those expirations would not
expire on business days that are business days on
which monthly options series expire, practically
speaking this would not occur.
17 While
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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
comprise a significant part of the
standard listing in options markets. The
below tables sets forth the percentage of
weekly listings as compared to monthly,
quarterly, and Long-Term Option Series
in 2020 and 2022 in the options
industry.18 The weekly strikes
decreased from 24% to19% in these two
years. The Exchange notes that during
this timeframe, all options exchanges
mitigated weekly strike intervals.
NUMBER OF STRIKES—2020
Expiration
Percent of
total series
Monthly .................................
Weekly ..................................
LEAP .....................................
Quarterly ...............................
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.19
The overall reduction offered by this
proposal reduces the number of Short
Term Option Expirations to be listed on
the Exchange and should encourage
Market-Makers to continue to deploy
capital more efficiently and improve
displayed market quality.20 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,
Trading Permit Holders will continue to
be able to expand hedging tools because
all days of the week would be available
to permit Trading Permit Holders to
tailor their investment and hedging
needs more effectively in SPY and QQQ.
59
24
16
1
TOTAL VOLUME—2022
[Through August 18]
Percent of
total series
Expiration
NUMBER OF STRIKES—2022
Expiration
Percent of
total series
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Monthly .................................
Weekly ..................................
LEAP .....................................
Quarterly ...............................
64
19
17
0
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
18 Nasdaq
ISE 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. See ISE
Approval Order, supra note 4.
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Monthly .................................
Weekly ..................................
LEAP .....................................
Quarterly ...............................
39
48
12
1
Weeklies comprise 48% of the total
volume of options listings.21 The
Exchange believes that inner weeklies
represent high volume as compared to
outer weeklies and would be more
attractive to market participants. 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
19 Nasdaq ISE sourced this information, which are
estimates, from LiveVol®. The information includes
data for all 16 options markets as of August 18,
2022. See id.
20 Market Makers (including Specialists and eSpecialists) are required to quote a specified time
in their assigned options series. See Rules 925NY
and 925.1NY.
21 This table sets forth industry volume. Weeklies
comprise 48% of volume while only being 19% of
the strikes. Nasdaq ISE sourced this information
from OCC. The information includes data for all 16
options markets as of August 18, 2022. See ISE
Approval Order, supra note 4.
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10403
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 will announce the
implementation of this proposal via
Trader Update to be published no later
than 60 days following the effectiveness
of this this rule. 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
Commentary .10 regarding Short Term
Option Series.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.22 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 23 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 24 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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 the Exchange. This reduction
would remove impediments to and
perfect the mechanism of a free and
open market by encouraging MarketMakers to continue to deploy capital
more efficiently and improve displayed
market quality.25 Also, the Exchange’s
22 15
23 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
24 Id.
25 Market Makers (including Specialists and eSpecialists) are required to quote a specified time
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Federal Register / Vol. 88, No. 33 / Friday, February 17, 2023 / Notices
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, Trading Permit Holders 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 (proposed to
be 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, 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 (proposed to be
SPY, QQQ, and IWM Monday and
Wednesday ‘‘Short Term Daily
Expirations’’).26
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 Commentary .10(f) that
currently apply to Wednesday SPY,
QQQ and IWM Expirations to Tuesday
and Thursday SPY and QQQ Short
in their assigned options series. See Rules 925NY
and 925.1NY.
26 See Commentary .10(f) and proposed
Commentary .10(f).
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Term Daily Expirations (per proposed
Commentary .10(f)) is justified.
The Exchange further 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.
Finally, the Exchange notes the
proposed rule change is substantively
the same as a rule change proposed by
Nasdaq ISE, which the Commission
recently approved.27
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.28
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,
Trading Permit Holders 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 Exchange believes the introduction
of SPY and QQQ Tuesday and Thursday
Short Term Daily Expirations will 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
27 See
ISE Approval Order, supra note 4.
Makers (including Specialists and eSpecialists) are required to quote a specified time
in their assigned options series. See Rules 925NY
and 925.1NY.
28 Market
E:\FR\FM\17FEN1.SGM
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Federal Register / Vol. 88, No. 33 / Friday, February 17, 2023 / Notices
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 intermarket 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.29
Additionally, as noted above, the
Commission recently approved a
substantively identical proposal of
another exchange.30 Further, the
Exchange does not believe the proposal
will impose any burden on intramarket
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 solicited
or received with respect to the proposed
rule change.
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 31 and Rule
19b–4(f)(6) thereunder.32 Because the
foregoing proposed rule change does
not: (i) significantly affect the protection
of investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
for 30 days from the date on which it
was filed, or such shorter time as the
Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 33 and
subparagraph (f)(6) of Rule 19b–4
thereunder.34
29 See
Commentary .10(f).
ISE Approval Order, supra note 4.
31 15 U.S.C. 78s(b)(3)(A)(iii).
32 17 CFR 240.19b–4(f)(6).
33 15 U.S.C. 78s(b)(3)(A)(iii).
34 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
lotter on DSK11XQN23PROD with NOTICES1
30 See
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Jkt 259001
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 35 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 36
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.37
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 its competitor
exchanges, thus creating competition
among Short Term Option Series
throughout the industry. For these
reasons, the Commission believes that
the proposed rule change presents no
novel issues and that waiver of the 30day 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.38
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:
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
35 17 CFR 240.19b–4(f)(6).
36 17 CFR 240.19b–4(f)(6)(iii).
37 See Securities Exchange Act Release No. 96281
(November 9, 2022), 87 FR 68769 (November 11,
2022) (SR–ISE–2022–18).
38 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).
PO 00000
Frm 00125
Fmt 4703
Sfmt 9990
10405
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–
NYSEAMER–2023–11 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–NYSEAMER–2023–11. 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–NYSEAMER–2023–11 and
should be submitted on or before March
10, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.39
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–03332 Filed 2–16–23; 8:45 am]
BILLING CODE 8011–01–P
39 17
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17FEN1
]]>Agencies
[Federal Register Volume 88, Number 33 (Friday, February 17, 2023)]
[Notices]
[Pages 10400-10405]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-03332]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96902; File No. SR-NYSEAMER-2023-11]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Amend Rule 903
February 13, 2023.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on February 6, 2023, NYSE American LLC (``NYSE American'' or the
``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 self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Rule 903 (Series of Options Open for
Trading) and Rule 903, Commentary .10 regarding the Short Term Option
Series Program. The proposed rule change is available on the Exchange's
website at www.nyse.com, at the principal office of the Exchange, and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 903 (Series of Options Open for
Trading) and Rule 903 Commentary .10. (hereinafter, ``Commentary
.10''). Specifically, the Exchange proposes to amend the Short Term
Option Series Program 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.
This is a competitive filing and is substantially identical to a rule
recently approved on Nasdaq ISE, LLC (``Nasdaq ISE'').\4\
---------------------------------------------------------------------------
\4\ See Securities and Exchange Act Release No. 96281 (November
9, 2022), 87 FR 68769 (November 16, 2022) (SR-ISE- 2022-18) (``ISE
Approval Order'').
---------------------------------------------------------------------------
Curtail Short Term Option Expiration Dates
Currently, per Rule 903(h), 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 on which monthly options series or
Quarterly Options Series expire (hereinafter referred to as ``Short
Term Option Expiration Dates''). In addition, 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, per Commentary .10(f), 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
[[Page 10401]]
Expirations,'' ``Wednesday QQQ Expirations,'' and ``Wednesday IWM
Expirations''). In addition, 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. In addition, 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 are subject to Commentary .10(f).
Proposal
At this time, the Exchange proposes to curtail the number of Short
Term Option Expiration Dates from five to two \5\ for SPY, QQQ and IWM
for Monday and Wednesday Expirations, as well as the proposed Tuesday
and Thursday Expirations in SPY and QQQ, which expirations are set
forth in Commentary .10(f). To effectuate this change, the Exchange
proposes new paragraph (f) (which incorporates current paragraph (f))
as set forth below.\6\
---------------------------------------------------------------------------
\5\ The Exchange proposes to list the two front weeks for Short
Term Options Daily Expirations.
\6\ See proposed Rule 903, Commentary .10(f).
---------------------------------------------------------------------------
Proposed Commentary .10(f), entitled ``Short Term Option Daily
Expirations'', would limit to two the number of option series in
symbols (set forth in ``Table 1'') that expire at the close of business
beyond the current week for each of the following two Mondays,
Tuesdays, Wednesdays, and Thursdays (collectively, the ``Short Term
Expiration Dates'') as set forth below:
* * * * *
Table 1
----------------------------------------------------------------------------------------------------------------
Number of expirations
Symbol ---------------------------------------------------------------
Monday Tuesday Wednesday Thursday
----------------------------------------------------------------------------------------------------------------
SPY............................................. 2 2 2 2
IWM............................................. 2 0 2 0
QQQ............................................. 2 2 2 2
----------------------------------------------------------------------------------------------------------------
* * * * *
As shown above, Table 1 sets forth the number of permissible
expirations for each symbol as well as permissible expiration days.
Specifically, 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 ``2'' as the number of permissible expirations
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. To this end, specifically, the
Exchange proposes to state within Commentary .10(f):
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 beyond the current week,
respectively, that are business days and are not business days on
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 beyond
the current week for each of Monday, Tuesday, Wednesday, and
Thursday expirations at one time. Short Term Option Daily
Expirations would be subject to this paragraph (f).
In connection with the foregoing change, the Exchange proposes to
modify Rule 903 (h) to distinguish the expirations set forth in Table 1
from other permissible expirations. Specifically, 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 on which monthly options series or Quarterly Options Series
expire and will be referred to as ``Friday Short Term Option Expiration
Dates''.\7\ In addition, these expirations would be referred to as
``Short Term Option Weekly Expirations'' to distinguish them from the
proposed expirations that would be subject to Table 1 (i.e., Short Term
Option Daily Expirations).\8\
---------------------------------------------------------------------------
\7\ See proposed Commentary .10(a).
\8\ Id.
---------------------------------------------------------------------------
Finally, proposed Commentary .10(f) would provide 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, would collectively refer to ``Short Term Option
Expiration Dates.'' \9\
---------------------------------------------------------------------------
\9\ 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 expirations (i.e.,
``Tuesday Short Term Option Daily Expirations'' and ``Thursday Short
Term Option Daily Expirations'') beyond the current week each for SPY
and QQQ. Tuesday and Thursday Short Term Option Daily Expirations would
be subject to proposed Commentary .10(f).
[[Page 10402]]
Currently, series listed pursuant to the Short Term Option Series
program are series in an option class that is approved for listing and
trading on the Exchange in which the series opened for trading on any
Monday, Tuesday, Wednesday, Thursday, or Friday (as applicable) 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 will expire) on the first business day
immediately prior to that Tuesday, Wednesday, Thursday, or Friday. For
a series listed for Monday expiration, if a Monday is not a business
day, the series will expire on the first business day immediately
following that Monday.\10\
---------------------------------------------------------------------------
\10\ See Commentary .10(f)
---------------------------------------------------------------------------
Current (and proposed) Commentary .10(f), 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, will be modified to accommodate the listing of options
series that expire on Tuesdays and Thursdays. Similar to Monday and
Wednesday SPY, QQQ, and IWM Short Term Option Daily Expirations, per
current (and proposed) Commentary .10(f), the Exchange proposes that it
may open for trading on any Monday or Tuesday that is a business day
series of options in symbols set forth in Table 1 that expire at the
close of business on each of the next two Tuesdays beyond the current
week 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'').\11\
---------------------------------------------------------------------------
\11\ See proposed Commentary .10(f).
---------------------------------------------------------------------------
Likewise, per proposed Commentary .10(f), the Exchange may open for
trading on any Wednesday or Thursday that is a business day series of
options on symbols set forth 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.\12\ Specifically, the Tuesday and Thursday SPY and QQQ
Short Term Option Daily Expirations will have a $0.50 strike interval
minimum.\13\ 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.
---------------------------------------------------------------------------
\12\ See Commentary .10(d).
\13\ See id.
---------------------------------------------------------------------------
Pursuant to proposed Commentary .10(f), with respect to the Short
Term Option Series Program, a Tuesday or Thursday expiration series
will 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.\14\
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.\15\ 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 beyond the current week.
---------------------------------------------------------------------------
\14\ See Commentary .10(a).
\15\ See id.
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In addition, 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. Specifically, 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 in the same class expire.\16\ 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.
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\16\ See proposed Commentary .10(f).
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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.\17\
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 on 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.
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\17\ While the Exchange proposes to add rule text within
Commentary .10(f) with respect to Monday Expirations, Tuesday
Expirations, and Wednesday Expirations stating that those
expirations would not expire on business days that are business days
on which monthly options series expire, practically speaking this
would not occur.
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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
[[Page 10403]]
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 comprise a significant part of the standard listing in options
markets. The below tables sets forth the percentage of weekly listings
as compared to monthly, quarterly, and Long-Term Option Series in 2020
and 2022 in the options industry.\18\ The weekly strikes decreased from
24% to19% in these two years. The Exchange notes that during this
timeframe, all options exchanges mitigated weekly strike intervals.
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\18\ Nasdaq ISE 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. See
ISE Approval Order, supra note 4.
Number of Strikes--2020
------------------------------------------------------------------------
Percent of
Expiration total series
------------------------------------------------------------------------
Monthly................................................. 59
Weekly.................................................. 24
LEAP.................................................... 16
Quarterly............................................... 1
------------------------------------------------------------------------
Number of Strikes--2022
------------------------------------------------------------------------
Percent of
Expiration total series
------------------------------------------------------------------------
Monthly................................................. 64
Weekly.................................................. 19
LEAP.................................................... 17
Quarterly............................................... 0
------------------------------------------------------------------------
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.\19\
The overall reduction offered by this proposal reduces the number of
Short Term Option Expirations to be listed on the Exchange and should
encourage Market-Makers to continue to deploy capital more efficiently
and improve displayed market quality.\20\ 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, Trading Permit Holders will continue to be able to expand
hedging tools because all days of the week would be available to permit
Trading Permit Holders to tailor their investment and hedging needs
more effectively in SPY and QQQ.
---------------------------------------------------------------------------
\19\ Nasdaq ISE sourced this information, which are estimates,
from LiveVol[supreg]. The information includes data for all 16
options markets as of August 18, 2022. See id.
\20\ Market Makers (including Specialists and e-Specialists) are
required to quote a specified time in their assigned options series.
See Rules 925NY and 925.1NY.
Total Volume--2022
[Through August 18]
------------------------------------------------------------------------
Percent of
Expiration total series
------------------------------------------------------------------------
Monthly................................................. 39
Weekly.................................................. 48
LEAP.................................................... 12
Quarterly............................................... 1
------------------------------------------------------------------------
Weeklies comprise 48% of the total volume of options listings.\21\
The Exchange believes that inner weeklies represent high volume as
compared to outer weeklies and would be more attractive to market
participants. 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.
---------------------------------------------------------------------------
\21\ This table sets forth industry volume. Weeklies comprise
48% of volume while only being 19% of the strikes. Nasdaq ISE
sourced this information from OCC. The information includes data for
all 16 options markets as of August 18, 2022. See ISE Approval
Order, supra note 4.
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Implementation
The Exchange will announce the implementation of this proposal via
Trader Update to be published no later than 60 days following the
effectiveness of this this rule. 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 Commentary .10
regarding Short Term Option Series.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\22\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \23\ requirements that the rules
of an exchange be designed to prevent fraudulent and manipulative acts
and practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \24\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\22\ 15 U.S.C. 78f(b).
\23\ 15 U.S.C. 78f(b)(5).
\24\ Id.
---------------------------------------------------------------------------
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 the Exchange. 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.\25\ Also, the
Exchange's
[[Page 10404]]
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, Trading Permit
Holders will continue to be able to expand hedging tools and tailor
their investment and hedging needs more effectively in SPY, QQQ, and
IWM.
---------------------------------------------------------------------------
\25\ Market Makers (including Specialists and e-Specialists) are
required to quote a specified time in their assigned options series.
See Rules 925NY and 925.1NY.
---------------------------------------------------------------------------
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 (proposed to be 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, 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 (proposed to be SPY, QQQ, and IWM Monday and
Wednesday ``Short Term Daily Expirations'').\26\
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\26\ See Commentary .10(f) and proposed Commentary .10(f).
---------------------------------------------------------------------------
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
Commentary .10(f) that currently apply to Wednesday SPY, QQQ and IWM
Expirations to Tuesday and Thursday SPY and QQQ Short Term Daily
Expirations (per proposed Commentary .10(f)) is justified.
The Exchange further 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.
Finally, the Exchange notes the proposed rule change is
substantively the same as a rule change proposed by Nasdaq ISE, which
the Commission recently approved.\27\
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\27\ See ISE Approval Order, supra note 4.
---------------------------------------------------------------------------
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.\28\ 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, Trading Permit Holders will continue to be able to expand
hedging tools and tailor their investment and hedging needs more
effectively in SPY, QQQ, and IWM.
---------------------------------------------------------------------------
\28\ Market Makers (including Specialists and e-Specialists) are
required to quote a specified time in their assigned options series.
See Rules 925NY and 925.1NY.
---------------------------------------------------------------------------
Similar to SPY, QQQ and IWM Monday and Wednesday Expirations, the
Exchange believes the introduction of SPY and QQQ Tuesday and Thursday
Short Term Daily Expirations will 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
[[Page 10405]]
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 intermarket 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.\29\
Additionally, as noted above, the Commission recently approved a
substantively identical proposal of another exchange.\30\ Further, the
Exchange does not believe the proposal will impose any burden on
intramarket competition, as all market participants will be treated in
the same manner under this proposal.
---------------------------------------------------------------------------
\29\ See Commentary .10(f).
\30\ See ISE Approval Order, supra note 4.
---------------------------------------------------------------------------
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \31\ and Rule 19b-4(f)(6) thereunder.\32\
Because the foregoing proposed rule change does not: (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A)(iii) of the Act \33\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\34\
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\31\ 15 U.S.C. 78s(b)(3)(A)(iii).
\32\ 17 CFR 240.19b-4(f)(6).
\33\ 15 U.S.C. 78s(b)(3)(A)(iii).
\34\ 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 \35\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \36\ 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.\37\ 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 its competitor exchanges, thus creating competition
among Short Term Option Series throughout the industry. 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.\38\
---------------------------------------------------------------------------
\35\ 17 CFR 240.19b-4(f)(6).
\36\ 17 CFR 240.19b-4(f)(6)(iii).
\37\ See Securities Exchange Act Release No. 96281 (November 9,
2022), 87 FR 68769 (November 11, 2022) (SR-ISE-2022-18).
\38\ 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).
---------------------------------------------------------------------------
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-NYSEAMER-2023-11 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-NYSEAMER-2023-11. 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-NYSEAMER-2023-11 and should be submitted
on or before March 10, 2023.
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\39\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\39\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-03332 Filed 2-16-23; 8:45 am]
BILLING CODE 8011-01-P
