Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 4A To Adopt Monthly Options Series, 86425-86429 [2023-27259]
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Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices
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–CboeBZX–2023–100 and should be
submitted on or before January 3, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.35
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–27271 Filed 12–12–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99102; File No. SR–
NASDAQ–2023–051]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Options 4A To Adopt Monthly Options
Series
December 7, 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
29, 2023, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ 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
comments on the proposed rule change
from interested persons.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Rules at Options 4A (Options Index
Rules) to adopt Monthly Options Series.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/nasdaq/rules, at the principal
35 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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
The Exchange proposes to amend
Options 4A (Options Index Rules),
identical to the rules recently approved
for Cboe Exchange, Inc. (‘‘Cboe’’),3 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’’). Cboe’s recently approved rule
change 4 introduces Monthly Options
Series for indexes and exchange-traded
funds (‘‘ETFs’’). This rule change
proposes to adopt Monthly Options
Series for indexes in Options 4A.
Nasdaq ISE, LLC (‘‘ISE’’) will separately
file a rule change to proposes to adopt
Monthly Options Series for ETFs in ISE
Options 4. The Exchange’s Options 4
rules, which govern the ability to
transact options on ETFs, incorporate
ISE Options 4 by reference.
The Exchange proposes to define
‘‘Monthly Options Series’’ in Options
4A, Section 2(l) to mean a series in an
options class that is approved for listing
and trading on the Exchange in which
the series is opened for trading on any
business day and that expires at the
close of business on the last business
day of a calendar month. The Exchange
proposes to re-letter the subsequent
definitions in Options 4A, Section 2.5
Pursuant to proposed Options 4A,
Section 12(i)(1)(A), the Exchange may
list Monthly Options Series for up to
five currently listed option classes that
3 See Securities Exchange Act Release No. 98915
(November 13, 2023), 88 FR 80356 (November 17,
2023) (SR–Cboe–2023–049) (‘‘Cboe Approval
Order’’).
4 Id.
5 The Exchange also proposes to fix an incorrect
cross cite to the definition of broad-based index in
Options 4A, Section 3(b)(1).
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86425
are index options or options on 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
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
6 As provided in the proposed Options 4A,
Section 12(i)(1)(A), the Exchange may list Monthly
Options Series for up to five currently listed option
classes that are index options or options on ETFs;
the five Monthly Options Series include both index
options and ETF options in the aggregate.
7 See Cboe Approval Order.
8 The Exchange notes this provision considers
consecutive monthly listings. In other words, as
other expirations (such as Quarterly Options 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
Options 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 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 Options 4A, Section 12(i)(1)(B).
10 See proposed Options 4A, Section 12(i)(1)(C).
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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
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 Option Series 14 or Quarterly
Options Series. Therefore, to avoid any
confusion in the marketplace, the
Exchange proposes to amend Options
4A, Section 12(h)(1)(B) to provide the
Exchange will not list a Short Term
Option Series in a class on a date on
which a Monthly Options Series or
11 See proposed Options 4A, Section 12(i)(1)(D).
The Exchange notes this proposed provision is
consistent with the initial series provision for the
Quarterly Options Series program in Options 4A,
Section 12(g).
12 See proposed Options 4A, Section 12(i)(1)(E).
13 See proposed Options 4A, Section 12(i)(1)(F)
(permissible strike prices for index options).
14 The Exchange proposes non-substantive
changes to clarify in Options 4A, Section 12(a)(3)
that index options have expiration months and
weeks, and that index options contracts may expire
at three (3)-month intervals, in consecutive months
or in consecutive weeks (as specified by class in
Options 4A, Section 12). This is merely a
clarification, as Options 4A, Section 12(h) currently
permits weekly expirations.
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Quarterly Options Series expires.15
Similarly, proposed Options 4A, Section
12(i)(1)(B) provide that no Monthly
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
Option Series on an index if a Monthly
Options Series on that index were to
expire on the same date, nor will the
Exchange list a Monthly Options Series
on an index if a Quarterly Options
Series on that index were to expire on
the same date to prevent the listing of
series with concurrent expirations.16
With respect to Monthly Options
Series added pursuant to proposed
Options 4A, Section 12(i)(1)(A) through
(F), 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 pursuant to Options 4A, Section
12(i)(1)(G)(i). 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
15 The Exchange also proposes to make nonsubstantive changes to Options 4A, Section 12(h)(1)
and Options 4A, Section 12(h)(1)(B) to reference
standard options series and 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.
16 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
Option 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 Option 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).
PO 00000
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uniform series delisting of multiply
listed Monthly Options Series.17
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 notes that Options 4A,
Section 6 (Position Limits for BroadBased Index Options) and Options 4A,
Section 7 (Position Limits for Industry
and Micro-Narrow Based Index Options)
will apply to Monthly Options Series. In
Options 4A, Section 6(c) and Options
4A, Section 7(c), Monthly Options
Series will be aggregated with positions
in options contracts on the same
underlying security or index.18 This is
consistent with how position (and
exercise) limits are currently imposed
on series with other expirations (Short
Term Option Series and Quarterly
Options Series). To that end, the
Exchange proposes to make this clear by
adding a sentence to Options 4A,
Sections 6(c) and 7(c) that provides:
‘‘Positions in Short Term Options
Series, Monthly Options Series and
Quarterly Options Series shall be
aggregated with positions in options
contracts of the same index.’’ 19
Therefore, positions in options within
class of index, 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 index and ETF
17 See
Options 4A, Section 12(i)(1)(G)(iii).
to Options 4A, Section 10, exercise
limits for index option contracts shall be equivalent
to the position limits prescribed for options
contracts with the nearest expiration date in
Options 4A, Section 6 or Section 7.
19 This additional rule text will further clarify the
current rule text for the existing Short Term Option
Series and Quarterly Options Series programs in
Options 4A, Section 12.
18 Pursuant
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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)
and reporting requirements—would
continue to apply.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.20 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 21 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 22 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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
20 15
21 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
23 Compare proposed Options 4A, Section 12(i) to
Options 4A, Section 12(g).
22 Id.
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16:54 Dec 12, 2023
available to market participants. The
Exchange believes the proposed
monthly expirations will allow market
participants to transact in the index
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
Options Series Program has expanded
the landscape of hedging for quarter-end
news. Monthly Options Series will also
complement Short Term Option 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 that 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.23
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 Option 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
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86427
expirations in a class will eliminate
potential investors confusion and thus
protect investors and the public interest.
Given that the 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
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 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 Option Series,
and Quarterly Options Series).24
Therefore, options positions within
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 index 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
24 See Cboe Approval Order; see also Options 4A,
Section 6 regarding position limits for broad-based
index options and Options 4A, Section 7, Position
Limits for Industry and Micro-Narrow Based Index
Options. Pursuant to Options 4A, Section 10,
exercise limits for index option contracts shall be
equivalent to the position limits prescribed for
options contracts with the nearest expiration date
in Options 4A, Section 6 or Section 7.
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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)
and reporting requirements—would
continue to apply.
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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. 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.25 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
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.26
Monthly Options Series will trade on
the Exchange in the same manner as
other options in the same class.
25 See
26 See
supra note 23.
supra note 11.
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16:54 Dec 12, 2023
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.27 As discussed
above, the proposed rule change would
permit listing of Monthly Options Series
in five index and 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
Option 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
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 regarding
aggregation of positions 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,
because 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 Option Series
and Quarterly Options Series).
Therefore, positions in options in a class
of 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
rule 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.
27 See
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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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 28 and Rule
19b–4(f)(6) thereunder.29 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 30 and
subparagraph (f)(6) of Rule 19b–4
thereunder.31
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 32 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 33
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 list Monthly Options
Series immediately, which the Exchange
believes will benefit investors by
promoting competition in Monthly
Options Series. The Exchange notes that
its proposal is substantively identical to
the proposal submitted by Cboe for its
Monthly Options Series program.34 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
28 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
30 15 U.S.C. 78s(b)(3)(A)(iii).
31 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.
32 17 CFR 240.19b–4(f)(6).
33 17 CFR 240.19b–4(f)(6)(iii).
34 See Cboe Approval Order, supra note 3.
29 17
E:\FR\FM\13DEN1.SGM
13DEN1
Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices
designates the proposed rule change
operative upon filing.35
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:
khammond on DSKJM1Z7X2PROD with NOTICES
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–
NASDAQ–2023–051 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–NASDAQ–2023–051. 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–NASDAQ–2023–051 and should be
submitted on or before January 3, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.36
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–27259 Filed 12–12–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–135, OMB Control No.
3235–0176]
Proposed Collection; Comment
Request; Extension: Rule 8b–1 to 8b–
5; 8b–10 to 8b–22; and 8b–25 to 8b–31
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 (‘‘OMB’’) for
extension and approval.
Rules 8b–1 to 8b–5; 8b–10 to 8b–22;
and 8b–25 to 8b–31 (‘‘rules under
Section 8(b)’’) (17 CFR 270.8b–1 to 8b–
33) under the Investment Company Act
of 1940 (15 U.S.C. 80a–1 et seq.)
(‘‘Investment Company Act’’) set forth
the procedures for preparing and filing
a registration statement under the
Investment Company Act. These
procedures are intended to facilitate the
registration process. These rules
generally do not require respondents to
report information.1
36 17
CFR 200.30–3(a)(12), (59).
the rules under Section 8(b) of the
Investment Company Act are generally procedural
in nature, two of the rules require respondents to
disclose some limited information. Rule 8b–3 (17
CFR 270.8b–3) provides that whenever a
registration form requires the title of securities to
1 Although
35 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).
VerDate Sep<11>2014
16:54 Dec 12, 2023
Jkt 262001
PO 00000
Frm 00115
Fmt 4703
Sfmt 4703
86429
The Commission believes that it is
appropriate to estimate the total
respondent burden associated with
preparing each registration statement
form rather than attempt to isolate the
impact of the procedural instructions
under Section 8(b) of the Investment
Company Act, which impose burdens
only in the context of the preparation of
the various registration statement forms.
Accordingly, the Commission is not
submitting a separate burden estimate
for the rules under Section 8(b), but
instead will include the burden for
these rules in its estimates of burden for
each of the registration forms under the
Investment Company Act. The
Commission is, however, submitting an
hourly burden estimate of one hour for
administrative purposes.
The collection of information under
the rules under Section 8(b) is
mandatory. The information provided
under the rules under Section 8(b) is not
kept confidential. 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 OMB control number.
Written comments are invited on: (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimate of the burden of 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
by February 12, 2024.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: David Bottom, 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.
be stated, the registrant must indicate the type and
general character of the securities to be issued. Rule
8b–22 (17 CFR 270.8b–22) provides that if the
existence of control is open to reasonable doubt, the
registrant may disclaim the existence of control, but
it must state the material facts pertinent to the
possible existence of control. The information
required by both of these rules is necessary to
ensure that investors have clear and complete
information upon which to base an investment
decision.
E:\FR\FM\13DEN1.SGM
13DEN1
]]>Agencies
[Federal Register Volume 88, Number 238 (Wednesday, December 13, 2023)]
[Notices]
[Pages 86425-86429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27259]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99102; File No. SR-NASDAQ-2023-051]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Options 4A To Adopt Monthly Options Series
December 7, 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 29, 2023, The Nasdaq Stock Market LLC (``Nasdaq'' 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 comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Rules at Options 4A (Options
Index Rules) to adopt Monthly Options Series.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/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
The Exchange proposes to amend Options 4A (Options Index Rules),
identical to the rules recently approved for Cboe Exchange, Inc.
(``Cboe''),\3\ 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''). Cboe's recently approved rule
change \4\ introduces Monthly Options Series for indexes and exchange-
traded funds (``ETFs''). This rule change proposes to adopt Monthly
Options Series for indexes in Options 4A. Nasdaq ISE, LLC (``ISE'')
will separately file a rule change to proposes to adopt Monthly Options
Series for ETFs in ISE Options 4. The Exchange's Options 4 rules, which
govern the ability to transact options on ETFs, incorporate ISE Options
4 by reference.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 98915 (November 13,
2023), 88 FR 80356 (November 17, 2023) (SR-Cboe-2023-049) (``Cboe
Approval Order'').
\4\ Id.
---------------------------------------------------------------------------
The Exchange proposes to define ``Monthly Options Series'' in
Options 4A, Section 2(l) to mean a series in an options class that is
approved for listing and trading on the Exchange in which the series is
opened for trading on any business day and that expires at the close of
business on the last business day of a calendar month. The Exchange
proposes to re-letter the subsequent definitions in Options 4A, Section
2.\5\
---------------------------------------------------------------------------
\5\ The Exchange also proposes to fix an incorrect cross cite to
the definition of broad-based index in Options 4A, Section 3(b)(1).
---------------------------------------------------------------------------
Pursuant to proposed Options 4A, Section 12(i)(1)(A), the Exchange
may list Monthly Options Series for up to five currently listed option
classes that are index options or options on 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\ As provided in the proposed Options 4A, Section 12(i)(1)(A),
the Exchange may list Monthly Options Series for up to five
currently listed option classes that are index options or options on
ETFs; the five Monthly Options Series include both index options and
ETF options in the aggregate.
\7\ See Cboe Approval Order.
\8\ The Exchange notes this provision considers consecutive
monthly listings. In other words, as other expirations (such as
Quarterly Options 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 Options 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 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 Options 4A, Section 12(i)(1)(B).
\10\ See proposed Options 4A, Section 12(i)(1)(C).
---------------------------------------------------------------------------
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
[[Page 86426]]
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 Options 4A, Section 12(i)(1)(D). The Exchange
notes this proposed provision is consistent with the initial series
provision for the Quarterly Options Series program in Options 4A,
Section 12(g).
\12\ See proposed Options 4A, Section 12(i)(1)(E).
\13\ See proposed Options 4A, Section 12(i)(1)(F) (permissible
strike prices for index options).
---------------------------------------------------------------------------
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 Option Series \14\ or Quarterly Options
Series. Therefore, to avoid any confusion in the marketplace, the
Exchange proposes to amend Options 4A, Section 12(h)(1)(B) to provide
the Exchange will not list a Short Term Option Series in a class on a
date on which a Monthly Options Series or Quarterly Options Series
expires.\15\ Similarly, proposed Options 4A, Section 12(i)(1)(B)
provide that no Monthly 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 Option Series on an index if a Monthly Options Series on
that index were to expire on the same date, nor will the Exchange list
a Monthly Options Series on an index if a Quarterly Options Series on
that index were to expire on the same date to prevent the listing of
series with concurrent expirations.\16\
---------------------------------------------------------------------------
\14\ The Exchange proposes non-substantive changes to clarify in
Options 4A, Section 12(a)(3) that index options have expiration
months and weeks, and that index options contracts may expire at
three (3)-month intervals, in consecutive months or in consecutive
weeks (as specified by class in Options 4A, Section 12). This is
merely a clarification, as Options 4A, Section 12(h) currently
permits weekly expirations.
\15\ The Exchange also proposes to make non-substantive changes
to Options 4A, Section 12(h)(1) and Options 4A, Section 12(h)(1)(B)
to reference standard options series and 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.
\16\ 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 Option 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 Option 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).
---------------------------------------------------------------------------
With respect to Monthly Options Series added pursuant to proposed
Options 4A, Section 12(i)(1)(A) through (F), 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 pursuant to Options 4A, Section 12(i)(1)(G)(i). 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.\17\
---------------------------------------------------------------------------
\17\ See Options 4A, Section 12(i)(1)(G)(iii).
---------------------------------------------------------------------------
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 notes that Options 4A, Section 6 (Position Limits for
Broad-Based Index Options) and Options 4A, Section 7 (Position Limits
for Industry and Micro-Narrow Based Index Options) will apply to
Monthly Options Series. In Options 4A, Section 6(c) and Options 4A,
Section 7(c), Monthly Options Series will be aggregated with positions
in options contracts on the same underlying security or index.\18\ This
is consistent with how position (and exercise) limits are currently
imposed on series with other expirations (Short Term Option Series and
Quarterly Options Series). To that end, the Exchange proposes to make
this clear by adding a sentence to Options 4A, Sections 6(c) and 7(c)
that provides: ``Positions in Short Term Options Series, Monthly
Options Series and Quarterly Options Series shall be aggregated with
positions in options contracts of the same index.'' \19\ Therefore,
positions in options within class of index, 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.
---------------------------------------------------------------------------
\18\ Pursuant to Options 4A, Section 10, exercise limits for
index option contracts shall be equivalent to the position limits
prescribed for options contracts with the nearest expiration date in
Options 4A, Section 6 or Section 7.
\19\ This additional rule text will further clarify the current
rule text for the existing Short Term Option Series and Quarterly
Options Series programs in Options 4A, Section 12.
---------------------------------------------------------------------------
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 index and ETF
[[Page 86427]]
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) and reporting requirements--would continue to
apply.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\20\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \21\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \22\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78f(b).
\21\ 15 U.S.C. 78f(b)(5).
\22\ Id.
---------------------------------------------------------------------------
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 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 Options Series Program
has expanded the landscape of hedging for quarter-end news. Monthly
Options Series will also complement Short Term Option 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 that 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.\23\ 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
Option 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 the 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.
---------------------------------------------------------------------------
\23\ Compare proposed Options 4A, Section 12(i) to Options 4A,
Section 12(g).
---------------------------------------------------------------------------
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 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 Option Series, and Quarterly Options
Series).\24\ Therefore, options positions within 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 index 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
[[Page 86428]]
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) and reporting requirements--would continue to
apply.
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\24\ See Cboe Approval Order; see also Options 4A, Section 6
regarding position limits for broad-based index options and Options
4A, Section 7, Position Limits for Industry and Micro-Narrow Based
Index Options. Pursuant to Options 4A, Section 10, exercise limits
for index option contracts shall be equivalent to the position
limits prescribed for options contracts with the nearest expiration
date in Options 4A, Section 6 or Section 7.
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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. 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.\25\
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
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.\26\ Monthly Options Series will trade on the
Exchange in the same manner as other options in the same class.
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\25\ See supra note 23.
\26\ See supra note 11.
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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.\27\ As discussed above, the proposed rule
change would permit listing of Monthly Options Series in five index and
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.
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\27\ See Cboe Approval Order.
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The Exchange believes that the proposed rule change may relieve any
burden on, or otherwise promote, competition. Similar to Short Term
Option 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 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 regarding
aggregation of positions 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, because 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
Option Series and Quarterly Options Series). Therefore, positions in
options in a class of 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 rule
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
No written comments were either solicited or received.
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 \28\ and Rule 19b-4(f)(6) thereunder.\29\
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 \30\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\31\
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\28\ 15 U.S.C. 78s(b)(3)(A)(iii).
\29\ 17 CFR 240.19b-4(f)(6).
\30\ 15 U.S.C. 78s(b)(3)(A)(iii).
\31\ 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 \32\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \33\ 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 list Monthly Options Series immediately, which
the Exchange believes will benefit investors by promoting competition
in Monthly Options Series. The Exchange notes that its proposal is
substantively identical to the proposal submitted by Cboe for its
Monthly Options Series program.\34\ 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
[[Page 86429]]
designates the proposed rule change operative upon filing.\35\
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\32\ 17 CFR 240.19b-4(f)(6).
\33\ 17 CFR 240.19b-4(f)(6)(iii).
\34\ See Cboe Approval Order, supra note 3.
\35\ 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-NASDAQ-2023-051 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-NASDAQ-2023-051. 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-NASDAQ-2023-051 and should
be submitted on or before January 3, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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\36\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27259 Filed 12-12-23; 8:45 am]
BILLING CODE 8011-01-P
