Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Rules To Adopt Monthly Options Series, 82921-82925 [2023-26005]
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Federal Register / Vol. 88, No. 226 / Monday, November 27, 2023 / Notices
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[FR Doc. 2023–26067 Filed 11–24–23; 8:45 am]
BILLING CODE 7709–02–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98987; File No. SR–BOX–
2023–29]
Self-Regulatory Organizations; BOX
Exchange LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Its Rules To
Adopt Monthly Options Series
November 20, 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 November
17, 2023, BOX Exchange LLC
(‘‘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 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Rules to adopt Monthly Options Series.
The text of the proposed rule change is
available from the principal office of the
Exchange, at the Commission’s Public
Reference Room and also on the
Exchange’s internet website at https://
rules.boxexchange.com/rulefilings.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
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Federal Register / Vol. 88, No. 226 / Monday, November 27, 2023 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
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.
The self-regulatory organization 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
khammond on DSKJM1Z7X2PROD with NOTICES
1. Purpose
The Exchange proposes to amend its
Rules to accommodate the listing of
option series that would expire at the
close of business on the last business
day of a calendar month (‘‘Monthly
Options Series’’). This is a competitive
filing that is based on a proposal
recently submitted Cboe Exchange, Inc
(‘‘CBOE’’).5
The Exchange proposes to amend its
Rules to accommodate the listing of
option series that would expire at the
close of business on the last business
day of a calendar month (‘‘Monthly
Options Series’’). Pursuant to proposed
IM–5050–13(1) and proposed IM–6090–
4(i), the Exchange may list Monthly
Options Series for up to five currently
listed option classes that are either
index options or options on exchangetraded funds (‘‘ETFs’’).6 In addition, the
Exchange may also list Monthly Options
Series on any options classes that are
selected by other securities exchanges
that employ a similar program under
their respective rules.7 The Exchange
may list 12 expirations for Monthly
Options Series. Monthly Options Series
need not be for consecutive months;
however, the expiration date of a
nonconsecutive expiration may not be
5 See Securities Exchange Act Release No. 98915
(November 13, 2023) (SR–CBOE–2023–049) (Order
Approving a Proposed Rule Change to Adopt
Monthly Options Series).
6 The Exchange proposes to amend Rule 5050(a)
to provide that proposed IM–5050–13 will describe
how the Exchange will fix a specific expiration date
and exercise price for Monthly Options Series and
that proposed IM–5050–13 will govern the
procedures for opening Monthly Options Series,
respectively. This is consistent with language in
current Rule 5050(a) for other Short Term Option
Series and Quarterly Options Series.
7 The Exchange’s proposal is based on a CBOE
proposal and the Exchange believes that other
options exchanges will adopt similar programs in
the future.
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beyond what would be considered the
last expiration date if the maximum
number of expirations were listed
consecutively.8 Other expirations in the
same class are not counted as part of the
maximum numbers of Monthly Options
Series expirations for a class.9 Monthly
Options Series will be P.M.-settled.10
The strike price of each Monthly
Options Series will be fixed at a price
per share, with at least two, but no more
than five, strike prices above and at least
two, but no more than five, strike prices
below the value of the underlying index
or price of the underlying security at
about the time that a Monthly Options
Series is opened for trading on the
Exchange. The Exchange will list strike
prices for Monthly Options Series that
are reasonably related to the current
price of the underlying security or
current index value of the underlying
index to which such series relates at
about the time such series of options is
first opened for trading on the
Exchange. The term ‘‘reasonably related
to the current price of the underlying
security or index value of the
underlying index’’ means that the
exercise price is within 30% of the
current underlying security price or
index value.11 Additional Monthly
8 The Exchange notes this provision considers
consecutive monthly listings. In other words, as
other expirations (such as Quarterly Option Series)
are not counted as part of the maximum, those
expirations would not be considered when
considering when the last expiration date would be
if the maximum number were listed consecutively.
For example, if it is January 2024 and the Exchange
lists Quarterly Options Series in class ABC with
expirations in March, June, September, December,
and the following March, the Exchange could also
list Monthly Options Series in class ABC with
expirations in January, February, April, May, July,
August, October, and November 2024 and January
and February of 2025. This is because, if Quarterly
Option Series, for example, were counted, the
Exchange would otherwise never be able to list the
maximum number of Monthly Options Series. This
is consistent with the listing provisions for
Quarterly Options Series, which permit give
calendar quarter expirations. The need to list series
with the same expiration in the current calendar
year and the following calendar year (whether
Monthly or Quarterly expiration) is to allow market
participants to execute one-year strategies pursuant
to which they may roll their exposures in the
longer-dated options (e.g., January 2025) prior to the
expiration of the nearer-dated option (e.g., January
2024).
9 See proposed IM–5050–13(2) and proposed IM–
6090–4(ii).
10 See proposed IM–5050–13(3) and proposed
IM–6090–4(iii).
11 See proposed IM–5050–13(4) and proposed
IM–6090–4(iv). The Exchange notes these proposed
provisions are consistent with the initial series
provision for the Quarterly Options Series program
in IM–5050–4(d). While different than the initial
strike listing provision for the Quarterly Options
Series program in current IM–5050–4(c), the
Exchange believes the proposed provision is
appropriate, as it contemplates classes that may
have strike intervals of $5 or greater. For
consistency, the Exchange also proposes to amend
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Options Series of the same class may be
open for trading on the Exchange when
the Exchange deems it necessary to
maintain an orderly market, to meet
customer demand, or when the market
price of the underlying security moves
substantially from the initial exercise
price or prices. To the extent that any
additional strike prices are listed by the
Exchange, such additional strike prices
will be within 30% above or below the
closing price of the underlying index or
security on the preceding day. The
Exchange may also open additional
strike prices of Monthly Options Series
that are more than 30% above or below
the current price of the underlying
security, 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 will not be considered when
determining customer interest under
this provision. The opening of the new
Monthly Options Series will not affect
the series of options of the same class
previously opened.12 The interval
between strike prices on Monthly
Options Series will be the same as the
interval for strike prices for series in
that same options class that expire in
accordance with the normal monthly
expiration cycle.13
By definition, Monthly Options Series
can never expire in the same week as a
standard expiration series (which expire
on the third Friday of a month) in the
same class expires. The same, however,
is not the case with regards to Short
Term Options Series or Quarterly
Options Series. Therefore, to avoid any
confusion in the marketplace, the
Exchange proposes to amend IM–5050–
6 and IM–6090–2 to provide the
Exchange will not list a Short Term
Options Series in a class on a date on
which a Monthly Options Series or
Quarterly Options Series expires.14
Similarly, proposed IM–5050–13(2) and
IM–6090–4(ii) provide that no Monthly
IM–5050–4(c) to incorporate the same provision for
initial series.
12 See proposed IM–5050–13(5) and proposed
IM–6090–4(v).
13 See proposed IM–5050–13(6) and proposed
IM–6090–4(vi); see also Rule 5050, IM–5050–1
(Strike Price Intervals), IM–5050–2 ($1 Strike Price
Interval Program), IM–5050–3 ($2.50 Strike Price
Program) and Rule 6090(c) (Procedures for Adding
and Deleting Strike Prices).
14 The Exchange also proposes to make a
nonsubstantive change to IM–5050–6 and IM–6090–
2 to change current references to ‘‘monthly options
series’’ to ‘‘standard expiration options series’’ (i.e.,
series that expire on the third Friday of a month),
to eliminate potential confusion. The current
references to ‘‘monthly options series’’ are intended
to refer to those series that expire on the third
Friday of a month, which are generally referred to
in the industry as standard expirations.
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Federal Register / Vol. 88, No. 226 / Monday, November 27, 2023 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
Options Series may expire on a date that
coincides with an expiration date of a
Quarterly Options Series in the same
index or ETF class. In other words, the
Exchange will not list a Short Term
Options Series on an index or ETF if a
Monthly Options Series on that index or
ETF were to expire on the same date,
nor will the Exchange list a Monthly
Options Series on an ETF or index if a
Quarterly Options Series on that index
or ETF were to expire on the same date
to prevent the listing of series with
concurrent expirations.15
With respect to Monthly Options
Series added pursuant to proposed IM–
5050–13(1) through (6) and proposed
IM–6090–4(i) through (vi), the Exchange
will, on a monthly basis, review series
that are outside a range of five strikes
above and five strikes below the current
price of the underlying index or
security, and delist series with no open
interest in both the put and the call
series having a: (i) strike higher than the
highest strike price with open interest in
the put and/or call series for a given
expiration month; and (ii) strike lower
than the lowest strike price with open
interest in the put and/or call series for
a given expiration month.
Notwithstanding this delisting policy,
customer requests to add strikes and/or
maintain strikes in Monthly Options
Series in series eligible for delisting will
be granted. In connection with this
delisting policy, if the Exchange
identifies series for delisting, the
Exchange will notify other options
exchanges with similar delisting
policies regarding eligible series for
delisting and will work with such other
exchanges to develop a uniform list of
series to be delisted, so as to ensure
uniform series delisting of multiply
listed Monthly Options Series.16
15 The Exchange notes this would not prevent the
Exchange from listing a P.M.-settled Monthly
Options Series on an index with the same
expiration date as an A.M.-settled Short Term
Options Series on the same index, both of which
may expire on a Friday. In other words, the
Exchange may list a P.M-settled Monthly Options
Series on an index concurrent with an A.M.-settled
Short Term Options Series on that index and both
of which expire on a Friday. The Exchange believes
this concurrent listing would provide investors
with yet another hedging mechanism and is
reasonable given these series would not be identical
(unlike if they were both P.M-settled). This could
not occur with respect to ETFs, as all Short Term
Options Series on ETFs are P.M.-settled.
16 See proposed IM–5050–13(7) and proposed
IM–6090–4(vii). Pursuant to Rule 3140, exercise
limits for impacted index and ETF classes would be
equal to the applicable position limits. For an
Options Participant that has been granted an
exemption to position limits pursuant Rule 3130(c)
(Exemption to Position Limits), the number of
contracts which can be exercised over a five (5)
business day period shall equal the Options
Participant’s exempted position.
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The Exchange believes that Monthly
Options Series will provide investors
with another flexible and valuable tool
to manage risk exposure, minimize
capital outlays, and be more responsive
to the timing of events affecting the
securities that underlie option contracts.
The Exchange believes limiting Monthly
Options Series to five classes will
ensure the addition of these new series
will have a negligible impact on the
Exchange’s and the Options Price
Reporting Authority’s (‘‘OPRA’s’’)
quoting capacity. The Exchange
represents it has the necessary systems
capacity to support new options series
that will result from the introduction of
Monthly Options Series. The Exchange
also proposes to amend Rules 3120,
6040, and 6050 to provide that positions
in Monthly Options Series will be
aggregated with positions in options
contracts on the same underlying
security or index.17 This is consistent
with how position (and exercise) limits
are currently imposed on series with
other expirations (Short Term Options
Series and Quarterly Options Series).
Therefore, positions in options within
class of index or ETF options, regardless
of their expirations, would continue to
be subject to existing position (and
exercise) limits. The Exchange believes
this will address potential manipulative
schemes and adverse market impacts
surrounding the use of options.
The Exchange also represents its
current surveillance programs will
apply to Monthly Options Series and
will properly monitor trading in the
proposed Monthly Options Series. The
Exchange currently lists Quarterly
Options Series in certain ETF classes,
which expire at the close of business at
the end of four calendar months (i.e., the
end of each calendar quarter), and has
not experienced any market disruptions
nor issues with capacity. The
Exchange’s surveillance programs
currently in place to support and
properly monitor trading in these
Quarterly Options Series, as well as
Short Term Option Series and standard
expiration series, will apply to the
proposed Monthly Options Series. The
Exchange believes its surveillances
17 See proposed IM–3120–5 (regarding positions
in options contracts on the same underlying
security), Rule 6040(d) (regarding position limits for
Broad-Based Index Options), and Rule 6050(d)
(regarding position limits for Industry Index
Options). The Exchange notes the proposed rule
change adds IM–3120–5 to state that positions in
Short Term Option Series, Monthly Options Series,
and Quarterly Options Series shall be aggregated
with positions in options contracts on the same
underlying security. This is currently true with
respect to Short Term Option Series and Quarterly
Options Series but was inadvertently omitted from
Rule 3120.
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82923
continue to be designed to deter and
detect violations of its Rules, including
position and exercise limits and
possible manipulative behavior, and
these surveillances will apply to
Monthly Options Series that the
Exchange determines to list for trading.
Ultimately, the Exchange does not
believe the proposed rule change raises
any unique regulatory concerns because
existing safeguards—such as position
and exercise limits (and the aggregation
of options overlying the same index or
ETF) and reporting requirements—
would continue to apply.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),18 in general, and Section 6(b)(5)
of the Act,19 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
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. In particular, the
Exchange believes the introduction of
Monthly Options Series will remove
impediments to and perfect the
mechanism of a free and open market
and a national market system by
expanding hedging tools available to
market participants. The Exchange
believes the proposed monthly
expirations will allow market
participants to transact in the index and
ETF options listed pursuant to the
proposed rule change based on their
timing as needed and allow them to
tailor their investment and hedging
needs more effectively. Further, the
Exchange believes the availability of
Monthly Options Series would protect
investors and the public interest by
providing investors with more
flexibility to closely tailor their
investment and hedging decisions in
these options, thus allowing them to
better manage their risk exposure.
The Exchange believes the Quarterly
Options Series Program has been
successful to date and the proposed
Monthly Options Series program simply
expands the ability of investors to hedge
risk against market movements
stemming from economic releases or
market events that occur at months’
ends in the same way the Quarterly
18 15
19 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
27NON1
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Federal Register / Vol. 88, No. 226 / Monday, November 27, 2023 / Notices
Options Series Program has expanded
the landscape of hedging for quarter-end
news. Monthly Options Series will also
complement Short Term Options Series,
which allow investors to hedge risk
against events that occur throughout a
month. The Exchange believes the
availability of additional expirations
should create greater trading and
hedging opportunities for investors, as
well as provide investors with the
ability to tailor their investment
objectives more effectively.
The Exchange notes the proposed
terms of Monthly Options Series,
including the limitation to five index
and ETF option classes, are
substantively the same as the current
terms of Quarterly Options Series.20
Quarterly Options Series expire on the
last business day of a calendar quarter,
which is the last business day of every
third month. The proposed Monthly
Options Series would fill the gaps
between Quarterly Options Series
expirations by permitting series to
expire on the last business day of every
month, rather than every third month.
The proposed Monthly Options Series
may be listed in accordance with the
same terms as Quarterly Options Series,
including permissible strikes. As is the
case with Quarterly Options Series, no
Short Term Options Series may expire
on the same day as a Monthly Options
Series. Similarly, as proposed, no
Monthly Options Series may expire on
the same day as a Quarterly Options
Series. The Exchange believes
preventing listing series with concurrent
expirations in a class will eliminate
potential investors confusion and thus
protect investors and the public interest.
Given that Quarterly Options Series the
Exchange currently lists are essentially
Monthly Options Series that can expire
at the end of only certain calendar
months, the Exchange believes it is
reasonable to list Monthly Options
Series in accordance with the same
terms, as it will promote just and
equitable principles of trade. The
Exchange believes limiting Monthly
Options Series to five classes will
ensure the addition of these new series
will have a negligible impact on the
Exchange’s and OPRA’s quoting
capacity. The Exchange represents it has
the necessary systems capacity to
support new options series that will
result from the introduction of Monthly
Options Series.
The Exchange further believes the
proposed rule change regarding the
treatment of Monthly Options Series
20 Compare proposed IM–5050–13 and proposed
IM–6090–4 to IM–5050–4 and IM–6090–1,
respectively.
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with respect to determining compliance
with position and exercise limits is
designed to prevent fraudulent and
manipulative acts and practices and
promote just and equitable principles of
trade. Monthly Options Series will be
aggregated with options overlying the
same ETF or index for purposes of
compliance with position (and exercise)
limits, which is consistent with how
position (and exercise) limits are
currently imposed on series with other
expirations (Short Term Options Series
and Quarterly Options Series).
Therefore, options positions within ETF
or index option classes for which
Monthly Options Series are listed,
regardless of their expirations, would
continue to be subject to existing
position (and exercise) limits. The
Exchange believes this will address
potential manipulative schemes and
adverse market impacts surrounding the
use of options. The Exchange also
represents its current surveillance
programs will apply to Monthly Options
Series and will properly monitor trading
in the proposed Monthly Options
Series. The Exchange currently trades
Quarterly Options Series in certain ETF
classes, which expire at the close of
business at the end of four calendar
months (i.e., the end of each calendar
quarter), and has not experienced any
market disruptions nor issues with
capacity. The Exchange’s surveillance
programs currently in place to support
and properly monitor trading in these
Quarterly Options Series, as well as
Short Term Option Series and standard
expiration series, will apply to the
proposed Monthly Options Series. The
Exchange believes its surveillances
continue to be designed to deter and
detect violations of its Rules, including
position and exercise limits and
possible manipulative behavior, and
these surveillances will apply to
Monthly Options Series that the
Exchange determines to list for trading.
Ultimately, the Exchange does not
believe the proposed rule change raises
any unique regulatory concerns because
existing safeguards—such as position
and exercise limits (and the aggregation
of options overlying the same ETF or
index) and reporting requirements
would continue to apply.
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
necessary or appropriate in furtherance
of the purposes of the Act. In this regard
and as indicated above, the Exchange
notes that the rule change is being
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Sfmt 4703
proposed as a competitive response to a
filing submitted by CBOE.
The Exchange does not believe the
proposed rule change to list Monthly
Options Series will impose any burden
on intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as any
Monthly Options Series the Exchange
lists for trading will be available in the
same manner for all market participants
who wish to trade such options. The
Exchange notes the proposed terms of
Monthly Options Series, including the
limitation to five index and ETF option
classes, are substantively the same as
the current terms of Quarterly Options
Series.21 Quarterly Options Series
expire on the last business day of a
calendar quarter, which is the last
business day of every third month,
making the concept of Monthly Options
Series in a limited number of index and
ETF options not novel. The proposed
Monthly Options Series will fill the
gaps between Quarterly Options Series
expirations by permitting series to
expire on the last business day of every
month, rather than every third month.
The proposed Monthly Options Series
may be listed in accordance with the
same terms as Quarterly Options Series,
including permissible strikes. Monthly
Options Series will trade on the
Exchange in the same manner as other
options in the same class. The Exchange
does not believe the proposed rule
change to list Monthly Options Series
will impose any burden on intermarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act, as nothing prevents
other options exchanges from proposing
similar rules. As discussed above, the
proposed rule change would permit
listing of Monthly Options Series in five
index or ETF options, as well as any
other classes that other exchanges may
list under similar programs. To the
extent that the availability of Monthly
Options Series makes the Exchange a
more attractive marketplace to market
participants at other exchanges, market
participants are free to elect to become
market participants on the Exchange.
The Exchange believes that the
proposed rule change may relieve any
burden on, or otherwise promote,
competition. Similar to Short Term
Options Series and Quarterly Options
Series, the Exchange believes the
introduction of Monthly Options Series
will not impose an undue burden on
competition. The Exchange believes that
it will, among other things, expand
hedging tools available to market
participants. The Exchange believes
21 See
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27NON1
Federal Register / Vol. 88, No. 226 / Monday, November 27, 2023 / Notices
Monthly Options Series will allow
market participants to purchase options
based on their timing as needed and
allow them to tailor their investment
and hedging needs more effectively. The
Exchange does not believe the proposed
rule change to provide that positions in
Monthly Options Series will be
aggregated with positions in options
contracts on the same underlying index
or security for purposes of determining
compliance with position (and exercise)
limits will impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as it will
apply in the same manner to all market
participants. The Exchange proposes to
apply position (and exercise) limits to
Monthly Options Series in the same
manner it applies position limits to
series with other expirations (Short
Term Options Series and Quarterly
Options Series). Therefore, positions in
options in a class of ETF or index
options, regardless of their expirations,
would continue to be subject to existing
position (and exercise) limits.
Additionally, the Exchange does not
believe this proposed change will
impose any burden on intermarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act, because it will
address potential manipulative schemes
and adverse market impacts
surrounding the use of options.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received comments on the proposed
rule change.
khammond on DSKJM1Z7X2PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 22 and Rule
19b–4(f)(6) thereunder.23 Because the
foregoing proposed rule change does
not: (i) significantly affect the protection
of investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
for 30 days from the date on which it
was filed, or such shorter time as the
Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 24 and
22 15
U.S.C. 78s(b)(3)(A)(iii).
23 17 CFR 240.19b–4(f)(6).
24 15 U.S.C. 78s(b)(3)(A)(iii).
VerDate Sep<11>2014
17:43 Nov 24, 2023
Jkt 262001
subparagraph (f)(6) of Rule 19b–4
thereunder.25
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 26 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 27
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has
requested that the Commission waive
the 30-day operative delay so that the
Exchange may establish Monthly
Options Series at the same time as
CBOE, which the Exchange believes is
consistent with the protection of
investors and the public interest
because it will ensure fair competition
among the exchanges. The Exchange
notes that its proposal is substantially
similar in all material respects to a
proposal submitted by CBOE to
implement the Monthly Options Series
program, that was recently approved by
the Commission.28 The Commission
believes that the proposed rule change
presents no novel issues and that waiver
of the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Accordingly, the Commission hereby
waives the operative delay and
designates the proposed rule change
operative upon filing.29
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
25 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
26 17 CFR 240.19b–4(f)(6).
27 17 CFR 240.19b–4(f)(6)(iii).
28 See supra, note 5, order approving CBOE’s
proposed rule change.
29 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 00105
Fmt 4703
Sfmt 4703
82925
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–
BOX–2023–29 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–BOX–2023–29. 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–BOX–2023–29 and should be
submitted on or before December 18,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–26005 Filed 11–24–23; 8:45 am]
BILLING CODE 8011–01–P
30 17
E:\FR\FM\27NON1.SGM
CFR 200.30–3(a)(12), (59).
27NON1
]]>Agencies
[Federal Register Volume 88, Number 226 (Monday, November 27, 2023)]
[Notices]
[Pages 82921-82925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26005]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98987; File No. SR-BOX-2023-29]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Its Rules
To Adopt Monthly Options Series
November 20, 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 November 17, 2023, BOX Exchange LLC (``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 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 its Rules to adopt Monthly Options
Series. The text of the proposed rule change is available from the
principal office of the Exchange, at the Commission's Public Reference
Room and also on the Exchange's internet website at https://rules.boxexchange.com/rulefilings.
[[Page 82922]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Rules to accommodate the listing
of option series that would expire at the close of business on the last
business day of a calendar month (``Monthly Options Series''). This is
a competitive filing that is based on a proposal recently submitted
Cboe Exchange, Inc (``CBOE'').\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 98915 (November 13,
2023) (SR-CBOE-2023-049) (Order Approving a Proposed Rule Change to
Adopt Monthly Options Series).
---------------------------------------------------------------------------
The Exchange proposes to amend its Rules to accommodate the listing
of option series that would expire at the close of business on the last
business day of a calendar month (``Monthly Options Series''). Pursuant
to proposed IM-5050-13(1) and proposed IM-6090-4(i), the Exchange may
list Monthly Options Series for up to five currently listed option
classes that are either index options or options on exchange-traded
funds (``ETFs'').\6\ In addition, the Exchange may also list Monthly
Options Series on any options classes that are selected by other
securities exchanges that employ a similar program under their
respective rules.\7\ The Exchange may list 12 expirations for Monthly
Options Series. Monthly Options Series need not be for consecutive
months; however, the expiration date of a nonconsecutive expiration may
not be beyond what would be considered the last expiration date if the
maximum number of expirations were listed consecutively.\8\ Other
expirations in the same class are not counted as part of the maximum
numbers of Monthly Options Series expirations for a class.\9\ Monthly
Options Series will be P.M.-settled.\10\
---------------------------------------------------------------------------
\6\ The Exchange proposes to amend Rule 5050(a) to provide that
proposed IM-5050-13 will describe how the Exchange will fix a
specific expiration date and exercise price for Monthly Options
Series and that proposed IM-5050-13 will govern the procedures for
opening Monthly Options Series, respectively. This is consistent
with language in current Rule 5050(a) for other Short Term Option
Series and Quarterly Options Series.
\7\ The Exchange's proposal is based on a CBOE proposal and the
Exchange believes that other options exchanges will adopt similar
programs in the future.
\8\ The Exchange notes this provision considers consecutive
monthly listings. In other words, as other expirations (such as
Quarterly Option Series) are not counted as part of the maximum,
those expirations would not be considered when considering when the
last expiration date would be if the maximum number were listed
consecutively. For example, if it is January 2024 and the Exchange
lists Quarterly Options Series in class ABC with expirations in
March, June, September, December, and the following March, the
Exchange could also list Monthly Options Series in class ABC with
expirations in January, February, April, May, July, August, October,
and November 2024 and January and February of 2025. This is because,
if Quarterly Option Series, for example, were counted, the Exchange
would otherwise never be able to list the maximum number of Monthly
Options Series. This is consistent with the listing provisions for
Quarterly Options Series, which permit give calendar quarter
expirations. The need to list series with the same expiration in the
current calendar year and the following calendar year (whether
Monthly or Quarterly expiration) is to allow market participants to
execute one-year strategies pursuant to which they may roll their
exposures in the longer-dated options (e.g., January 2025) prior to
the expiration of the nearer-dated option (e.g., January 2024).
\9\ See proposed IM-5050-13(2) and proposed IM-6090-4(ii).
\10\ See proposed IM-5050-13(3) and proposed IM-6090-4(iii).
---------------------------------------------------------------------------
The strike price of each Monthly Options Series will be fixed at a
price per share, with at least two, but no more than five, strike
prices above and at least two, but no more than five, strike prices
below the value of the underlying index or price of the underlying
security at about the time that a Monthly Options Series is opened for
trading on the Exchange. The Exchange will list strike prices for
Monthly Options Series that are reasonably related to the current price
of the underlying security or current index value of the underlying
index to which such series relates at about the time such series of
options is first opened for trading on the Exchange. The term
``reasonably related to the current price of the underlying security or
index value of the underlying index'' means that the exercise price is
within 30% of the current underlying security price or index value.\11\
Additional Monthly Options Series of the same class may be open for
trading on the Exchange when the Exchange deems it necessary to
maintain an orderly market, to meet customer demand, or when the market
price of the underlying security moves substantially from the initial
exercise price or prices. To the extent that any additional strike
prices are listed by the Exchange, such additional strike prices will
be within 30% above or below the closing price of the underlying index
or security on the preceding day. The Exchange may also open additional
strike prices of Monthly Options Series that are more than 30% above or
below the current price of the underlying security, 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 will not be considered when
determining customer interest under this provision. The opening of the
new Monthly Options Series will not affect the series of options of the
same class previously opened.\12\ The interval between strike prices on
Monthly Options Series will be the same as the interval for strike
prices for series in that same options class that expire in accordance
with the normal monthly expiration cycle.\13\
---------------------------------------------------------------------------
\11\ See proposed IM-5050-13(4) and proposed IM-6090-4(iv). The
Exchange notes these proposed provisions are consistent with the
initial series provision for the Quarterly Options Series program in
IM-5050-4(d). While different than the initial strike listing
provision for the Quarterly Options Series program in current IM-
5050-4(c), the Exchange believes the proposed provision is
appropriate, as it contemplates classes that may have strike
intervals of $5 or greater. For consistency, the Exchange also
proposes to amend IM-5050-4(c) to incorporate the same provision for
initial series.
\12\ See proposed IM-5050-13(5) and proposed IM-6090-4(v).
\13\ See proposed IM-5050-13(6) and proposed IM-6090-4(vi); see
also Rule 5050, IM-5050-1 (Strike Price Intervals), IM-5050-2 ($1
Strike Price Interval Program), IM-5050-3 ($2.50 Strike Price
Program) and Rule 6090(c) (Procedures for Adding and Deleting Strike
Prices).
---------------------------------------------------------------------------
By definition, Monthly Options Series can never expire in the same
week as a standard expiration series (which expire on the third Friday
of a month) in the same class expires. The same, however, is not the
case with regards to Short Term Options Series or Quarterly Options
Series. Therefore, to avoid any confusion in the marketplace, the
Exchange proposes to amend IM-5050-6 and IM-6090-2 to provide the
Exchange will not list a Short Term Options Series in a class on a date
on which a Monthly Options Series or Quarterly Options Series
expires.\14\ Similarly, proposed IM-5050-13(2) and IM-6090-4(ii)
provide that no Monthly
[[Page 82923]]
Options Series may expire on a date that coincides with an expiration
date of a Quarterly Options Series in the same index or ETF class. In
other words, the Exchange will not list a Short Term Options Series on
an index or ETF if a Monthly Options Series on that index or ETF were
to expire on the same date, nor will the Exchange list a Monthly
Options Series on an ETF or index if a Quarterly Options Series on that
index or ETF were to expire on the same date to prevent the listing of
series with concurrent expirations.\15\
---------------------------------------------------------------------------
\14\ The Exchange also proposes to make a nonsubstantive change
to IM-5050-6 and IM-6090-2 to change current references to ``monthly
options series'' to ``standard expiration options series'' (i.e.,
series that expire on the third Friday of a month), to eliminate
potential confusion. The current references to ``monthly options
series'' are intended to refer to those series that expire on the
third Friday of a month, which are generally referred to in the
industry as standard expirations.
\15\ The Exchange notes this would not prevent the Exchange from
listing a P.M.-settled Monthly Options Series on an index with the
same expiration date as an A.M.-settled Short Term Options Series on
the same index, both of which may expire on a Friday. In other
words, the Exchange may list a P.M-settled Monthly Options Series on
an index concurrent with an A.M.-settled Short Term Options Series
on that index and both of which expire on a Friday. The Exchange
believes this concurrent listing would provide investors with yet
another hedging mechanism and is reasonable given these series would
not be identical (unlike if they were both P.M-settled). This could
not occur with respect to ETFs, as all Short Term Options Series on
ETFs are P.M.-settled.
---------------------------------------------------------------------------
With respect to Monthly Options Series added pursuant to proposed
IM-5050-13(1) through (6) and proposed IM-6090-4(i) through (vi), the
Exchange will, on a monthly basis, review series that are outside a
range of five strikes above and five strikes below the current price of
the underlying index or security, and delist series with no open
interest in both the put and the call series having a: (i) strike
higher than the highest strike price with open interest in the put and/
or call series for a given expiration month; and (ii) strike lower than
the lowest strike price with open interest in the put and/or call
series for a given expiration month. Notwithstanding this delisting
policy, customer requests to add strikes and/or maintain strikes in
Monthly Options Series in series eligible for delisting will be
granted. In connection with this delisting policy, if the Exchange
identifies series for delisting, the Exchange will notify other options
exchanges with similar delisting policies regarding eligible series for
delisting and will work with such other exchanges to develop a uniform
list of series to be delisted, so as to ensure uniform series delisting
of multiply listed Monthly Options Series.\16\
---------------------------------------------------------------------------
\16\ See proposed IM-5050-13(7) and proposed IM-6090-4(vii).
Pursuant to Rule 3140, exercise limits for impacted index and ETF
classes would be equal to the applicable position limits. For an
Options Participant that has been granted an exemption to position
limits pursuant Rule 3130(c) (Exemption to Position Limits), the
number of contracts which can be exercised over a five (5) business
day period shall equal the Options Participant's exempted position.
---------------------------------------------------------------------------
The Exchange believes that Monthly Options Series will provide
investors with another flexible and valuable tool to manage risk
exposure, minimize capital outlays, and be more responsive to the
timing of events affecting the securities that underlie option
contracts. The Exchange believes limiting Monthly Options Series to
five classes will ensure the addition of these new series will have a
negligible impact on the Exchange's and the Options Price Reporting
Authority's (``OPRA's'') quoting capacity. The Exchange represents it
has the necessary systems capacity to support new options series that
will result from the introduction of Monthly Options Series. The
Exchange also proposes to amend Rules 3120, 6040, and 6050 to provide
that positions in Monthly Options Series will be aggregated with
positions in options contracts on the same underlying security or
index.\17\ This is consistent with how position (and exercise) limits
are currently imposed on series with other expirations (Short Term
Options Series and Quarterly Options Series). Therefore, positions in
options within class of index or ETF options, regardless of their
expirations, would continue to be subject to existing position (and
exercise) limits. The Exchange believes this will address potential
manipulative schemes and adverse market impacts surrounding the use of
options.
---------------------------------------------------------------------------
\17\ See proposed IM-3120-5 (regarding positions in options
contracts on the same underlying security), Rule 6040(d) (regarding
position limits for Broad-Based Index Options), and Rule 6050(d)
(regarding position limits for Industry Index Options). The Exchange
notes the proposed rule change adds IM-3120-5 to state that
positions in Short Term Option Series, Monthly Options Series, and
Quarterly Options Series shall be aggregated with positions in
options contracts on the same underlying security. This is currently
true with respect to Short Term Option Series and Quarterly Options
Series but was inadvertently omitted from Rule 3120.
---------------------------------------------------------------------------
The Exchange also represents its current surveillance programs will
apply to Monthly Options Series and will properly monitor trading in
the proposed Monthly Options Series. The Exchange currently lists
Quarterly Options Series in certain ETF classes, which expire at the
close of business at the end of four calendar months (i.e., the end of
each calendar quarter), and has not experienced any market disruptions
nor issues with capacity. The Exchange's surveillance programs
currently in place to support and properly monitor trading in these
Quarterly Options Series, as well as Short Term Option Series and
standard expiration series, will apply to the proposed Monthly Options
Series. The Exchange believes its surveillances continue to be designed
to deter and detect violations of its Rules, including position and
exercise limits and possible manipulative behavior, and these
surveillances will apply to Monthly Options Series that the Exchange
determines to list for trading. Ultimately, the Exchange does not
believe the proposed rule change raises any unique regulatory concerns
because existing safeguards--such as position and exercise limits (and
the aggregation of options overlying the same index or ETF) and
reporting requirements--would continue to apply.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(the ``Act''),\18\ in general, and Section 6(b)(5) of the Act,\19\ in
particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in 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. In particular, the Exchange believes the introduction
of Monthly Options Series will remove impediments to and perfect the
mechanism of a free and open market and a national market system by
expanding hedging tools available to market participants. The Exchange
believes the proposed monthly expirations will allow market
participants to transact in the index and ETF options listed pursuant
to the proposed rule change based on their timing as needed and allow
them to tailor their investment and hedging needs more effectively.
Further, the Exchange believes the availability of Monthly Options
Series would protect investors and the public interest by providing
investors with more flexibility to closely tailor their investment and
hedging decisions in these options, thus allowing them to better manage
their risk exposure.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes the Quarterly Options Series Program has been
successful to date and the proposed Monthly Options Series program
simply expands the ability of investors to hedge risk against market
movements stemming from economic releases or market events that occur
at months' ends in the same way the Quarterly
[[Page 82924]]
Options Series Program has expanded the landscape of hedging for
quarter-end news. Monthly Options Series will also complement Short
Term Options Series, which allow investors to hedge risk against events
that occur throughout a month. The Exchange believes the availability
of additional expirations should create greater trading and hedging
opportunities for investors, as well as provide investors with the
ability to tailor their investment objectives more effectively.
The Exchange notes the proposed terms of Monthly Options Series,
including the limitation to five index and ETF option classes, are
substantively the same as the current terms of Quarterly Options
Series.\20\ Quarterly Options Series expire on the last business day of
a calendar quarter, which is the last business day of every third
month. The proposed Monthly Options Series would fill the gaps between
Quarterly Options Series expirations by permitting series to expire on
the last business day of every month, rather than every third month.
The proposed Monthly Options Series may be listed in accordance with
the same terms as Quarterly Options Series, including permissible
strikes. As is the case with Quarterly Options Series, no Short Term
Options Series may expire on the same day as a Monthly Options Series.
Similarly, as proposed, no Monthly Options Series may expire on the
same day as a Quarterly Options Series. The Exchange believes
preventing listing series with concurrent expirations in a class will
eliminate potential investors confusion and thus protect investors and
the public interest. Given that Quarterly Options Series the Exchange
currently lists are essentially Monthly Options Series that can expire
at the end of only certain calendar months, the Exchange believes it is
reasonable to list Monthly Options Series in accordance with the same
terms, as it will promote just and equitable principles of trade. The
Exchange believes limiting Monthly Options Series to five classes will
ensure the addition of these new series will have a negligible impact
on the Exchange's and OPRA's quoting capacity. The Exchange represents
it has the necessary systems capacity to support new options series
that will result from the introduction of Monthly Options Series.
---------------------------------------------------------------------------
\20\ Compare proposed IM-5050-13 and proposed IM-6090-4 to IM-
5050-4 and IM-6090-1, respectively.
---------------------------------------------------------------------------
The Exchange further believes the proposed rule change regarding
the treatment of Monthly Options Series with respect to determining
compliance with position and exercise limits is designed to prevent
fraudulent and manipulative acts and practices and promote just and
equitable principles of trade. Monthly Options Series will be
aggregated with options overlying the same ETF or index for purposes of
compliance with position (and exercise) limits, which is consistent
with how position (and exercise) limits are currently imposed on series
with other expirations (Short Term Options Series and Quarterly Options
Series). Therefore, options positions within ETF or index option
classes for which Monthly Options Series are listed, regardless of
their expirations, would continue to be subject to existing position
(and exercise) limits. The Exchange believes this will address
potential manipulative schemes and adverse market impacts surrounding
the use of options. The Exchange also represents its current
surveillance programs will apply to Monthly Options Series and will
properly monitor trading in the proposed Monthly Options Series. The
Exchange currently trades Quarterly Options Series in certain ETF
classes, which expire at the close of business at the end of four
calendar months (i.e., the end of each calendar quarter), and has not
experienced any market disruptions nor issues with capacity. The
Exchange's surveillance programs currently in place to support and
properly monitor trading in these Quarterly Options Series, as well as
Short Term Option Series and standard expiration series, will apply to
the proposed Monthly Options Series. The Exchange believes its
surveillances continue to be designed to deter and detect violations of
its Rules, including position and exercise limits and possible
manipulative behavior, and these surveillances will apply to Monthly
Options Series that the Exchange determines to list for trading.
Ultimately, the Exchange does not believe the proposed rule change
raises any unique regulatory concerns because existing safeguards--such
as position and exercise limits (and the aggregation of options
overlying the same ETF or index) and reporting requirements would
continue to apply.
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 necessary or appropriate in
furtherance of the purposes of the Act. In this regard and as indicated
above, the Exchange notes that the rule change is being proposed as a
competitive response to a filing submitted by CBOE.
The Exchange does not believe the proposed rule change to list
Monthly Options Series will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act, as any Monthly Options Series the Exchange lists
for trading will be available in the same manner for all market
participants who wish to trade such options. The Exchange notes the
proposed terms of Monthly Options Series, including the limitation to
five index and ETF option classes, are substantively the same as the
current terms of Quarterly Options Series.\21\ Quarterly Options Series
expire on the last business day of a calendar quarter, which is the
last business day of every third month, making the concept of Monthly
Options Series in a limited number of index and ETF options not novel.
The proposed Monthly Options Series will fill the gaps between
Quarterly Options Series expirations by permitting series to expire on
the last business day of every month, rather than every third month.
The proposed Monthly Options Series may be listed in accordance with
the same terms as Quarterly Options Series, including permissible
strikes. Monthly Options Series will trade on the Exchange in the same
manner as other options in the same class. The Exchange does not
believe the proposed rule change to list Monthly Options Series will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as nothing
prevents other options exchanges from proposing similar rules. As
discussed above, the proposed rule change would permit listing of
Monthly Options Series in five index or ETF options, as well as any
other classes that other exchanges may list under similar programs. To
the extent that the availability of Monthly Options Series makes the
Exchange a more attractive marketplace to market participants at other
exchanges, market participants are free to elect to become market
participants on the Exchange. The Exchange believes that the proposed
rule change may relieve any burden on, or otherwise promote,
competition. Similar to Short Term Options Series and Quarterly Options
Series, the Exchange believes the introduction of Monthly Options
Series will not impose an undue burden on competition. The Exchange
believes that it will, among other things, expand hedging tools
available to market participants. The Exchange believes
[[Page 82925]]
Monthly Options Series will allow market participants to purchase
options based on their timing as needed and allow them to tailor their
investment and hedging needs more effectively. The Exchange does not
believe the proposed rule change to provide that positions in Monthly
Options Series will be aggregated with positions in options contracts
on the same underlying index or security for purposes of determining
compliance with position (and exercise) limits will impose any burden
on intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as it will apply in the same
manner to all market participants. The Exchange proposes to apply
position (and exercise) limits to Monthly Options Series in the same
manner it applies position limits to series with other expirations
(Short Term Options Series and Quarterly Options Series). Therefore,
positions in options in a class of ETF or index options, regardless of
their expirations, would continue to be subject to existing position
(and exercise) limits. Additionally, the Exchange does not believe this
proposed change will impose any burden on intermarket competition that
is not necessary or appropriate in furtherance of the purposes of the
Act, because it will address potential manipulative schemes and adverse
market impacts surrounding the use of options.
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\21\ See IM-5050-4 and IM-6090-1.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \22\ and Rule 19b-4(f)(6) thereunder.\23\
Because the foregoing proposed rule change does not: (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A)(iii) of the Act \24\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\25\
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\22\ 15 U.S.C. 78s(b)(3)(A)(iii).
\23\ 17 CFR 240.19b-4(f)(6).
\24\ 15 U.S.C. 78s(b)(3)(A)(iii).
\25\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \26\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \27\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the Exchange may establish Monthly Options Series at the same time
as CBOE, which the Exchange believes is consistent with the protection
of investors and the public interest because it will ensure fair
competition among the exchanges. The Exchange notes that its proposal
is substantially similar in all material respects to a proposal
submitted by CBOE to implement the Monthly Options Series program, that
was recently approved by the Commission.\28\ The Commission believes
that the proposed rule change presents no novel issues and that waiver
of the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission hereby
waives the operative delay and designates the proposed rule change
operative upon filing.\29\
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\26\ 17 CFR 240.19b-4(f)(6).
\27\ 17 CFR 240.19b-4(f)(6)(iii).
\28\ See supra, note 5, order approving CBOE's proposed rule
change.
\29\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-BOX-2023-29 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-BOX-2023-29. 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-BOX-2023-29 and should be
submitted on or before December 18, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-26005 Filed 11-24-23; 8:45 am]
BILLING CODE 8011-01-P
