Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Short Term Option Series Program in Rule 19.5, Interpretation and Policy .05 and a Related Definition in Rule 16.1, 63160-63165 [2023-19845]
Download as PDF
<![CDATA[
63160
Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices
Electronic Comments
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
FICC has not received or solicited any
written comments relating to this
proposal. If any written comments are
received, FICC will amend this filing to
publicly file such comments as an
Exhibit 2 to this filing, as required by
Form 19b–4 and the General
Instructions thereto.
Persons submitting written comments
are cautioned that, according to Section
IV (Solicitation of Comments) of the
Exhibit 1A in the General Instructions to
Form 19b–4, the Commission does not
edit personal identifying information
from comment submissions.
Commenters should submit only
information that they wish to make
available publicly, including their
name, email address, and any other
identifying information.
All prospective commenters should
follow the Commission’s instructions on
How to Submit Comments, available at
www.sec.gov/regulatory-actions/how-tosubmit-comments. General questions
regarding the rule filing process or
logistical questions regarding this filing
should be directed to the Main Office of
the Commission’s Division of Trading
and Markets at tradingandmarkets@
sec.gov or 202–551–5777.
FICC reserves the right to not respond
to any comments received.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to section
19(b)(3)(A) 27 of the Act and paragraph
(f) 28 of Rule 19b–4 thereunder. 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.
lotter on DSK11XQN23PROD with NOTICES1
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
FICC–2023–013 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to file
number SR–FICC–2023–013. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of NSCC
and on DTCC’s website (https://
dtcc.com/legal/sec-rule-filings.aspx). Do
not include personal identifiable
information in submissions; you should
submit only information that you wish
to make available publicly. We may
redact in part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–FICC–2023–013 and
should be submitted on or before
October 5, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–19843 Filed 9–13–23; 8:45 am]
BILLING CODE 8011–01–P
27 15
28 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
VerDate Sep<11>2014
17:47 Sep 13, 2023
29 17
Jkt 259001
PO 00000
Fmt 4703
[Release No. 34–98338; File No. SR–MEMX–
2023–19]
Self-Regulatory Organizations; MEMX
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend the Short Term
Option Series Program in Rule 19.5,
Interpretation and Policy .05 and a
Related Definition in Rule 16.1
September 8, 2023.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 6, 2023, MEMX LLC
(‘‘MEMX’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to section 19(b)(3)(A)(iii) of the
Act 3 and Rule 19b–4(f)(6) thereunder.4
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Short Term Option Series Program in
MEMX Rule 19.5, Interpretation and
Policy .05 and a related definition in
Rule 16.1. The text of the proposed rule
change is provided in Exhibit 5.
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.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
CFR 200.30–3(a)(12).
Frm 00111
SECURITIES AND EXCHANGE
COMMISSION
Sfmt 4703
E:\FR\FM\14SEN1.SGM
14SEN1
Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend the Short Term
Option Series Program in Rule 19.5,
Interpretation and Policy .05, and
amend the definition of Short Term
Option Series in Rule 16.1.
In August 2022, the Commission
approved the Exchange’s adoption of
rules to govern the trading of options on
the Exchange by MEMX Options,5
which will be a facility of the Exchange.
The rules adopted were substantially
similar to those of other currently
operating options exchanges, in
particular, Cboe BZX Exchange, Inc.
(‘‘BZX Options’’). Since that time, BZX
Options and other options exchanges,
including Cboe EDGX Exchange, Inc.
(‘‘EDGX Options’’), have modified
certain of those rules 6 and, as such, the
Exchange wishes to propose the same
modifications in order to conform to
those rules at the time trading begins on
MEMX Options.7
Specifically, the Exchange proposes to
amend the Short Term Option Series
Program 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 Short Term Option
Series in Rule 16.1.
lotter on DSK11XQN23PROD with NOTICES1
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
5 See Securities Exchange Act Release No. 95445
(August 9, 2022), 87 FR 49884 (August 12, 2022)
(SR–MEMX–2022–010).
6 See Securities Exchange Act Release Nos. 96313
(November 15, 2022), 87 FR 70869 (November 21,
2022) (SR–CboeBZX–2022–056); 96320 (November
15, 2022), 87 FR 70880 (November 21, 2022) (SR–
CboeEDGX–2022–051); see also Securities
Exchange Act Release No. 96281 (November 9,
2022), 87 FR 68769 (November 16, 2022) (SR–ISE–
2022–18).
7 Currently, the Exchange plans to launch MEMX
Options in September 2023.
VerDate Sep<11>2014
17:47 Sep 13, 2023
Jkt 259001
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
(‘‘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 the
SPY, QQQ, or IWM to expire on any
Monday of the month that is a business
day and is not a Monday in which
Quarterly Options Series expire
(‘‘Monday SPY Expirations,’’ ‘‘Monday
QQQ Expirations,’’ and ‘‘Monday IWM
Expirations’’), provided that Monday
SPY Expirations, Monday QQQ
Expirations, and Monday IWM
Expirations that are listed on a Friday
must be listed at least one business
week and one business day prior to the
expiration. The Exchange may list up to
five consecutive Wednesday SPY
Expirations, Wednesday QQQ
Expirations, and Wednesday IWM
Expirations and five consecutive
Monday SPY Expirations, Monday QQQ
Expirations, and Monday IWM
Expirations at one time; the Exchange
may have no more than a total of five
each of Wednesday SPY Expirations,
Wednesday QQQ Expirations, and
Wednesday IWM Expirations and a total
of five each of Monday SPY Expirations,
Monday QQQ Expirations, and Monday
IWM Expirations. Monday and
Wednesday SPY Expirations, Monday
and Wednesday QQQ Expirations, and
PO 00000
Frm 00112
Fmt 4703
Sfmt 4703
63161
Monday and Wednesday IWM
Expirations will be subject to the
provisions of Rule 19.5, Interpretation
and Policy .05.
Proposal
At this time, the Exchange proposes to
curtail the number of Short Term
Option Expiration Dates from five to
two 8 for Monday and Wednesday
Expirations in SPY, QQQ and IWM, 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 the
Monday, Tuesday, Wednesday, and
Thursday expirations at any one time.
The Exchange proposes to include a
table, labelled ‘‘Table 1’’, within Rule
19.5, Interpretation and Policy .05(h),
which specifies each symbol which
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 Rule 19.5,
Interpretation and Policy .05(h):
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 beyond the current week 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
8 The Exchange proposes to list the two front
months for Short Term Option Daily Expirations.
E:\FR\FM\14SEN1.SGM
14SEN1
63162
Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices
Term Option Daily Expirations would be
subject to this Interpretation and Policy .05.
lotter on DSK11XQN23PROD with NOTICES1
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 (‘‘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 Rule 19.5, Interpretation
and Policy .05(h) 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.’’ 9
Tuesday and Thursday Expirations
At this time, the Exchange proposes to
expand the Short Term Option Series
Program for Short Term Option Daily
Expirations on Tuesday (‘‘Tuesday
Short Term Option Daily Expirations)
and Short Term Option Daily
Expirations on Thursday (‘‘Thursday
Short Term Option Daily Expirations’’).
No more than a total of two Tuesday
Short Term Option Daily Expirations or
Thursday Short Term Option Daily
Expirations in SPY and QQQ will be
listed at any one time beyond the
current week. Tuesday and Thursday
Short Term Option Daily Expirations
would be subject to Rule 19.5,
Interpretation and Policy .05.
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
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.
VerDate Sep<11>2014
17:47 Sep 13, 2023
Jkt 259001
immediately prior to that Tuesday,
Wednesday, Thursday or Friday. For a
series listed pursuant to this section for
Monday expiration, if a Monday is not
a business day, the series shall expire on
the first business day immediately
following that Monday.
The Exchange proposes to amend this
definition in Rule 16.1 to accommodate
the listing of options series that expire
on Tuesdays and Thursdays.
Specifically, the Exchange proposes to
add Tuesday and Thursdays to the
permitted expiration days, which
currently include Monday, Wednesday,
and Friday, that it may open for trading.
The Exchange also proposes
corresponding changes within Rule
19.5, Interpretation and Policy .05,
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, 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 within Rule 19.5,
Interpretation and Policy .05, 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 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’’).
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
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
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.10 Specifically,
the Tuesday and Thursday SPY and
QQQ Short Term Option Daily
Expirations will have a $0.50 strike
interval minimum.11 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 Rule 19.5,
Interpretation and Policy .05, 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.12 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.13 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.
Finally, the Exchange is amending
Rule 19.5, Interpretation and Policy
.05(b) to conform the rule text to the
usage of the term ‘‘Short Term Option
10 See
Rule 19.5, Interpretation and Policy .05(e)
id.
12 See Rule 19.5, Interpretation and Policy .05(a).
13 See id.
11 See
E:\FR\FM\14SEN1.SGM
14SEN1
Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices
lotter on DSK11XQN23PROD with NOTICES1
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.14
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, as
other Exchanges have already adopted
identical rules, and the Exchange will
have 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.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
14 While the Exchange proposes to add rule text
within Rule 19.5, Interpretation and Policy .05 with
respect to Monday Expirations, Tuesday
Expirations, and Wednesday Expirations stating
that those expirations would not expire on business
days on which monthly options series expire,
practically speaking this would not occur.
VerDate Sep<11>2014
17:47 Sep 13, 2023
Jkt 259001
thereunder applicable to the Exchange
and, in particular, the requirements of
section 6(b) of the Act.15 Specifically,
the Exchange believes the proposed rule
change is consistent with the section
6(b)(5) 16 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) 17 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.18 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 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)
15 15
16 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
17 Id.
18 Market-Makers are required to quote a specified
time in their assigned options series. See Rule 22.6.
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
63163
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
as implemented by other exchanges 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.
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
E:\FR\FM\14SEN1.SGM
14SEN1
lotter on DSK11XQN23PROD with NOTICES1
63164
Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices
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 Rule 19.5, Interpretation
and Policy .05 that will apply to
Wednesday SPY, QQQ and IWM
Expirations to Tuesday and Thursday
SPY and QQQ Short Term Daily
Expirations 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, as previously noted, the
proposed rule change is substantively
the same as a rule change proposed by
BZX Options and EDGX Options, which
the Commission approved in 2022.19
improve displayed market quality.20
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 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
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
other options exchanges have already
adopted similar rules to list and trade
Short-Term Option Series with Tuesday
and Thursday Short Term Daily
Expirations. Additionally, the
Commission recently approved a
substantively identical proposal of
another exchange and other exchanges
have filed to modify their rules in a
similar fashion.21 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.
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
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
19 See
supra note 6.
VerDate Sep<11>2014
17:47 Sep 13, 2023
Jkt 259001
The Exchange neither solicited nor
received comments on the proposed
rule change.
20 See
supra note 18.
Securities and Exchange Act Release No.
96281 (November 9, 2022) (SR–ISE–2022–18); See
also Securities Exchange Act Release Nos. 96313
(November 15, 2022), 87 FR 70869 (November 21,
2022) (SR–CboeBZX–2022–056) and 96320
(November 15, 2022), 87 FR 70880 (November 21,
2022) (SR–CboeEDGX–2022–051).
21 See
PO 00000
Frm 00115
Fmt 4703
Sfmt 4703
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to section
19(b)(3)(A) of the Act 22 and Rule 19b–
4(f)(6) thereunder.23
A proposed rule change filed under
Rule 19b–4(f)(6) 24 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),25 the
Commission may 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 proposed rule change is
substantially similar to those of other
currently operating options
exchanges.26 The Exchange states that it
intends to launch MEMX Options on
September 13, 2023 and that waiver of
the 30-day operative delay would allow
the Exchange to implement the
proposed change to amend its rules as
set forth above prior to launch, thus
ensuring consistency of rules between
the Exchange and other options
exchanges. For these reasons, and
because the proposed rule change does
not raise any novel legal or regulatory
issues, the Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Therefore, the Commission hereby
waives the 30-day operative delay and
designates the proposal operative upon
filing.27
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
22 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change at least five business
days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
24 17 CFR 240.19b–4(f)(6).
25 17 CFR 240.19b–4(f)(6)(iii).
26 See supra note 6.
27 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).
23 17
E:\FR\FM\14SEN1.SGM
14SEN1
Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
lotter on DSK11XQN23PROD with NOTICES1
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–
MEMX–2023–19 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–MEMX–2023–19. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
VerDate Sep<11>2014
17:47 Sep 13, 2023
Jkt 259001
subject to copyright protection. All
submissions should refer to file number
SR–MEMX–2023–19 and should be
submitted on or before October 5, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–19845 Filed 9–13–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98332; File No. SR–
NYSEAMER–2023–43]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change To Modify the NYSE American
Options Fee Schedule
September 8, 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 August
29, 2023, NYSE American LLC (‘‘NYSE
American’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the 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 modify the
NYSE American Options Fee Schedule
(‘‘Fee Schedule’’) to provide for certain
temporary fee changes in connection
with the Exchange’s migration to the
Pillar trading platform. The Exchange
proposes to implement the fee changes
effective August 29, 2023. 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
28 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
63165
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 purpose of this filing to amend
the Fee Schedule to provide for certain
temporary changes in connection with
the Exchange’s migration to a new
trading platform known as Pillar.
Currently, the Exchange conducts
options trading on an electronic
platform known as ‘‘the Exchange
System,’’ which refers to the Exchange’s
electronic order delivery, execution, and
reporting system for designated option
issues through which orders and quotes
of users are consolidated for execution
and/or display.4 On or about October
23, 2023, the Exchange anticipates
beginning the migration of its options
trading to the Pillar technology
platform.5
4 See
NYSE American Rule 900.2NY Definitions.
Exchange has announced that, pending
regulatory approval, it will begin migrating
Exchange-listed options to Pillar on October 23,
2023, available here: https://www.nyse.com/traderupdate/history#110000530919. See also, e.g.,
Securities Exchange Act Release Nos. 97297 (April
13, 2023), 88 FR 24225 (April 19, 2023) (SR–
NYSEAMER–2023–16) (Notice of Filing and
Immediate Effectiveness of Proposed Change to
Modify Rule 900.2NY and to Adopt New Rules
964NYP, 964.1NYP, and 964.2NYP); 97739 (June
15, 2023), 88 FR 40893 (June 22, 2023) (SR–
NYSEAMER–2023–17) (Notice of Filing of
Amendment No. 1 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified
by Amendment No. 1, to Adopt New Exchange Rule
980NYP and Amend Exchange Rule 935NY); 97869
(July 10, 2023), 88 FR 45730 (July 17, 2023) (SR–
NYSEAMER–2023–34) (Notice of Filing and
Immediate Effectiveness of Proposed New Rules
900.3NYP, 925.1NYP, 928NYP, 928.1NYP, and
952NYP and Amendments to Rules 900.3NY,
925NY, 925.1NY, 928NY, 952NY, 953.1NY, 967NY,
967.1NY, and 985NY); 97938 (July 18, 2023), 88 FR
47536 (July 24, 2023) (NYSEAMER–2023–35)
(Notice of Filing and Immediate Effectiveness of
Proposed Change for New Rule 971.1NYP).
5 The
E:\FR\FM\14SEN1.SGM
14SEN1
]]>Agencies
[Federal Register Volume 88, Number 177 (Thursday, September 14, 2023)]
[Notices]
[Pages 63160-63165]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-19845]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98338; File No. SR-MEMX-2023-19]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the Short
Term Option Series Program in Rule 19.5, Interpretation and Policy .05
and a Related Definition in Rule 16.1
September 8, 2023.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on September 6, 2023, MEMX LLC (``MEMX'' or the ``Exchange'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change as described in Items I and II below, which
Items have been prepared by the Exchange. The Exchange filed the
proposal as a ``non-controversial'' proposed rule change pursuant to
section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6)
thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Short Term Option Series Program
in MEMX Rule 19.5, Interpretation and Policy .05 and a related
definition in Rule 16.1. The text of the proposed rule change is
provided in Exhibit 5.
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.
[[Page 63161]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the Short Term
Option Series Program in Rule 19.5, Interpretation and Policy .05, and
amend the definition of Short Term Option Series in Rule 16.1.
In August 2022, the Commission approved the Exchange's adoption of
rules to govern the trading of options on the Exchange by MEMX
Options,\5\ which will be a facility of the Exchange. The rules adopted
were substantially similar to those of other currently operating
options exchanges, in particular, Cboe BZX Exchange, Inc. (``BZX
Options''). Since that time, BZX Options and other options exchanges,
including Cboe EDGX Exchange, Inc. (``EDGX Options''), have modified
certain of those rules \6\ and, as such, the Exchange wishes to propose
the same modifications in order to conform to those rules at the time
trading begins on MEMX Options.\7\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 95445 (August 9,
2022), 87 FR 49884 (August 12, 2022) (SR-MEMX-2022-010).
\6\ See Securities Exchange Act Release Nos. 96313 (November 15,
2022), 87 FR 70869 (November 21, 2022) (SR-CboeBZX-2022-056); 96320
(November 15, 2022), 87 FR 70880 (November 21, 2022) (SR-CboeEDGX-
2022-051); see also Securities Exchange Act Release No. 96281
(November 9, 2022), 87 FR 68769 (November 16, 2022) (SR-ISE-2022-
18).
\7\ Currently, the Exchange plans to launch MEMX Options in
September 2023.
---------------------------------------------------------------------------
Specifically, the Exchange proposes to amend the Short Term Option
Series Program 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 Short Term Option
Series in Rule 16.1.
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 on 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 the SPY, QQQ, or IWM to expire on any Monday of the month
that is a business day and is not a Monday in which Quarterly Options
Series expire (``Monday SPY Expirations,'' ``Monday QQQ Expirations,''
and ``Monday IWM Expirations''), provided that Monday SPY Expirations,
Monday QQQ Expirations, and Monday IWM Expirations that are listed on a
Friday must be listed at least one business week and one business day
prior to the expiration. The Exchange may list up to five consecutive
Wednesday SPY Expirations, Wednesday QQQ Expirations, and Wednesday IWM
Expirations and five consecutive Monday SPY Expirations, Monday QQQ
Expirations, and Monday IWM Expirations at one time; the Exchange may
have no more than a total of five each of Wednesday SPY Expirations,
Wednesday QQQ Expirations, and Wednesday IWM Expirations and a total of
five each of Monday SPY Expirations, Monday QQQ Expirations, and Monday
IWM Expirations. Monday and Wednesday SPY Expirations, Monday and
Wednesday QQQ Expirations, and Monday and Wednesday IWM Expirations
will be subject to the provisions of Rule 19.5, Interpretation and
Policy .05.
Proposal
At this time, the Exchange proposes to curtail the number of Short
Term Option Expiration Dates from five to two \8\ for Monday and
Wednesday Expirations in SPY, QQQ and IWM, 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 the Monday, Tuesday, Wednesday, and Thursday
expirations at any one time. The Exchange proposes to include a table,
labelled ``Table 1'', within Rule 19.5, Interpretation and Policy
.05(h), which specifies each symbol which 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 Rule 19.5, Interpretation and Policy
.05(h):
---------------------------------------------------------------------------
\8\ The Exchange proposes to list the two front months for Short
Term Option Daily Expirations.
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 beyond the current week 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
[[Page 63162]]
Term Option Daily Expirations would be subject to this
---------------------------------------------------------------------------
Interpretation and Policy .05.
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 (``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 Rule 19.5, Interpretation and
Policy .05(h) 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.'' \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 for Short Term Option Daily Expirations on Tuesday
(``Tuesday Short Term Option Daily Expirations) and Short Term Option
Daily Expirations on Thursday (``Thursday Short Term Option Daily
Expirations''). No more than a total of two Tuesday Short Term Option
Daily Expirations or Thursday Short Term Option Daily Expirations in
SPY and QQQ will be listed at any one time beyond the current week.
Tuesday and Thursday Short Term Option Daily Expirations would be
subject to Rule 19.5, Interpretation and Policy .05.
A Short Term Option Series means a series in an option class that
is approved for listing and trading on the Exchange in which the series
is opened for trading on any Monday, Tuesday, Wednesday, Thursday, or
Friday that is a business day and that expires on the Monday,
Wednesday, or Friday of the following business week that is a business
day, or, in the case of a series that is listed on a Friday and expires
on a Monday, is listed one business week and one business day prior to
that expiration. If a Tuesday, Wednesday, Thursday or Friday is not a
business day, the series may be opened (or shall expire) on the first
business day immediately prior to that Tuesday, Wednesday, Thursday or
Friday. For a series listed pursuant to this section for Monday
expiration, if a Monday is not a business day, the series shall expire
on the first business day immediately following that Monday.
The Exchange proposes to amend this definition in Rule 16.1 to
accommodate the listing of options series that expire on Tuesdays and
Thursdays. Specifically, the Exchange proposes to add Tuesday and
Thursdays to the permitted expiration days, which currently include
Monday, Wednesday, and Friday, that it may open for trading.
The Exchange also proposes corresponding changes within Rule 19.5,
Interpretation and Policy .05, 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, 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 within Rule 19.5, Interpretation and Policy .05, 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 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'').
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.\10\ Specifically, the Tuesday and Thursday SPY and QQQ
Short Term Option Daily Expirations will have a $0.50 strike interval
minimum.\11\ 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.
---------------------------------------------------------------------------
\10\ See Rule 19.5, Interpretation and Policy .05(e)
\11\ See id.
---------------------------------------------------------------------------
Pursuant to proposed Rule 19.5, Interpretation and Policy .05, 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.\12\
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.\13\ 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.
---------------------------------------------------------------------------
\12\ See Rule 19.5, Interpretation and Policy .05(a).
\13\ See id.
---------------------------------------------------------------------------
Finally, the Exchange is amending Rule 19.5, Interpretation and
Policy .05(b) to conform the rule text to the usage of the term ``Short
Term Option
[[Page 63163]]
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.\14\ 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.
---------------------------------------------------------------------------
\14\ While the Exchange proposes to add rule text within Rule
19.5, Interpretation and Policy .05 with respect to Monday
Expirations, Tuesday Expirations, and Wednesday Expirations stating
that those expirations would not expire on business days on which
monthly options series expire, practically speaking this would not
occur.
---------------------------------------------------------------------------
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, as other Exchanges have already
adopted identical rules, and the Exchange will have 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.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the Securities Exchange Act of 1934 (the ``Act'') and the rules
and regulations thereunder applicable to the Exchange and, in
particular, the requirements of section 6(b) of the Act.\15\
Specifically, the Exchange believes the proposed rule change is
consistent with the section 6(b)(5) \16\ 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) \17\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
\17\ 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.\18\ 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 be able to expand hedging tools and tailor their investment and
hedging needs more effectively in SPY, QQQ, and IWM.
---------------------------------------------------------------------------
\18\ Market-Makers are required to quote a specified time in
their assigned options series. See Rule 22.6.
---------------------------------------------------------------------------
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 as implemented by other exchanges 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.
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
[[Page 63164]]
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 Rule
19.5, Interpretation and Policy .05 that will apply to Wednesday SPY,
QQQ and IWM Expirations to Tuesday and Thursday SPY and QQQ Short Term
Daily Expirations 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, as previously noted, the proposed rule change is
substantively the same as a rule change proposed by BZX Options and
EDGX Options, which the Commission approved in 2022.\19\
---------------------------------------------------------------------------
\19\ See supra note 6.
---------------------------------------------------------------------------
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.\20\ 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 be able to expand hedging tools and tailor
their investment and hedging needs more effectively in SPY, QQQ, and
IWM.
---------------------------------------------------------------------------
\20\ See supra note 18.
---------------------------------------------------------------------------
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 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 other options exchanges have already adopted similar rules to list
and trade Short-Term Option Series with Tuesday and Thursday Short Term
Daily Expirations. Additionally, the Commission recently approved a
substantively identical proposal of another exchange and other
exchanges have filed to modify their rules in a similar fashion.\21\
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.
---------------------------------------------------------------------------
\21\ See Securities and Exchange Act Release No. 96281 (November
9, 2022) (SR-ISE-2022-18); See also Securities Exchange Act Release
Nos. 96313 (November 15, 2022), 87 FR 70869 (November 21, 2022) (SR-
CboeBZX-2022-056) and 96320 (November 15, 2022), 87 FR 70880
(November 21, 2022) (SR-CboeEDGX-2022-051).
---------------------------------------------------------------------------
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to section 19(b)(3)(A) of the Act \22\ and Rule 19b-
4(f)(6) thereunder.\23\
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \24\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\25\ the Commission
may 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 proposed
rule change is substantially similar to those of other currently
operating options exchanges.\26\ The Exchange states that it intends to
launch MEMX Options on September 13, 2023 and that waiver of the 30-day
operative delay would allow the Exchange to implement the proposed
change to amend its rules as set forth above prior to launch, thus
ensuring consistency of rules between the Exchange and other options
exchanges. For these reasons, and because the proposed rule change does
not raise any novel legal or regulatory issues, the Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. Therefore, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\27\
---------------------------------------------------------------------------
\24\ 17 CFR 240.19b-4(f)(6).
\25\ 17 CFR 240.19b-4(f)(6)(iii).
\26\ See supra note 6.
\27\ 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
[[Page 63165]]
it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-MEMX-2023-19 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-MEMX-2023-19. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-MEMX-2023-19 and should be
submitted on or before October 5, 2023.
---------------------------------------------------------------------------
\28\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-19845 Filed 9-13-23; 8:45 am]
BILLING CODE 8011-01-P
