Self-Regulatory Organizations; Nasdaq ISE LLC; Notice of Filing of Proposed Rule Change To Permit the Listing and Trading of P.M.-Settled Nasdaq-100 Index Options With a Third-Friday-of-the-Month Expiration, 68841-68844 [2023-22006]
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Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication by December 4, 2023.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
the SEC’s Public Reference Room at
(202) 551–8090.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–21898 Filed 10–3–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–557, OMB Control No.
3235–0618]
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Proposed Collection; Comment
Request; Extension: Rule 173
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Securities Act Rule 173 (17 CFR
230.173) provides a notice of
registration to investors who purchased
securities in a registered offering under
the Securities Act of 1933 (15 U.S.C. 77a
et seq.). A Rule 173 notice must be
provided by underwriter or dealer to
each investor who purchased securities
from the underwriter or dealer. The
Rule 173 notice is not publicly
available. We estimate that it takes
approximately 0.0167 hour per response
to provide the information required
under Rule 173 and that the information
is filed by approximately 5,720
respondents approximately 43,546 times
a year for a total of 249,083,120
responses. We estimate that the total
annual reporting burden for Rule 173 is
4,159,688 hours (0.0167 hours per
response × 249,083,120 responses).
Written comments are invited on: (a)
whether this proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
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Dated: September 28, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–21924 Filed 10–3–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–556, OMB Control No.
3235–0619]
Proposed Collection; Comment
Request; Extension: Rule 163
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 163 (17 CFR 230.163) provides
an exemption from Section 5(c) under
the Securities Act of 1933 (15 U.S.C. 77a
et seq.) for certain communications by
or on behalf of a well-known seasoned
issuer. The information filed under Rule
163 is publicly available. We estimate
that it takes approximately 0.375 burden
hours per response to provide the
information required under Rule 163
and that the information is filed by
approximately 12 respondents for a total
annual reporting burden of one hour.
We estimate that 25% of 0.375 hours per
response (0.09375 hours) is prepared by
the respondent for a total annual burden
of 1 hour (0.09375 hours per response
× 12 responses).
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68841
Written comments are invited on: (a)
whether this proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication by December 4, 2023.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street, NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: September 28, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–21923 Filed 10–3–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98643; File No. SR–ISE–
2023–20]
Self-Regulatory Organizations; Nasdaq
ISE LLC; Notice of Filing of Proposed
Rule Change To Permit the Listing and
Trading of P.M.-Settled Nasdaq-100
Index Options With a Third-Friday-ofthe-Month Expiration
September 29, 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 28, 2023, Nasdaq ISE LLC
(‘‘ISE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
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. 191 / Wednesday, October 4, 2023 / Notices
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 permit the
listing and trading of p.m.-settled
Nasdaq-100 Index® options 3 with a
third-Friday-of-the-month expiration.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/ise/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
ISE proposes to amend its rules to
permit the listing and trading of p.m.settled Nasdaq-100 Index options with a
third-Friday-of-the-month expiration
date. The Exchange notes that p.m.settled options were recently approved
and included a p.m.-settled thirdFriday-of-the-month expiration for
trading of options based on 1⁄5 the value
of the Nasdaq-100 Index (‘‘NQX’’).4
By way of background, the Nasdaq100 Index, a modified market
capitalization-weighted index, includes
100 of the largest non-financial
companies listed on The Nasdaq Stock
Market LLC, based on market
capitalization. It does not contain
securities of financial companies
including investment companies.
Security types generally eligible for the
Nasdaq-100 Index include common
stocks, ordinary shares, American
3 Nasdaq-100 Index options trade under the
symbol (‘‘NDX’’).
4 See Securities Exchange Act Release No. 98450
(September 20, 2023), 88 FR 66 111 (September 26,
2023) (SR–ISE–2023–08) (Order Granting Approval
of a Proposed Rule Change, as Modified by
Amendment No. 1, to Make Permanent Certain
P.M.-Settled Pilots).
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Depository Receipts, and tracking
stocks. Security or company types not
included in the Nasdaq-100 Index are
closed-end funds, convertible
debentures, exchange traded funds,
limited liability companies, limited
partnership interests, preferred stocks,
rights, shares or units of beneficial
interest, warrants, units and other
derivative securities.5 Today, the
Exchange may list a.m.-settled thirdFriday-of-the-month expirations on
Nasdaq-100 Index options.
Additionally, today, Cboe Exchange,
Inc. (‘‘Cboe’’) lists third-Friday p.m.settled options on the Standard & Poor’s
500 Index (‘‘S&P 500 Index’’) under the
symbol ‘‘SPXW.’’ 6 Of note, in 2017,
Nasdaq Phlx LLC (‘‘Phlx’’) received
approval to permit the listing and
trading, on a pilot basis, of NASDAQ100 options with p.m.-settled thirdFriday-of-the-month expiration dates.7
Phlx extended their pilot two times and
ultimately did not renew the Pilot a
third time and therefore the Pilot
expired on November 4, 2019.8
At this time, the Exchange proposes to
amend Options 4A, Section 12 to permit
the listing of p.m.-settled third-Fridayof-the-month Expiration Dates under the
trading symbol ‘‘NDXP.’’ Today, the
Exchange may list a.m.-settled thirdFriday-of-the-month expirations on
Nasdaq-100 Index options. With this
proposal, the Exchange would have
5 A description of the Nasdaq-100 is available on
Nasdaq’s website at https://indexes.
nasdaqomx.com/docs/methodology_NDX.pdf.
6 Cboe also lists a.m.-settled S&P 500 Index
options that have standard third-Friday expirations.
See Cboe Rule 4.10(e). Cboe’s third-Friday-of-themonth pilot was recently approved. See Securities
Exchange Act Release No. 98454 (September 20,
2023) (SR–CBOE–2023–005) (Order Granting
Approval of a Proposed Rule Change, as Modified
by Amendment No. 1, to Make Permanent the
Operation of the Program that Allows the Exchange
to List P.M.-Settled Third Friday-of-the-Month S&P
500 Stock Index Options (‘‘SPX’’) Series).
7 See Securities Exchange Act Release No. 81293
(August 2, 2017), 82 FR 37138 (August 8, 2017)
(approving SR–Phlx–2017–04) (Order Granting
Approval of a Proposed Rule Change, as Modified
by Amendment Nos. 1 and 2, To Permit the Listing
and Trading of P.M.-Settled Nasdaq-100 Index
Options on a Pilot Basis).
8 See Securities Exchange Act Release Nos. 84685
(November 29, 2019), 83 FR 62942 (December 6,
2018) (SR–Phlx–2018–76) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To Amend the Pilot Period for the Listing of P.M.Settled Nasdaq-100 Index Options Expiring on the
Third Friday of the Month) and 85692 (April 18,
2019), 84 FR 17213 (April 24, 2019) (SR–Phlx–
2019–16) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Extend
the Pilot Period for the Listing of P.M.-Settled
Nasdaq-100 Index Options Expiring on the Third
Friday of the Month). See also Securities Exchange
Act Release No. 87517 (November 13, 2019), 84 FR
63910 (November 19, 2023) (SR–Phlx–2019–49)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Remove Rule Text From
Phlx Rule 1101A).
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third-Friday-of-the-month expirations
on Nasdaq-100 Index options that are
both a.m.-settled and p.m.-settled on the
same day. The conditions for listing
p.m.-settled third-Friday-of-the-month
expirations on Nasdaq-100 Index
options will be similar to those for a.m.settled third-Friday-of-the-month
expirations on Nasdaq-100 Index
options.
The proposed contract would use a
$100 multiplier, and the minimum
trading increment would be $0.05 for
options trading below $3.00 and $0.10
for all other series.9 Strike price
intervals would be set at no less than
$2.50.10 Consistent with existing rules
for index options, the Exchange would
allow up to nine near-term expiration
months 11 as well as LEAPS.12 The
product would have European-style
exercise. Because the product is based
on the Nasdaq-100 Index there would be
no position limits. Also, today, the
Exchange notes that it has the flexibility
to open for trading additional series in
response to customer demand.13
NDXP options are series of the NDX
options class. Currently, these NDXP
options may expire any day of the week,
Mondays, Tuesdays, Wednesdays,
Thursdays, Fridays, as applicable (other
than third-Friday-of-the-month), and the
last trading day of the month.14 ThirdFriday p.m.-settled options trading
under the NDXP symbol will be a new
type of series under the Nasdaq-100
Index options class and not a new
options class, therefore all third-Friday
p.m.-settled NDXP options will be
9 See
Options 3, Section 3, Minimum Increments.
Options 4A, Section 12(c)(1).
11 The Exchange proposes the same expiration
month options for NDXP as are permitted for the
Nasdaq-100 Index, since both options classes are
derived from the Nasdaq-100 Index.
12 See Options 4A, Section 12(b)(1).
13 Options 4A, Section 12(c)(4) provides that
notwithstanding any other provision of this
paragraph (c), the Exchange may open for trading
additional series of the same class of index options
as the current index value of the underlying index
moves substantially from the exercise price of those
index options that already have been opened for
trading on the Exchange. The exercise price of each
series of index options opened for trading on the
Exchange shall be reasonably related to the current
index value of the underlying index to which such
series relates at or about the time such series of
options is first opened for trading on the Exchange.
The term ‘‘reasonably related to the current index
value of the underlying index’’ means that the
exercise price is within thirty percent (30%) of the
current index value. The Exchange may also open
for trading additional series of index options that
are more than thirty percent (30%) away from the
current index value, provided that demonstrated
customer interest exists for such series, as
expressed by institutional, corporate, or individual
customers or their brokers. Market-makers trading
for their own account shall not be considered when
determining customer interest under this provision.
14 See Supplementary Material .07(a) to Options
4, Section 5.
10 See
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Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices
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aggregated together with all other
standard expirations for applicable
reporting and other requirements.15
As with the Nasdaq-100 Index,
whenever the Exchange determines that
additional margin is warranted in light
of the risks associated with an underhedged NDXP option position,
including third-Friday-of-the-month
p.m.-settled NDXP, the Exchange may
consider imposing additional margin
upon the account maintaining such
under-hedged position pursuant to its
authority pursuant to under Exchange
Rules Options 6E, Section 2. The trading
hours for NDXP, including third-Fridayof-the-month p.m.-settled NDXP, will be
from 9:30 a.m. to 4:15 p.m. Eastern
Time.16
The Exchange proposes to amend
Options 4A, Section 12(a)(6) to provide
that in addition to a.m.-settled Nasdaq100 Index options approved for trading
on the Exchange, the Exchange may also
list options on the Nasdaq-100 Index
whose exercise settlement value is the
closing value of the Nasdaq-100 Index
on the expiration day.17
The Exchange does not believe that
any market disruptions will be
encountered with the introduction of
Nasdaq-100 Index options with thirdFriday-of-the-month p.m.-settled
expiration dates. The Exchange will
monitor for any such disruptions or the
development of any factors that could
cause such disruptions.
The adoption of trading third-Fridayof-the-month p.m.-settled options on the
Nasdaq-100 Index on the same exchange
that lists third-Friday-of-the-month
a.m.-settled options on the Nasdaq-100
Index would provide greater spread
opportunities. This manner of trading in
different products allows a market
participant to utilize different expiration
times, providing expanded trading
opportunities. In the options market
currently, market participants regularly
trade similar or related products in
conjunction with each other, which
contributes to overall market liquidity.
The Exchange represents that it has
sufficient capacity to handle additional
traffic associated with listing thirdFriday-of-the-month p.m.-settled
options, and that it has in place
adequate surveillance procedures to
monitor trading in these options thereby
helping to ensure the maintenance of a
fair and orderly market.
15 See
Options 3, Section 6(c) and (d).
16 The Exchange notes that NDXP will ordinarily
cease at 4:00 p.m. on the day on which the exercisesettlement value is calculated.
17 The closing value of the Nasdaq-100 Index may
change up until 17:15 Eastern Time due to
corrections to prices of the underlying component
securities.
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,18
in general, and with Section 6(b)(5) of
the Act,19 in that it is designed 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; and is not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers,
or to regulate by virtue of any authority
conferred by the Act matters not related
to the purposes of the Act or the
administration of the Exchange. The
Exchange believes that the proposed
rule change is also consistent with
Section 6(b)(8) of the Act 20 in that it
does not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.
P.M.-settled options were recently
approved and included a p.m.-settled
third-Friday-of-the-month expiration for
trading of options on NQX.21 Today,
Cboe lists third-Friday p.m.-settled
options on the S&P 500 Index under the
symbol ‘‘SPXW.’’ 22 Of note, in 2017,
Phlx received approval to permit the
listing and trading, on a pilot basis, of
NASDAQ-100 options with p.m.-settled
third-Friday-of-the-month expiration
dates.23 Phlx extended their pilot two
times and ultimately did not renew the
Pilot a third time and therefore the Pilot
expired on November 4, 2019.24 For
these reasons, the Exchange desires to
list a p.m.-settled third-Friday-of-themonth expiration for trading of options
on the Nasdaq-100 Index. The Exchange
believes that listing this expiry would
not have any adverse effects or impact
on market volatility and the operation of
fair and orderly markets on the
underlying cash market at or near the
close of trading in its Nasdaq-100 Index
options.
Specifically, the Exchange believes
that the introduction of Nasdaq-100
Index options with third-Friday-of-themonth p.m.-settled expiration dates will
attract order flow to the Exchange,
18 15
U.S.C. 78f.
19 15 U.S.C. 78f(b)(5).
20 15 U.S.C. 78f(b)(8).
21 See supra note 4.
22 See supra note 6.
23 See supra note 7.
24 See supra note 8.
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68843
increase the variety of listed options to
investors, and provide a valuable hedge
tool to investors. Further, the Exchange
believes this proposal will ensure
market participants, particularly retail
customers, have seamless access to
p.m.-settled Nasdaq-100 Index options
expiring every Friday of the month,
which helps to remove impediments to
and perfect the mechanism of a free and
open market. The Exchange believes the
proposed rule change will help to
protect investors and the public interest
by allowing market participants to enter
options positions with the same
underlying in one symbol that spans
every Friday expiration in a month, thus
providing a more efficient way to gain
exposure and hedge risk.
The adoption of trading third-Fridayof-the-month p.m.-settled options on the
Nasdaq-100 Index on the same exchange
that lists third-Friday-of-the-month
a.m.-settled options on the Nasdaq-100
Index would provide greater spread
opportunities. This manner of trading in
different products allows a market
participant to utilize different expiration
times, providing expanded trading
opportunities. In the options market
currently, market participants regularly
trade similar or related products in
conjunction with each other, which
contributes to overall market liquidity.
Third-Friday p.m. settled options
trading under the NDXP symbol will be
a new type of series under the Nasdaq100 Index options class and not a new
options class, therefore all third-Friday
p.m.-settled NDXP options will be
aggregated together with all other
standard expirations for applicable
reporting and other requirements.25
The Exchange does not believe that
any market disruptions will be
encountered with the introduction of
Nasdaq-100 Index options with thirdFriday-of-the-month expiration dates.
The Exchange will monitor for any such
disruptions or the development of any
factors that could cause such
disruptions.
Finally, the Exchange represents that
it has sufficient capacity to handle
additional traffic associated with this
new listing, and that it has in place
adequate surveillance procedures to
monitor trading in these options thereby
helping to ensure the maintenance of a
fair and orderly market.
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 not
25 See
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Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices
necessary or appropriate in furtherance
of the purposes of the Act.
The Exchange does not believe the
rule change will impose a burden on
intramarket competition because all
market participants would have access
to p.m.-settled Nasdaq-100 Index
options expiring every Friday of the
month and would be able to trade them
under the NDXP symbol. The proposal
will not impose a burden on intermarket
competition because the options
affected by this proposal are exclusive
to the Exchange. Other options
exchange may elect to adopt a similar
expiry for a product listed on their
markets.
Additionally, the Exchange does not
believe the proposal will impose any
burden on intermarket competition as
market participants on other exchanges
are welcome to become members and
trade at ISE if they determine that this
proposed rule change has made ISE
more attractive or favorable.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
will:
A. by order approve or disapprove
such proposed rule change, or
B. institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
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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:
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–ISE–2023–20. 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–ISE–2023–20 and should be
submitted on or before October 25,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–22006 Filed 10–3–23; 8:45 am]
BILLING CODE 8011–01–P
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–
ISE–2023–20 on the subject line.
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98583; File No. SR–IEX–
2023–09]
Self-Regulatory Organizations;
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Correct Six
Typographical Cross-Reference Errors
in IEX Rule 11.190(b)
September 28, 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 22, 2023, the Investors
Exchange LLC (‘‘IEX’’ 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 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
Pursuant to the provisions of Section
19(b)(1) under the Act,3 and Rule 19b–
4 thereunder,4 the Exchange is filing
with the Commission a proposed rule
change to correct six typographical
cross-reference errors in IEX Rule
11.190(b). The Exchange has designated
this rule change as ‘‘non-controversial’’
under Section 19(b)(3)(A) of the Act 5
and provided the Commission with the
notice required by Rule 19b–4(f)(6)
thereunder.6
The text of the proposed rule change
is available at the Exchange’s website at
www.iextrading.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 the
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statements may be examined at
the places specified in Item IV below.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(1).
4 17 CFR 240.19b–4.
5 15 U.S.C. 78s(b)(3)(A).
6 17 CFR 240.19b–4.
2 17
26 17
PO 00000
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 88, Number 191 (Wednesday, October 4, 2023)]
[Notices]
[Pages 68841-68844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22006]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98643; File No. SR-ISE-2023-20]
Self-Regulatory Organizations; Nasdaq ISE LLC; Notice of Filing
of Proposed Rule Change To Permit the Listing and Trading of P.M.-
Settled Nasdaq-100 Index Options With a Third-Friday-of-the-Month
Expiration
September 29, 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 28, 2023, Nasdaq ISE LLC (``ISE'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit
[[Page 68842]]
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to permit the listing and trading of p.m.-
settled Nasdaq-100 Index[supreg] options \3\ with a third-Friday-of-
the-month expiration.
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\3\ Nasdaq-100 Index options trade under the symbol (``NDX'').
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The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/ise/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
ISE proposes to amend its rules to permit the listing and trading
of p.m.-settled Nasdaq-100 Index options with a third-Friday-of-the-
month expiration date. The Exchange notes that p.m.-settled options
were recently approved and included a p.m.-settled third-Friday-of-the-
month expiration for trading of options based on \1/5\ the value of the
Nasdaq-100 Index (``NQX'').\4\
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\4\ See Securities Exchange Act Release No. 98450 (September 20,
2023), 88 FR 66 111 (September 26, 2023) (SR-ISE-2023-08) (Order
Granting Approval of a Proposed Rule Change, as Modified by
Amendment No. 1, to Make Permanent Certain P.M.-Settled Pilots).
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By way of background, the Nasdaq-100 Index, a modified market
capitalization-weighted index, includes 100 of the largest non-
financial companies listed on The Nasdaq Stock Market LLC, based on
market capitalization. It does not contain securities of financial
companies including investment companies. Security types generally
eligible for the Nasdaq-100 Index include common stocks, ordinary
shares, American Depository Receipts, and tracking stocks. Security or
company types not included in the Nasdaq-100 Index are closed-end
funds, convertible debentures, exchange traded funds, limited liability
companies, limited partnership interests, preferred stocks, rights,
shares or units of beneficial interest, warrants, units and other
derivative securities.\5\ Today, the Exchange may list a.m.-settled
third-Friday-of-the-month expirations on Nasdaq-100 Index options.
Additionally, today, Cboe Exchange, Inc. (``Cboe'') lists third-Friday
p.m.-settled options on the Standard & Poor's 500 Index (``S&P 500
Index'') under the symbol ``SPXW.'' \6\ Of note, in 2017, Nasdaq Phlx
LLC (``Phlx'') received approval to permit the listing and trading, on
a pilot basis, of NASDAQ-100 options with p.m.-settled third-Friday-of-
the-month expiration dates.\7\ Phlx extended their pilot two times and
ultimately did not renew the Pilot a third time and therefore the Pilot
expired on November 4, 2019.\8\
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\5\ A description of the Nasdaq-100 is available on Nasdaq's
website at https://indexes.nasdaqomx.com/docs/methodology_NDX.pdf.
\6\ Cboe also lists a.m.-settled S&P 500 Index options that have
standard third-Friday expirations. See Cboe Rule 4.10(e). Cboe's
third-Friday-of-the-month pilot was recently approved. See
Securities Exchange Act Release No. 98454 (September 20, 2023) (SR-
CBOE-2023-005) (Order Granting Approval of a Proposed Rule Change,
as Modified by Amendment No. 1, to Make Permanent the Operation of
the Program that Allows the Exchange to List P.M.-Settled Third
Friday-of-the-Month S&P 500 Stock Index Options (``SPX'') Series).
\7\ See Securities Exchange Act Release No. 81293 (August 2,
2017), 82 FR 37138 (August 8, 2017) (approving SR-Phlx-2017-04)
(Order Granting Approval of a Proposed Rule Change, as Modified by
Amendment Nos. 1 and 2, To Permit the Listing and Trading of P.M.-
Settled Nasdaq-100 Index Options on a Pilot Basis).
\8\ See Securities Exchange Act Release Nos. 84685 (November 29,
2019), 83 FR 62942 (December 6, 2018) (SR-Phlx-2018-76) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
the Pilot Period for the Listing of P.M.-Settled Nasdaq-100 Index
Options Expiring on the Third Friday of the Month) and 85692 (April
18, 2019), 84 FR 17213 (April 24, 2019) (SR-Phlx-2019-16) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Pilot Period for the Listing of P.M.-Settled Nasdaq-100 Index
Options Expiring on the Third Friday of the Month). See also
Securities Exchange Act Release No. 87517 (November 13, 2019), 84 FR
63910 (November 19, 2023) (SR-Phlx-2019-49) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Remove Rule Text
From Phlx Rule 1101A).
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At this time, the Exchange proposes to amend Options 4A, Section 12
to permit the listing of p.m.-settled third-Friday-of-the-month
Expiration Dates under the trading symbol ``NDXP.'' Today, the Exchange
may list a.m.-settled third-Friday-of-the-month expirations on Nasdaq-
100 Index options. With this proposal, the Exchange would have third-
Friday-of-the-month expirations on Nasdaq-100 Index options that are
both a.m.-settled and p.m.-settled on the same day. The conditions for
listing p.m.-settled third-Friday-of-the-month expirations on Nasdaq-
100 Index options will be similar to those for a.m.-settled third-
Friday-of-the-month expirations on Nasdaq-100 Index options.
The proposed contract would use a $100 multiplier, and the minimum
trading increment would be $0.05 for options trading below $3.00 and
$0.10 for all other series.\9\ Strike price intervals would be set at
no less than $2.50.\10\ Consistent with existing rules for index
options, the Exchange would allow up to nine near-term expiration
months \11\ as well as LEAPS.\12\ The product would have European-style
exercise. Because the product is based on the Nasdaq-100 Index there
would be no position limits. Also, today, the Exchange notes that it
has the flexibility to open for trading additional series in response
to customer demand.\13\
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\9\ See Options 3, Section 3, Minimum Increments.
\10\ See Options 4A, Section 12(c)(1).
\11\ The Exchange proposes the same expiration month options for
NDXP as are permitted for the Nasdaq-100 Index, since both options
classes are derived from the Nasdaq-100 Index.
\12\ See Options 4A, Section 12(b)(1).
\13\ Options 4A, Section 12(c)(4) provides that notwithstanding
any other provision of this paragraph (c), the Exchange may open for
trading additional series of the same class of index options as the
current index value of the underlying index moves substantially from
the exercise price of those index options that already have been
opened for trading on the Exchange. The exercise price of each
series of index options opened for trading on the Exchange shall be
reasonably related to the current index value of the underlying
index to which such series relates at or about the time such series
of options is first opened for trading on the Exchange. The term
``reasonably related to the current index value of the underlying
index'' means that the exercise price is within thirty percent (30%)
of the current index value. The Exchange may also open for trading
additional series of index options that are more than thirty percent
(30%) away from the current index value, provided that demonstrated
customer interest exists for such series, as expressed by
institutional, corporate, or individual customers or their brokers.
Market-makers trading for their own account shall not be considered
when determining customer interest under this provision.
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NDXP options are series of the NDX options class. Currently, these
NDXP options may expire any day of the week, Mondays, Tuesdays,
Wednesdays, Thursdays, Fridays, as applicable (other than third-Friday-
of-the-month), and the last trading day of the month.\14\ Third-Friday
p.m.-settled options trading under the NDXP symbol will be a new type
of series under the Nasdaq-100 Index options class and not a new
options class, therefore all third-Friday p.m.-settled NDXP options
will be
[[Page 68843]]
aggregated together with all other standard expirations for applicable
reporting and other requirements.\15\
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\14\ See Supplementary Material .07(a) to Options 4, Section 5.
\15\ See Options 3, Section 6(c) and (d).
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As with the Nasdaq-100 Index, whenever the Exchange determines that
additional margin is warranted in light of the risks associated with an
under-hedged NDXP option position, including third-Friday-of-the-month
p.m.-settled NDXP, the Exchange may consider imposing additional margin
upon the account maintaining such under-hedged position pursuant to its
authority pursuant to under Exchange Rules Options 6E, Section 2. The
trading hours for NDXP, including third-Friday-of-the-month p.m.-
settled NDXP, will be from 9:30 a.m. to 4:15 p.m. Eastern Time.\16\
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\16\ The Exchange notes that NDXP will ordinarily cease at 4:00
p.m. on the day on which the exercise-settlement value is
calculated.
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The Exchange proposes to amend Options 4A, Section 12(a)(6) to
provide that in addition to a.m.-settled Nasdaq-100 Index options
approved for trading on the Exchange, the Exchange may also list
options on the Nasdaq-100 Index whose exercise settlement value is the
closing value of the Nasdaq-100 Index on the expiration day.\17\
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\17\ The closing value of the Nasdaq-100 Index may change up
until 17:15 Eastern Time due to corrections to prices of the
underlying component securities.
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The Exchange does not believe that any market disruptions will be
encountered with the introduction of Nasdaq-100 Index options with
third-Friday-of-the-month p.m.-settled expiration dates. The Exchange
will monitor for any such disruptions or the development of any factors
that could cause such disruptions.
The adoption of trading third-Friday-of-the-month p.m.-settled
options on the Nasdaq-100 Index on the same exchange that lists third-
Friday-of-the-month a.m.-settled options on the Nasdaq-100 Index would
provide greater spread opportunities. This manner of trading in
different products allows a market participant to utilize different
expiration times, providing expanded trading opportunities. In the
options market currently, market participants regularly trade similar
or related products in conjunction with each other, which contributes
to overall market liquidity.
The Exchange represents that it has sufficient capacity to handle
additional traffic associated with listing third-Friday-of-the-month
p.m.-settled options, and that it has in place adequate surveillance
procedures to monitor trading in these options thereby helping to
ensure the maintenance of a fair and orderly market.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\18\ in general, and with
Section 6(b)(5) of the Act,\19\ in that it is designed 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; and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers, or to regulate by virtue of any authority conferred by the Act
matters not related to the purposes of the Act or the administration of
the Exchange. The Exchange believes that the proposed rule change is
also consistent with Section 6(b)(8) of the Act \20\ in that it does
not impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
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\18\ 15 U.S.C. 78f.
\19\ 15 U.S.C. 78f(b)(5).
\20\ 15 U.S.C. 78f(b)(8).
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P.M.-settled options were recently approved and included a p.m.-
settled third-Friday-of-the-month expiration for trading of options on
NQX.\21\ Today, Cboe lists third-Friday p.m.-settled options on the S&P
500 Index under the symbol ``SPXW.'' \22\ Of note, in 2017, Phlx
received approval to permit the listing and trading, on a pilot basis,
of NASDAQ-100 options with p.m.-settled third-Friday-of-the-month
expiration dates.\23\ Phlx extended their pilot two times and
ultimately did not renew the Pilot a third time and therefore the Pilot
expired on November 4, 2019.\24\ For these reasons, the Exchange
desires to list a p.m.-settled third-Friday-of-the-month expiration for
trading of options on the Nasdaq-100 Index. The Exchange believes that
listing this expiry would not have any adverse effects or impact on
market volatility and the operation of fair and orderly markets on the
underlying cash market at or near the close of trading in its Nasdaq-
100 Index options.
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\21\ See supra note 4.
\22\ See supra note 6.
\23\ See supra note 7.
\24\ See supra note 8.
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Specifically, the Exchange believes that the introduction of
Nasdaq-100 Index options with third-Friday-of-the-month p.m.-settled
expiration dates will attract order flow to the Exchange, increase the
variety of listed options to investors, and provide a valuable hedge
tool to investors. Further, the Exchange believes this proposal will
ensure market participants, particularly retail customers, have
seamless access to p.m.-settled Nasdaq-100 Index options expiring every
Friday of the month, which helps to remove impediments to and perfect
the mechanism of a free and open market. The Exchange believes the
proposed rule change will help to protect investors and the public
interest by allowing market participants to enter options positions
with the same underlying in one symbol that spans every Friday
expiration in a month, thus providing a more efficient way to gain
exposure and hedge risk.
The adoption of trading third-Friday-of-the-month p.m.-settled
options on the Nasdaq-100 Index on the same exchange that lists third-
Friday-of-the-month a.m.-settled options on the Nasdaq-100 Index would
provide greater spread opportunities. This manner of trading in
different products allows a market participant to utilize different
expiration times, providing expanded trading opportunities. In the
options market currently, market participants regularly trade similar
or related products in conjunction with each other, which contributes
to overall market liquidity.
Third-Friday p.m. settled options trading under the NDXP symbol
will be a new type of series under the Nasdaq-100 Index options class
and not a new options class, therefore all third-Friday p.m.-settled
NDXP options will be aggregated together with all other standard
expirations for applicable reporting and other requirements.\25\
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\25\ See supra note 15.
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The Exchange does not believe that any market disruptions will be
encountered with the introduction of Nasdaq-100 Index options with
third-Friday-of-the-month expiration dates. The Exchange will monitor
for any such disruptions or the development of any factors that could
cause such disruptions.
Finally, the Exchange represents that it has sufficient capacity to
handle additional traffic associated with this new listing, and that it
has in place adequate surveillance procedures to monitor trading in
these options thereby helping to ensure the maintenance of a fair and
orderly market.
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 not
[[Page 68844]]
necessary or appropriate in furtherance of the purposes of the Act.
The Exchange does not believe the rule change will impose a burden
on intramarket competition because all market participants would have
access to p.m.-settled Nasdaq-100 Index options expiring every Friday
of the month and would be able to trade them under the NDXP symbol. The
proposal will not impose a burden on intermarket competition because
the options affected by this proposal are exclusive to the Exchange.
Other options exchange may elect to adopt a similar expiry for a
product listed on their markets.
Additionally, the Exchange does not believe the proposal will
impose any burden on intermarket competition as market participants on
other exchanges are welcome to become members and trade at ISE if they
determine that this proposed rule change has made ISE more attractive
or favorable.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-ISE-2023-20 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-ISE-2023-20. 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-ISE-2023-20 and should be
submitted on or before October 25, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-22006 Filed 10-3-23; 8:45 am]
BILLING CODE 8011-01-P
