Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 19.5, 63176-63180 [2023-19846]
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63176
Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices
Europe’s Rules, ICE Clear Europe
expects that claims against it in respect
of the CDS clearing business would be
limited to those of CDS Clearing
Members arising in connection with
cleared CDS contracts. Accordingly,
once such contracts are terminated and
finally settled in accordance with ICE
Clear Europe’s Rules as described above,
and the Margin, Permitted Cover, and
CDS Guaranty Fund Contributions of
CDS Clearing Members are made
available for withdrawal as described
above, ICE Clear Europe does not
anticipate that there would be any
further claims of CDS Clearing Members
in respect of the CDS clearing business.
ICE Clear Europe further does not
believe other persons would have
claims against it in respect of cleared
CDS contracts 30 and that it has no other
known or anticipated claims by or
against it that are associated with its
CDS Business or clearing agency
registration. However, to the extent any
valid claims relating to the CDS
business may nonetheless be brought
against it in the five years following
withdrawal from registration (or such
longer period as may be required by
law), ICE Clear Europe—which will
remain a going concern—would expect
to pay such claims in the ordinary
course of its operations. Finally, ICE
Clear Europe will maintain records
necessary to evaluate and address any
contingent or other claims that be
brought against it after withdrawal of its
registration, for the period and in the
manner discussed in point 7 below.
7. ICE Clear Europe will retain and
maintain all documents, books, and
records, including correspondence,
memoranda, papers, notices, accounts,
and other records made or received by
it in the ordinary course of its CDS
Business and its activities as a registered
clearing agency, in accordance with the
requirements of Exchange Act Rule 17a–
1(a) and (b),31 for a period of at least five
years from the effective date of the
withdrawal of registration. ICE Clear
Europe further will produce such
records and furnish such information at
the request of any representative of the
Commission, in accordance with
Exchange Act Rule 17a–1(c).32
8. Following the effectiveness of its
withdrawal from registration hereunder,
ICE Clear Europe will not seek to engage
in securities clearing activity relating to
security-based swaps in reliance on any
deemed registered status pursuant to
section 17A(l) of the Act. ICE Clear
Europe notes that its affiliate, ICE Clear
30 See,
e.g., ICE Clear Europe Rule 111(f).
CFR 240.17a–1(a) and (b).
32 See also 17 CFR 240.17a–1(c).
31 17
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Credit LLC, will continue to clear
security-based swaps as a registered
clearing agency. If other affiliates of ICE
Clear Europe seek to clear securitybased swaps or other securities products
in a manner that requires registration
with the Commission under the Act,
such affiliate would do so after
registration with the Commission
pursuant to the process set forth in
Exchange Act Rule 17Ab2–1.33
ICE Clear Europe therefore requests
that the Commission issue an order,
pursuant to section 19(a)(3) of the Act,34
that its registration as a clearing agency
under section 17A of the Act 35 with
respect to security-based swaps be
withdrawn as of the Withdrawal Date of
October 27, 2023, or as soon as
practicable thereafter.
In the Written Request, ICE Clear
Europe also requests that, effective as of
the withdrawal of its registration
hereunder, the Securities Product
Exemption be withdrawn. As noted
above, ICE Clear Europe requested, and
the Commission granted, the Securities
Product Exemption in light of the
combination of security-based swap
clearing activity and securities option
clearing activity contemplated by ICE
Clear Europe at the time. ICE Clear
Europe represents in the Written
Request that, upon cessation of securitybased swap clearing activity and
withdrawal of its clearing agency
registration, ICE Clear Europe will fall
within the category of foreign clearing
agencies for which registration (or an
exemption) is not required due to its
lack of contact with the U.S.36
Accordingly, in ICE Clear Europe’s
view, the Securities Product Exemption
will not be necessary for ICE Clear
Europe’s continued operation of the
F&O clearing service following
withdrawal of its clearing agency
registration. As a result, ICE Clear
Europe requests that the Commission
terminate the Securities Product
Exemption at the same time it approves
ICE Clear Europe’s request to withdraw
from registration as a clearing agency.
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the requested
33 17
CFR 240.17Ab2–1.
U.S.C. 78s(a)(3).
35 15 U.S.C. 78q–1.
36 In the Written Request, ICE Clear Europe
represents that it does not currently clear any equity
options on U.S. securities or single stock futures on
U.S. securities. ICE Clear Europe further represents
that ICE Clear Europe Rule 207(g) is intended to
comprehensively exclude U.S. person Clearing
Members for the purpose of clearing contracts that
are futures or options on underlying U.S. securities.
34 15
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withdrawal is consistent with the
Exchange 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/other.shtml), or
• Send an email to rule-comments@
sec.gov. Please include File No. 4–809
on the subject line.
Paper Comments
• Send paper comments to Secretary,
Securities and Exchange Commission,
100 F Street NE, Washington, DC,
20549–1090.
All submissions should refer to File
Number 4–809. 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). Comments are also 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. Operating
conditions may limit access to the
Commission’s Public Reference Room.
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 4–809 and should be
submitted on or before October 5, 2023.
By the Commission.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–19847 Filed 9–13–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98339; File No. SR–MEMX–
2023–18]
Self-Regulatory Organizations; MEMX
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Rule 19.5
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
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices
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
MEMX Rule 19.5. 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.
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 Rule 19.5,
Interpretation and Policy .05.
Specifically, the Exchange proposes to
amend Rule 19.5, Interpretation and
Policy .05(f) to account for conflicts
between different provisions within the
Short Term Option Series Rules, extend
current $0.50 strike price intervals in
equity options to short term options
with strike prices less than $100, and
make other clarifying changes.
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’s current
Rule 19.5, Interpretation and Policy .05
limits the intervals between strikes in
equity options listed as part of the Short
Term Option Series Program, excluding
Exchange-Traded Fund Shares and
ETNs, that have an expiration date more
than twenty-one days from the listing
date (‘‘Strike Interval Proposal’’). The
Strike Interval Proposal paragraph (f)
includes a table that specifies the
applicable strike intervals that would
supersede subparagraph (e) 8 for Short
Term Option Series in equity options,
excluding options on exchange-traded
fund shares and on exchange-traded
notes, which have an expiration more
than 21 days from the listing date. The
Strike Interval Proposal was designed to
reduce the density of strike intervals
that would be listed in later weeks,
within the Short Term Option Series
Program, by utilizing limitations for
intervals between strikes that have an
expiration date more than 21 days from
the listing date.
The Exchange proposes to amend
Rule 19.5, Interpretation and Policy .05
to clarify the current rule text and
amend the application of the table to
account for potential conflicts within
the Short Term Option Series Rules.
Currently, Rule 19.5, Interpretation and
Policy .05(f) provides that
notwithstanding subparagraph (e),9
when Short Term Option Series in
equity options (excluding options on
ETFs and ETNs) have an expiration
more than 21 days from the listing date,
the strike interval for each option class
will be based on the following table, and
also states: ‘‘to the extent there is
conflict between applying subparagraph
(e) above and the below table, the
greater interval would apply.’’ The
existing table is as follows:
Share price 1
Tier
Average daily volume
1 ........................
2 ........................
3 ........................
Greater than 5,000 ...............................
Greater than 1,000 to 5,000 .................
0 to 1,000 ..............................................
Less
than $25
$25 to less
than $75
$0.50
1.00
2.50
$75 to less
than $150
$1.00
1.00
5.00
$1.00
1.00
5.00
$150 to less
than $500
$5.00
5.00
5.00
$500 or
greater
$5.00
10.00
10.00
1 The Share Price is the closing price on the primary market on the last day of the calendar quarter. In the event of a corporate action, the
Share Price of the surviving company is utilized. The Average Daily Volume is the total number of option contracts traded in a given security for
the applicable calendar quarter divided by the number of trading days in the applicable calendar quarter. Beginning on the second trading day in
the first month of each calendar quarter, the Average Daily Volume is calculated by utilizing data from the prior calendar quarter based on Customer-cleared volume at OCC. For options listed on the first trading day of a given calendar quarter, the Average Daily Volume is calculated
using the quarter prior to the last trading calendar quarter. See Rule 19.5, Interpretation and Policy .05(f)(1) and (2).
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First, the Exchange proposes to add
the phrase ‘‘which specifies the
applicable interval for listing’’ to the
end of the first sentence of paragraph (f).
3 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
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. 95406
(August 1, 2022), 87 FR 48051 (August 5, 2022)
(SR–CboeBZX–2022–042); 95407 (August 1, 2022),
4 17
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The table within that paragraph
provides for the listing of intervals
based on certain parameters (average
daily volume and share price). The
Exchange proposes to add the phrase
‘‘which specifies the applicable interval
for listing’’ to clarify that the only
permitted intervals are as specified in
87 FR 48055 (August 5, 2022) (SR–CboeEDGX–
2022–034).
7 Currently, the Exchange plans to launch MEMX
Options in September 2023.
8 Rule 19.5, Interpretation and Policy .05(e) states
if a class does not trade in $1 strike price intervals,
the strike price interval for Short Term Option
Series may be (i) $0.50 or greater where the strike
price is less than $75; (ii) $1.00 or greater where the
strike price is between $75 and $150; or (iii) $2.50
or greater for strike prices greater than $150.
9 The proposed rule change makes a
nonsubstantive change to correct the term
‘‘subparagraph’’ to ‘‘paragraph’’ in the introductory
paragraph of Rule 19.5, Interpretation and Policy
.05(f) as well as subparagraph (f)(3).
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Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices
the table within paragraph (f), as
proposed to be amended.
Second, the Exchange proposes to
delete the final sentence of paragraph (f)
which indicates that in the event of a
conflict between applying subparagraph
(e) and the below table, the greater
interval would apply, and amend the
table in paragraph (f) to address
situations in which there is a conflict
between applying the intervals in
paragraph (e) and the table in paragraph
(f). Today, there are instances where a
conflict is presented as between the
application of the table within
paragraph (f) and the rule text within
paragraph (e) with respect to the correct
interval. To address these potential
conflicts, the Exchange included the
final sentence in paragraph (f) that
indicates to the extent there is a conflict
between applying the current table
within paragraph (f) and the rule text
within paragraph (e), the greater interval
would apply. However, in order to more
clearly reflect this within the Rules and
maintain consistency with other
exchanges 10, the Exchange proposes to
amend the table in paragraph (f) to
specify what the greater interval would
be, and thus the interval the Exchange
would apply, in the event of any
possible conflict between the two rule
provisions. While the substance of the
rule does not change by this proposed
modification, the Exchange believes that
the amended table provides a simpler
reference for Options Members.
Specifically, the proposed rule change
amends the table as follows:
Share price
Average daily
volume
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Tier
1 ...........
Greater than
5,000.
2 ...........
Greater than
1,000 to
5,000.
3 ...........
0 to 1,000 .......
Less
than $25
$0.50 for strikes less than $100 in
Short Term Option Series Program
classes and classes that trade in $1
increments in non-Short Term Option Series.
$1.00 for strikes between $100 and
$150 for classes that do not otherwise trade in $1.00 increments in
non-Short Term Option Series.
$2.50 for strikes greater than $150.
$1.00 for strikes less than $150 .........
$2.50 for strikes greater than $150.
$2.50 ...................................................
Below are some examples to
demonstrate the application of the
proposed table:
Example 1: Assume a Tier 1 stock that
closed on the last day of Q1 with a
quarterly share price higher than $75
but less than $150. Therefore, utilizing
the current table within paragraph (f),
the interval would be $1.00 for strikes
added during Q2 even for strikes above
$150. However, paragraph (e) provides
that the Exchange may list a Short Term
Option Series at $2.50 intervals where
the strike price is above $150. In other
words, there is a potential conflict
between the permitted strike intervals
above $150 during Q2. In this example,
current paragraph (f) would specify a
$1.00 interval whereas current
paragraph (e) would specify a $2.50
interval. Consistent with selecting the
greater interval (from current paragraph
(e)), the permissible strike interval in
this scenario would be $2.50 as set forth
in the proposed table. Therefore, during
Q2, the following strikes would be
eligible to list: $152.50 and $157.50. For
strikes less than $150, the following
strikes would be eligible to list during
Q2: $149 and $148 because Short Term
Option Series with expiration dates
10 See
$25 to less
than $75
$75 to less
than $150
$1.00 for strikes
less than $150.
$2.50 for strikes
greater than
$150.
$1.00 for strikes
less than $150.
$2.50 for strikes
greater than
$150.
$1.00 for strikes
less than $150.
$2.50 for strikes
greater than
$150.
$5.00 ....................
$1.00 for strikes
less than $150.
$2.50 for strikes
greater than
$150.
$5.00 ....................
more than 21 days from the listing date
as well as Short Term Option Series
with expiration dates less than 21 days
from the listing date would both be
eligible to list $1 intervals pursuant to
both paragraphs (e) and (f).
Example 2: Assume a Tier 2 stock that
closed on the last day of Q1 with a
quarterly share price less than $25.
Therefore, utilizing the current table
within paragraph (f), the interval would
be $1.00 for strikes added during Q2
even for strikes above $25. However,
paragraph (e), as proposed to be
amended, provides that the Exchange
may list a Short Term Option Series at
$0.50 intervals where the strike is less
than $100, at $1.00 intervals where the
strike price is between $100 and $150,
and at $2.50 intervals where the strike
price is above $150. In other words,
there is a potential conflict between the
permitted strike intervals below $100
and above $150 during Q2. In this
example, current paragraph (f) would
specify a $1.00 interval for strikes below
$100 whereas amended paragraph (e)
would specify a $0.50 interval.
Consistent with selecting the greater
interval (from current paragraph (f)), the
permissible strike interval in this
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$500 or
greater
$5.00
$5.00
5.00
10.00
5.00
10.00
scenario for strikes below $100 would
be $1.00 as set forth in the proposed
table. For strikes between $100 and
$150, there is no conflict, as both
provisions would provide $1.00
intervals for those strikes. For strikes
above $150, current paragraph (f) would
specify a $1.00 interval for strikes above
$150 whereas current paragraph (e)
would specify a $2.50 interval.
Consistent with selecting the greater
interval (from current paragraph (e)), the
permissible strike interval in this
scenario for strikes above $150 would be
$2.50 as set forth in the proposed table.
Example 3: Assume a Tier 3 stock that
closed on the last day of Q1 with a
quarterly share price less than $25.
Therefore, utilizing the current table
within paragraph (f), the interval would
be $2.50 for all strikes added during Q2.
However, paragraph (e), as proposed to
be amended, provides that the Exchange
may list a Short Term Option Series at
$0.50 intervals where the strike price is
less than $100, $1.00 intervals where
the strike price is between $100 and
$150, and $2.50 intervals where the
strike price is above $150. In other
words, there is a potential conflict
between the permitted strike intervals
supra note 6.
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than $500
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below $150 during Q2 (there is no
conflict for strikes above $150, as both
provisions provide for a $2.50 strike
interval). Consistent with selecting the
greater interval (from current paragraph
(f)), the permissible strike interval in
this scenario for strikes below $150
would be $2.50 as set forth in the
proposed table.11
Finally, the Exchange proposes to
amend Rule 19.5, Interpretation and
Policy .05(e) to extend $0.50 strike price
intervals in equity options to short-term
options with strike prices less than $100
instead of the current $75. This
proposed change is intended to conform
this provision of the Short Term Option
Series Program to that of other options
exchanges.12 With this proposed
change, for short term options in equity
option classes that do not trade in $1
strike price intervals, the strike price
interval for Short Term Option Series
may be (i) $0.50 or greater where the
strike price is less than $100; (ii) $1.00
or greater where the strike price is
between $100 and $150; or (iii) $2.50 or
greater for strike prices greater than
$150.
2. Statutory Basis
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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.13 Specifically,
the Exchange believes the proposed rule
change is consistent with the section
6(b)(5) 14 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) 15 requirement that
the rules of an exchange not be designed
11 The Exchange made similar corresponding
changes to the table for tier 1 and tier 2 stocks with
prices $25 to less than $75 and $75 to less than
$150, with all potential conflicts between current
paragraphs (e) and (f) resolved to apply the greater
interval.
12 See, e.g., EDGX Rule 19.6, Interpretation and
Policy .05(e).
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
15 Id.
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to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes the Strike
Proposal continues to limit the intervals
between strikes listed in the Short Term
Option Series Program that have an
expiration date more than twenty-one
days.
In particular, the Exchange’s proposed
addition to the first sentence of Rule
19.5, Interpretation and Policy .05(f) is
consistent with the Act because it
clarifies that the only permitted
intervals are as specified in the table
within that subparagraph, as amended.
The Exchange believes this proposed
rule change will bring greater
transparency to the rule. The proposed
rule change to delete the final sentence
of the introductory paragraph and
amend the table within Rule 19.5,
Interpretation and Policy .05(f) to
address potential conflicts between that
paragraph and paragraph (e) with
respect to the correct strike interval is
consistent with the Act because it
protects investors and the public
interest by adding transparency to the
manner in which the Exchange
implements its listing rules and removes
potential uncertainty. The proposed rule
text specifies the applicable intervals
when there is a conflict between the
rule text within paragraphs (e) and (f),
thereby providing certainty as to the
outcome.
The Strike Interval Proposal was
designed to reduce the density of strike
intervals that would be listed in later
weeks, within the Short Term Option
Series Program, by utilizing limitations
for intervals between strikes which have
an expiration date more than twentyone days from the listing date. The
Exchange’s proposal intends to continue
to remove certain strike intervals where
there exist clusters of strikes whose
characteristics closely resemble one
another and, therefore, do not serve
different trading needs,16 rendering
these strikes less useful. Also, the Strike
Interval Proposal continues to reduce
the number of strikes listed on the
Exchange, allowing Market-Makers to
expend their capital in the options
market in a more efficient manner,
thereby improving overall market
quality on the Exchange.
Additionally, by providing more
clarity as to which interval would apply
between the current rule text within
Rule 19.5, Interpretation and Policy
.05(e) and (f), the Exchange is reducing
the number of strikes listed in a manner
consistent with the intent of the Strike
16 For example, two strikes that are densely
clustered may have the same risk properties and
may also be the same percentage out-of-the-money.
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63179
Interval Proposal, which was to reduce
strikes which were farther out in time.
The result of this clarification is to
select wider strike intervals for Short
Term Option Series in equity options
which have an expiration date more
than twenty-one days from the listing
date. This rule change would harmonize
strike intervals as between inner
weeklies (those having less than twentyone days from the listing date) and outer
weeklies (those having more than
twenty-one days from the listing date)
so that strike intervals are not widening
as the listing date approaches.
The proposed rule change to extend
current $0.50 strike price intervals in
equity options to short term options
with strike prices less than $100 will
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, because
it will conform this portion of the Short
Term Option Series Program to that of
other options exchanges.17
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 Strike
Interval Proposal continues to limit the
number of Short Term Option Series
Program strike intervals available for
quoting and trading on the Exchange for
all Options Members.
The Exchange believes adding
clarifying language to the first sentence
of Rule 19.5, Interpretation and Policy
.05(f) regarding which parameter the
table within that provision amends
within the Short Term Option Series
Program will bring greater transparency
to the rules. Amending the table within
paragraph (f) to address potential
conflicts as between the rule text of Rule
19.5, Interpretation and Policy .05(e)
and (f) will bring greater transparency to
and reduce potential confusion
regarding the manner in which the
Exchange implements its listing rules.
Deleting the last sentence of the first
paragraph of the introductory paragraph
of Rule 19.5, Interpretation and Policy
.05(f) does not impose an undue burden
on competition and will avoid potential
confusion because the table within
paragraph (f) clarifies which strike
intervals will apply in all scenarios.
Extending current $0.50 strike price
intervals in equity options to short term
options with strike prices less than $100
will not impose an undue burden on
competition, because it is consistent
17 See, e.g., EDGX Rule 19.6, Interpretation and
Policy .05(e).
E:\FR\FM\14SEN1.SGM
14SEN1
63180
Federal Register / Vol. 88, No. 177 / Thursday, September 14, 2023 / Notices
with the rules of other options
exchanges.18
While this proposal continues to limit
the intervals of strikes listed on the
Exchange, the Exchange continues to
balance the needs of market participants
by continuing to offer a number of
strikes to meet a market participant’s
investment objective. The Exchange’s
Strike Interval Proposal does not impose
an undue burden on intermarket
competition as this Strike Interval
Proposal does not impact the listings
available at another self-regulatory
organization.
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 19 and Rule 19b–
4(f)(6) thereunder.20
A proposed rule change filed under
Rule 19b–4(f)(6) 21 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),22 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.23 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
18 Id.
19 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.
21 17 CFR 240.19b–4(f)(6).
22 17 CFR 240.19b–4(f)(6)(iii).
23 See supra note 6.
lotter on DSK11XQN23PROD with NOTICES1
20 17
VerDate Sep<11>2014
17:47 Sep 13, 2023
Jkt 259001
the Exchange to implement the
proposed change to amend its rules as
set forth above prior to launch, thus
ensuring consistency of strike 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.24
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
MEMX–2023–18 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–MEMX–2023–18. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
24 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 00131
Fmt 4703
Sfmt 4703
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–2023–18 and should be
submitted on or before October 5, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–19846 Filed 9–13–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98328; File No. SR–NSCC–
2023–008]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Recovery
and Wind-Down Plan
September 8, 2023.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 1, 2023, National Securities
Clearing Corporation (‘‘NSCC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II and III below, which Items
have been prepared by the clearing
agency. NSCC filed the proposed rule
change pursuant to section 19(b)(3)(A)
25 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\14SEN1.SGM
14SEN1
]]>Agencies
[Federal Register Volume 88, Number 177 (Thursday, September 14, 2023)]
[Notices]
[Pages 63176-63180]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-19846]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98339; File No. SR-MEMX-2023-18]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend Rule 19.5
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\
[[Page 63177]]
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 MEMX Rule 19.5. 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.
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 Rule 19.5,
Interpretation and Policy .05. Specifically, the Exchange proposes to
amend Rule 19.5, Interpretation and Policy .05(f) to account for
conflicts between different provisions within the Short Term Option
Series Rules, extend current $0.50 strike price intervals in equity
options to short term options with strike prices less than $100, and
make other clarifying changes.
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. 95406 (August 1,
2022), 87 FR 48051 (August 5, 2022) (SR-CboeBZX-2022-042); 95407
(August 1, 2022), 87 FR 48055 (August 5, 2022) (SR-CboeEDGX-2022-
034).
\7\ Currently, the Exchange plans to launch MEMX Options in
September 2023.
---------------------------------------------------------------------------
Specifically, the Exchange's current Rule 19.5, Interpretation and
Policy .05 limits the intervals between strikes in equity options
listed as part of the Short Term Option Series Program, excluding
Exchange-Traded Fund Shares and ETNs, that have an expiration date more
than twenty-one days from the listing date (``Strike Interval
Proposal''). The Strike Interval Proposal paragraph (f) includes a
table that specifies the applicable strike intervals that would
supersede subparagraph (e) \8\ for Short Term Option Series in equity
options, excluding options on exchange-traded fund shares and on
exchange-traded notes, which have an expiration more than 21 days from
the listing date. The Strike Interval Proposal was designed to reduce
the density of strike intervals that would be listed in later weeks,
within the Short Term Option Series Program, by utilizing limitations
for intervals between strikes that have an expiration date more than 21
days from the listing date.
---------------------------------------------------------------------------
\8\ Rule 19.5, Interpretation and Policy .05(e) states if a
class does not trade in $1 strike price intervals, the strike price
interval for Short Term Option Series may be (i) $0.50 or greater
where the strike price is less than $75; (ii) $1.00 or greater where
the strike price is between $75 and $150; or (iii) $2.50 or greater
for strike prices greater than $150.
---------------------------------------------------------------------------
The Exchange proposes to amend Rule 19.5, Interpretation and Policy
.05 to clarify the current rule text and amend the application of the
table to account for potential conflicts within the Short Term Option
Series Rules. Currently, Rule 19.5, Interpretation and Policy .05(f)
provides that notwithstanding subparagraph (e),\9\ when Short Term
Option Series in equity options (excluding options on ETFs and ETNs)
have an expiration more than 21 days from the listing date, the strike
interval for each option class will be based on the following table,
and also states: ``to the extent there is conflict between applying
subparagraph (e) above and the below table, the greater interval would
apply.'' The existing table is as follows:
---------------------------------------------------------------------------
\9\ The proposed rule change makes a nonsubstantive change to
correct the term ``subparagraph'' to ``paragraph'' in the
introductory paragraph of Rule 19.5, Interpretation and Policy
.05(f) as well as subparagraph (f)(3).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Share price 1
-------------------------------------------------------------------------------
Tier Average daily volume $25 to less $75 to less $150 to less $500 or
Less than $25 than $75 than $150 than $500 greater
--------------------------------------------------------------------------------------------------------------------------------------------------------
1......................................... Greater than 5,000.......... $0.50 $1.00 $1.00 $5.00 $5.00
2......................................... Greater than 1,000 to 5,000. 1.00 1.00 1.00 5.00 10.00
3......................................... 0 to 1,000.................. 2.50 5.00 5.00 5.00 10.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The Share Price is the closing price on the primary market on the last day of the calendar quarter. In the event of a corporate action, the Share
Price of the surviving company is utilized. The Average Daily Volume is the total number of option contracts traded in a given security for the
applicable calendar quarter divided by the number of trading days in the applicable calendar quarter. Beginning on the second trading day in the first
month of each calendar quarter, the Average Daily Volume is calculated by utilizing data from the prior calendar quarter based on Customer-cleared
volume at OCC. For options listed on the first trading day of a given calendar quarter, the Average Daily Volume is calculated using the quarter prior
to the last trading calendar quarter. See Rule 19.5, Interpretation and Policy .05(f)(1) and (2).
First, the Exchange proposes to add the phrase ``which specifies
the applicable interval for listing'' to the end of the first sentence
of paragraph (f). The table within that paragraph provides for the
listing of intervals based on certain parameters (average daily volume
and share price). The Exchange proposes to add the phrase ``which
specifies the applicable interval for listing'' to clarify that the
only permitted intervals are as specified in
[[Page 63178]]
the table within paragraph (f), as proposed to be amended.
Second, the Exchange proposes to delete the final sentence of
paragraph (f) which indicates that in the event of a conflict between
applying subparagraph (e) and the below table, the greater interval
would apply, and amend the table in paragraph (f) to address situations
in which there is a conflict between applying the intervals in
paragraph (e) and the table in paragraph (f). Today, there are
instances where a conflict is presented as between the application of
the table within paragraph (f) and the rule text within paragraph (e)
with respect to the correct interval. To address these potential
conflicts, the Exchange included the final sentence in paragraph (f)
that indicates to the extent there is a conflict between applying the
current table within paragraph (f) and the rule text within paragraph
(e), the greater interval would apply. However, in order to more
clearly reflect this within the Rules and maintain consistency with
other exchanges \10\, the Exchange proposes to amend the table in
paragraph (f) to specify what the greater interval would be, and thus
the interval the Exchange would apply, in the event of any possible
conflict between the two rule provisions. While the substance of the
rule does not change by this proposed modification, the Exchange
believes that the amended table provides a simpler reference for
Options Members. Specifically, the proposed rule change amends the
table as follows:
---------------------------------------------------------------------------
\10\ See supra note 6.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Share price
------------------------------------------------------------------------------------------------
Tier Average daily volume $25 to less than $75 to less than $150 to less $500 or
Less than $25 $75 $150 than $500 greater
--------------------------------------------------------------------------------------------------------------------------------------------------------
1................................ Greater than 5,000.. $0.50 for strikes $1.00 for strikes $1.00 for strikes $5.00 $5.00
less than $100 in less than $150. less than $150.
Short Term Option $2.50 for strikes $2.50 for strikes
Series Program greater than $150. greater than $150..
classes and classes
that trade in $1
increments in non-
Short Term Option
Series.
$1.00 for strikes
between $100 and
$150 for classes
that do not
otherwise trade in
$1.00 increments in
non-Short Term
Option Series.
$2.50 for strikes
greater than $150..
2................................ Greater than 1,000 $1.00 for strikes $1.00 for strikes $1.00 for strikes 5.00 10.00
to 5,000. less than $150. less than $150. less than $150.
$2.50 for strikes $2.50 for strikes $2.50 for strikes
greater than $150.. greater than $150. greater than $150.
3................................ 0 to 1,000.......... $2.50............... $5.00............... $5.00.............. 5.00 10.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Below are some examples to demonstrate the application of the
proposed table:
Example 1: Assume a Tier 1 stock that closed on the last day of Q1
with a quarterly share price higher than $75 but less than $150.
Therefore, utilizing the current table within paragraph (f), the
interval would be $1.00 for strikes added during Q2 even for strikes
above $150. However, paragraph (e) provides that the Exchange may list
a Short Term Option Series at $2.50 intervals where the strike price is
above $150. In other words, there is a potential conflict between the
permitted strike intervals above $150 during Q2. In this example,
current paragraph (f) would specify a $1.00 interval whereas current
paragraph (e) would specify a $2.50 interval. Consistent with selecting
the greater interval (from current paragraph (e)), the permissible
strike interval in this scenario would be $2.50 as set forth in the
proposed table. Therefore, during Q2, the following strikes would be
eligible to list: $152.50 and $157.50. For strikes less than $150, the
following strikes would be eligible to list during Q2: $149 and $148
because Short Term Option Series with expiration dates more than 21
days from the listing date as well as Short Term Option Series with
expiration dates less than 21 days from the listing date would both be
eligible to list $1 intervals pursuant to both paragraphs (e) and (f).
Example 2: Assume a Tier 2 stock that closed on the last day of Q1
with a quarterly share price less than $25. Therefore, utilizing the
current table within paragraph (f), the interval would be $1.00 for
strikes added during Q2 even for strikes above $25. However, paragraph
(e), as proposed to be amended, provides that the Exchange may list a
Short Term Option Series at $0.50 intervals where the strike is less
than $100, at $1.00 intervals where the strike price is between $100
and $150, and at $2.50 intervals where the strike price is above $150.
In other words, there is a potential conflict between the permitted
strike intervals below $100 and above $150 during Q2. In this example,
current paragraph (f) would specify a $1.00 interval for strikes below
$100 whereas amended paragraph (e) would specify a $0.50 interval.
Consistent with selecting the greater interval (from current paragraph
(f)), the permissible strike interval in this scenario for strikes
below $100 would be $1.00 as set forth in the proposed table. For
strikes between $100 and $150, there is no conflict, as both provisions
would provide $1.00 intervals for those strikes. For strikes above
$150, current paragraph (f) would specify a $1.00 interval for strikes
above $150 whereas current paragraph (e) would specify a $2.50
interval. Consistent with selecting the greater interval (from current
paragraph (e)), the permissible strike interval in this scenario for
strikes above $150 would be $2.50 as set forth in the proposed table.
Example 3: Assume a Tier 3 stock that closed on the last day of Q1
with a quarterly share price less than $25. Therefore, utilizing the
current table within paragraph (f), the interval would be $2.50 for all
strikes added during Q2. However, paragraph (e), as proposed to be
amended, provides that the Exchange may list a Short Term Option Series
at $0.50 intervals where the strike price is less than $100, $1.00
intervals where the strike price is between $100 and $150, and $2.50
intervals where the strike price is above $150. In other words, there
is a potential conflict between the permitted strike intervals
[[Page 63179]]
below $150 during Q2 (there is no conflict for strikes above $150, as
both provisions provide for a $2.50 strike interval). Consistent with
selecting the greater interval (from current paragraph (f)), the
permissible strike interval in this scenario for strikes below $150
would be $2.50 as set forth in the proposed table.\11\
---------------------------------------------------------------------------
\11\ The Exchange made similar corresponding changes to the
table for tier 1 and tier 2 stocks with prices $25 to less than $75
and $75 to less than $150, with all potential conflicts between
current paragraphs (e) and (f) resolved to apply the greater
interval.
---------------------------------------------------------------------------
Finally, the Exchange proposes to amend Rule 19.5, Interpretation
and Policy .05(e) to extend $0.50 strike price intervals in equity
options to short-term options with strike prices less than $100 instead
of the current $75. This proposed change is intended to conform this
provision of the Short Term Option Series Program to that of other
options exchanges.\12\ With this proposed change, for short term
options in equity option classes that do not trade in $1 strike price
intervals, the strike price interval for Short Term Option Series may
be (i) $0.50 or greater where the strike price is less than $100; (ii)
$1.00 or greater where the strike price is between $100 and $150; or
(iii) $2.50 or greater for strike prices greater than $150.
---------------------------------------------------------------------------
\12\ See, e.g., EDGX Rule 19.6, Interpretation and Policy
.05(e).
---------------------------------------------------------------------------
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.\13\
Specifically, the Exchange believes the proposed rule change is
consistent with the section 6(b)(5) \14\ 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) \15\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange believes the
Strike Proposal continues to limit the intervals between strikes listed
in the Short Term Option Series Program that have an expiration date
more than twenty-one days.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ Id.
---------------------------------------------------------------------------
In particular, the Exchange's proposed addition to the first
sentence of Rule 19.5, Interpretation and Policy .05(f) is consistent
with the Act because it clarifies that the only permitted intervals are
as specified in the table within that subparagraph, as amended.
The Exchange believes this proposed rule change will bring greater
transparency to the rule. The proposed rule change to delete the final
sentence of the introductory paragraph and amend the table within Rule
19.5, Interpretation and Policy .05(f) to address potential conflicts
between that paragraph and paragraph (e) with respect to the correct
strike interval is consistent with the Act because it protects
investors and the public interest by adding transparency to the manner
in which the Exchange implements its listing rules and removes
potential uncertainty. The proposed rule text specifies the applicable
intervals when there is a conflict between the rule text within
paragraphs (e) and (f), thereby providing certainty as to the outcome.
The Strike Interval Proposal was designed to reduce the density of
strike intervals that would be listed in later weeks, within the Short
Term Option Series Program, by utilizing limitations for intervals
between strikes which have an expiration date more than twenty-one days
from the listing date. The Exchange's proposal intends to continue to
remove certain strike intervals where there exist clusters of strikes
whose characteristics closely resemble one another and, therefore, do
not serve different trading needs,\16\ rendering these strikes less
useful. Also, the Strike Interval Proposal continues to reduce the
number of strikes listed on the Exchange, allowing Market-Makers to
expend their capital in the options market in a more efficient manner,
thereby improving overall market quality on the Exchange.
---------------------------------------------------------------------------
\16\ For example, two strikes that are densely clustered may
have the same risk properties and may also be the same percentage
out-of-the-money.
---------------------------------------------------------------------------
Additionally, by providing more clarity as to which interval would
apply between the current rule text within Rule 19.5, Interpretation
and Policy .05(e) and (f), the Exchange is reducing the number of
strikes listed in a manner consistent with the intent of the Strike
Interval Proposal, which was to reduce strikes which were farther out
in time. The result of this clarification is to select wider strike
intervals for Short Term Option Series in equity options which have an
expiration date more than twenty-one days from the listing date. This
rule change would harmonize strike intervals as between inner weeklies
(those having less than twenty-one days from the listing date) and
outer weeklies (those having more than twenty-one days from the listing
date) so that strike intervals are not widening as the listing date
approaches.
The proposed rule change to extend current $0.50 strike price
intervals in equity options to short term options with strike prices
less than $100 will remove impediments to and perfect the mechanism of
a free and open market and a national market system, because it will
conform this portion of the Short Term Option Series Program to that of
other options exchanges.\17\
---------------------------------------------------------------------------
\17\ See, e.g., EDGX Rule 19.6, Interpretation and Policy
.05(e).
---------------------------------------------------------------------------
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 Strike Interval Proposal
continues to limit the number of Short Term Option Series Program
strike intervals available for quoting and trading on the Exchange for
all Options Members.
The Exchange believes adding clarifying language to the first
sentence of Rule 19.5, Interpretation and Policy .05(f) regarding which
parameter the table within that provision amends within the Short Term
Option Series Program will bring greater transparency to the rules.
Amending the table within paragraph (f) to address potential conflicts
as between the rule text of Rule 19.5, Interpretation and Policy .05(e)
and (f) will bring greater transparency to and reduce potential
confusion regarding the manner in which the Exchange implements its
listing rules. Deleting the last sentence of the first paragraph of the
introductory paragraph of Rule 19.5, Interpretation and Policy .05(f)
does not impose an undue burden on competition and will avoid potential
confusion because the table within paragraph (f) clarifies which strike
intervals will apply in all scenarios. Extending current $0.50 strike
price intervals in equity options to short term options with strike
prices less than $100 will not impose an undue burden on competition,
because it is consistent
[[Page 63180]]
with the rules of other options exchanges.\18\
---------------------------------------------------------------------------
\18\ Id.
---------------------------------------------------------------------------
While this proposal continues to limit the intervals of strikes
listed on the Exchange, the Exchange continues to balance the needs of
market participants by continuing to offer a number of strikes to meet
a market participant's investment objective. The Exchange's Strike
Interval Proposal does not impose an undue burden on intermarket
competition as this Strike Interval Proposal does not impact the
listings available at another self-regulatory organization.
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 \19\ and Rule 19b-
4(f)(6) thereunder.\20\
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\22\ 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.\23\ 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 strike 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.\24\
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\21\ 17 CFR 240.19b-4(f)(6).
\22\ 17 CFR 240.19b-4(f)(6)(iii).
\23\ See supra note 6.
\24\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule 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-2023-18 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-MEMX-2023-18. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
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-2023-18 and should be
submitted on or before October 5, 2023.
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\25\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-19846 Filed 9-13-23; 8:45 am]
BILLING CODE 8011-01-P
