Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Rules To Accommodate the Listing of Options Series That Would Expire at the Close of Business on the Last Business Day of a Calendar Month (“Monthly Options Series”), 490-495 [2023-28950]
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490
Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Notices
II. Docketed Proceeding(s)
telephone for advice on filing
alternatives.
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Docketed Proceeding(s)
khammond on DSKJM1Z7X2PROD with NOTICES
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the Market Dominant or
the Competitive product list, or the
modification of an existing product
currently appearing on the Market
Dominant or the Competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern Market Dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
Competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
1 See
Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
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1. Docket No(s).: MC2024–151 and
CP2024–157; Filing Title: USPS Request
to Add Priority Mail & USPS Ground
Advantage Contract 163 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: December 28, 2023; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Kenneth R. Moeller; Comments Due:
January 8, 2024.
This Notice will be published in the
Federal Register.
Mallory Richards,
Federal Register Liaison.
[FR Doc. 2023–28981 Filed 1–3–24; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL SERVICE
International Product Change—Priority
Mail Express International, Priority Mail
International & First-Class Package
International Service Agreement
AGENCY:
ACTION:
Postal ServiceTM.
Notice.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a Priority
Mail Express International, Priority Mail
International & First-Class Package
International Service contract to the list
of Negotiated Service Agreements in the
Competitive Product List in the Mail
Classification Schedule.
SUMMARY:
DATES:
Date of notice: January 4, 2024.
FOR FURTHER INFORMATION CONTACT:
Christopher C. Meyerson, (202) 268–
7820.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 27,
2023, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express International,
Priority Mail International & First-Class
Package International Service Contract
34 to Competitive Product List.
Documents are available at
www.prc.gov, Docket Nos. MC2024–146
and CP2024–152.
SUPPLEMENTARY INFORMATION:
Christopher Doyle,
Attorney, Ethics and Legal Compliance.
[FR Doc. 2023–29004 Filed 1–3–24; 8:45 am]
BILLING CODE 7710–12–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99252; File No. SR–MEMX–
2023–37]
Self-Regulatory Organizations; MEMX
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend the Exchange’s
Rules To Accommodate the Listing of
Options Series That Would Expire at
the Close of Business on the Last
Business Day of a Calendar Month
(‘‘Monthly Options Series’’)
December 28, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
20, 2023, MEMX LLC (‘‘MEMX’’ 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 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 is filing with the
Commission a proposed rule change to
amend its Rules to accommodate the
listing of options series that would
expire at the close of business on the
last business day of a calendar month
(‘‘Monthly Options Series’’). The text of
the proposed rule change is provided in
Exhibit 5.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4.
2 17
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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Notices
1. Purpose
The Exchange proposes to amend its
Rules to accommodate the listing of
options series that would expire at the
close of business on the last business
day of a calendar month (‘‘Monthly
Options Series’’). Pursuant to proposed
Rules 19.5, Interpretation and Policy
.08(a) and 29.11(k)(1),5 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
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
5 The proposed rule change defines the term
‘‘Monthly Options series’’ in Rule 29.2(k) (and reletters current paragraphs (k) through (o) to be (l)
through (p)) as 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.
6 The Exchange proposes to amend Rule 19.5(a)
and (b) to provide that proposed Rule 19.5,
Interpretation and Policy .08 will describe how the
Exchange will fix a specific expiration date and
exercise price for Monthly Options Series and will
govern the procedures for opening Monthly Options
Series, respectively. The proposed change to Rule
19.5(a) is consistent with language in current Rule
19.5(a) for other Short Term Option Series and
Quarterly Options Series. The proposed rule change
also makes a non-substantive correction to pluralize
the term ‘‘policy’’ (to become ‘‘policies’’) to be
consistent with the terminology in the Rules.
Additionally, the proposed rule change adds to
Rule 19.5(b) that Interpretation and Policies .04 and
.05 will govern the procedures for opening
Quarterly Options Series and Short Term Option
Series, respectively (as well as adding exception
language to the beginning of that paragraph). This
is merely a clarification, as Rule 19.5,
Interpretations and Policies .04 and .05 clearly
govern the opening procedures for those options
listing programs. This proposed change is also
consistent with Cboe Exchange, Inc. (‘‘Cboe
Options’’) Rule 4.5(b), which has similar options
listing programs.
7 The Securities and Exchange Commission (the
‘‘Commission’’) recently approved a Cboe Options
proposed rule change to adopt a substantively
identical Monthly Options Series program. See
Securities Exchange Act Release No. 98915
(November 13, 2023) (SR–CBOE–2023–049) (‘‘Cboe
Options 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 Rules 19.5, Interpretation and
Policy .08(b) and 29.11(k)(2).
10 See proposed Rules 19.5, Interpretation and
Policy .08(c) and 29.11(k)(3).
11 See proposed Rules 19.5, Interpretation and
Policy .08(d) and 29.11(k)(4). The Exchange notes
these proposed provisions are consistent with the
initial series provision for the Quarterly Options
Series program in Rule 29.11(g)(3). While different
than the initial strike listing provision for the
Quarterly Options Series program in current Rule
19.5, Interpretation and Policy .04(b), 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 Rule 19.5,
Interpretation and Policy .04(b) to incorporate the
same provision for initial series.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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491
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 Rules 19.5,
Interpretation and Policy .05
(introductory paragraph), (b), and (h)
and 29.11(h) (introductory paragraph)
and (2) 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
12 See proposed Rules 19.5, Interpretation and
Policy .08(e) and 29.11(k)(5).
13 See proposed Rules 19.5, Interpretation and
Policy .08(f) and 29.11(k)(6); see also Rule 19.5(d),
(f), (g) and Interpretations and Policies .01–.03 and
.06 (permissible strike prices for ETF classes) and
Rule 29.11(c) (permissible strike prices for index
options).
14 The proposed rule change clarifies in Rule
29.11(a)(3) that index options have expiration
months and weeks, which expirations may occur in
consecutive weeks as specified in Rule 29.11(h).
This is merely a clarification, as Rule 29.11(h)
currently permits weekly expirations. This language
is consistent with Cboe Options Rule 4.13(a)(2).
Additionally, the proposed rule change adds to rule
29.11(a)(3) that index options may expire more than
12 months out as specified elsewhere in the Rule.
This is consistent with current Rule 29.11(b), which
permits long term index options to expire between
12 and 180 months after issuance, as well as
proposed Rule 29.11(k)(2), as discussed above.
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Series expires.15 Similarly, proposed
Rules 19.5, Interpretation and Policy
.08(b) and 29.11(k)(2) 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 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.16
With respect to Monthly Options
Series added pursuant to proposed
Rules 19.5, Interpretation and Policy
.08(a) through (f) and 29.11(k)(1)
through (6), 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
15 The Exchange also proposes to make a nonsubstantive change to Rules 19.5, Interpretation and
Policy .05 and 29.11(h) 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. The proposed rule change also adds a
heading to Rule 19.5, Interpretation and Policy .05
for consistency with other Interpretations and
Policies in that Rule.
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). This could
not occur with respect to ETFs, as all Short Term
Option Series on ETFs are P.M.-settled.
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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
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 Rules 18.7
and 29.5 through 29.7 regarding
position limits will apply to Monthly
Options Series. These Rules provide
that the position limits fixed by MEMX
Options 18 and Cboe Options 19 apply to
options contracts traded on MEMX
Options, which would include Monthly
Options Series.20 As noted above, Cboe
Options recently received Commission
approval to adopt a substantively
identical Monthly Options Series
Program as the one proposed in this rule
filing.21 Pursuant to those recently
approved Cboe Options rules, Monthly
Options Series will be aggregated with
positions in options contracts on the
same underlying security or index.22
This is consistent with how position
(and exercise) limits are currently
imposed on series with other
expirations (Short Term Option Series
17 See proposed Rules 19.5, Interpretation and
Policy .08(g) and 22.11(k)(7).
18 See MEMX Rule 18.7.
19 See MEMX Rule 29.5.
20 The Exchange issued Regulatory Notice 23–12
on September 14, 2023 which clarified its specific
position limits applicable to options on the
Exchange are those calculated and disseminated by
the Options Clearing Corporation (‘‘OCC’’). See:
https://info.memxtrading.com/wp-content/uploads/
2023/09/RegNotice-23-12-Options-PositionLimits.pdf.
21 See Cboe Options Approval Order.
22 See id.; see also Cboe Options Rules 8.30,
Interpretation and Policy .09 (regarding position
limits for options on stocks and ETFs), 8.31(e)
(regarding position limits for broad-based index
options), 8.32(f) (regarding position limits for
industry index options), 8.33(c) (regarding position
limits for micro and narrow-based indexes), and
8.34(c) (regarding position limits for individual
stock or ETF based volatility index options).
Pursuant to Cboe Options Rule 8.42 (and Exchange
Rules 18.9 and 29.9), exercise limits for impacted
index and ETF classes would be equal to the
applicable position limits.
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and Quarterly Options Series).
Therefore, positions in options within a
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
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
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.23 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 24 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
23 15
24 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
04JAN1
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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Notices
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) 25 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
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
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 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.26
Quarterly Options Series expire on the
last business day of a calendar quarter,
which is the last business day of every
25 Id.
26 Compare proposed Rules 19.5, Interpretation
and Policy .08 and 29.11(k) to Rules 19.5,
Interpretation and Policy .04 and 29.11(g),
respectively.
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16:54 Jan 03, 2024
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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.27 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 investor 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
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 Option Series
and Quarterly Options Series).28
27 The Exchange notes the proposed maximum
number of expirations is consistent with the
maximum number of expirations permitted for endof-month series in index classes. See Rule
29.11(j)(2) (which references Rule 29.11(a)(3),
which permits up to 12 standard monthly
expirations on the majority of index options
currently listed on the Exchange).
28 See Cboe Options Approval Order; see also
Cboe Options Rules 8.30, Interpretation and Policy
.09 (regarding position limits for options on stocks
and ETFs), 8.31(e) (regarding position limits for
broad-based index options), 8.32(f) (regarding
PO 00000
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Sfmt 4703
493
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 that is 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
position limits for industry index options), 8.33(c)
(regarding position limits for micro narrow-based
indexes), and 8.34(c) (regarding position limits for
individual stock or ETF based volatility index
options). Pursuant to Cboe Options Rule 8.42 (and
Exchange Rules 18.9 and 29.9), exercise limits for
impacted index and ETF classes would be equal to
the applicable position limits.
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494
Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Notices
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.29 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.30
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.31 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
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.
29 See Rules 19.5, Interpretation and Policy .04
and 29.11(g).
30 See supra note 27.
31 As noted above, at least one other options
exchange recently adopted a substantively identical
Monthly Options Series program. See Cboe Options
Approval Order.
VerDate Sep<11>2014
16:54 Jan 03, 2024
Jkt 262001
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 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
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
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 32 and Rule
19b–4(f)(6) thereunder.33 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 34 and
subparagraph (f)(6) of Rule 19b–4
thereunder.35
32 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
34 15 U.S.C. 78s(b)(3)(A)(iii).
35 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.
33 17
PO 00000
Frm 00041
Fmt 4703
Sfmt 4703
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 36 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 37
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
Exchange, Inc. for its Monthly Options
Series program.38 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.39
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 rule-comments@
sec.gov. Please include file number SR–
MEMX–2023–37 on the subject line.
36 17
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
38 See Cboe Monthly Approval Order, supra note
37 17
7.
39 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).
E:\FR\FM\04JAN1.SGM
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Federal Register / Vol. 89, No. 3 / Thursday, January 4, 2024 / Notices
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–MEMX–2023–37. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–MEMX–2023–37 and should be
submitted on or before January 25, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.40
Christina Z. Milnor,
Assistant Secretary.
[FR Doc. 2023–28950 Filed 1–3–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
khammond on DSKJM1Z7X2PROD with NOTICES
[Investment Company Act Release No. IC–
35084]
Deregistration Under Section 8(f) of the
Investment Company Act of 1940
December 29, 2023.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’)
AGENCY:
40 17
CFR 200.30–3(a)(12), (59).
VerDate Sep<11>2014
16:54 Jan 03, 2024
Notice of Applications for
Deregistration under Section 8(f) of the
Investment Company Act of 1940.
ACTION:
Jkt 262001
The following is a notice of
applications for deregistration under
section 8(f) of the Investment Company
Act of 1940 for the month of December
2023. A copy of each application may be
obtained via the Commission’s website
by searching for the applicable file
number listed below, or for an applicant
using the Company name search field,
on the SEC’s EDGAR system. The SEC’s
EDGAR system may be searched at
https://www.sec.gov/edgar/searchedgar/
legacy/companysearch.html. You may
also call the SEC’s Public Reference
Room at (202) 551–8090. An order
granting each application will be issued
unless the SEC orders a hearing.
Interested persons may request a
hearing on any application by emailing
the SEC’s Secretary at SecretarysOffice@sec.gov and serving the relevant
applicant with a copy of the request by
email, if an email address is listed for
the relevant applicant below, or
personally or by mail, if a physical
address is listed for the relevant
applicant below. Hearing requests
should be received by the SEC by 5:30
p.m. on January 23, 2024, and should be
accompanied by proof of service on
applicants, in the form of an affidavit or,
for lawyers, a certificate of service.
Pursuant to Rule 0–5 under the Act,
hearing requests should state the nature
of the writer’s interest, any facts bearing
upon the desirability of a hearing on the
matter, the reason for the request, and
the issues contested. Persons who wish
to be notified of a hearing may request
notification by writing to the
Commission’s Secretary at SecretarysOffice@sec.gov.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov.
FOR FURTHER INFORMATION CONTACT:
Shawn Davis, Assistant Director, at
(202) 551–6413 or Chief Counsel’s
Office at (202) 551–6821; SEC, Division
of Investment Management, Chief
Counsel’s Office, 100 F Street NE,
Washington, DC 20549–8010.
AOG Institutional Diversified Master
Fund [File No. 811–23765]
Summary: Applicant, a closed-end
investment company, seeks an order
declaring that it has ceased to be an
investment company. Applicant
currently has 2 beneficial owners, is not
presently making an offering of
securities and does not propose to make
any offering of securities. Applicant will
continue to operate as a private
investment fund in reliance on section
3(c)(1) of the Act.
PO 00000
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495
Filing Dates: The application was
filed on September 20, 2023 and
amended on November 30, 2023.
Applicant’s Address: 11911 Freedom
Drive, Suite 730, Reston, Virginia 20190.
AOG Institutional Diversified Tender
Fund [File No. 811–23766]
Summary: Applicant, a closed-end
investment company, seeks an order
declaring that it has ceased to be an
investment company. Applicant has
never made a public offering of its
securities and does not propose to make
a public offering or engage in business
of any kind.
Filing Dates: The application was
filed on September 20, 2023 and
amended on November 30, 2023.
Applicant’s Address: 11911 Freedom
Drive, Suite 730, Reston, Virginia 20190.
ASYMmetric ETFs Trust [File No. 811–
23622]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On October 18,
2023, applicant made a liquidating
distribution to its shareholders based on
net asset value. Expenses of $17,292
incurred in connection with the
liquidation were paid by the applicant’s
investment adviser.
Filing Date: The application was filed
on November 14, 2023.
Applicant’s Address: 158 East 126th
Street, Suite 304, New York, New York
10035.
BlackRock 2022 Global Income
Opportunity Trust [File No. 811–23218]
Summary: Applicant, a closed-end
investment company, seeks an order
declaring that it has ceased to be an
investment company. On July 30, 2021,
August 31, 2021, September 30, 2021,
October 29, 2021, November 30, 2021,
December 28, 2021, and December 29,
2021, applicant made liquidating
distributions to its shareholders based
on net asset value. Expenses of $172,712
incurred in connection with the
liquidation were paid by the applicant.
Filing Date: The application was filed
on November 13, 2023.
Applicant’s Address: 100 Bellevue
Parkway, Wilmington, Delaware 19809.
Blackrock Florida Municipal 2020
Term Trust [File No. 811–21184]
Summary: Applicant, a closed-end
investment company, seeks an order
declaring that it has ceased to be an
investment company. On December 22,
2020 and December 24, 2020, applicant
made liquidating distributions to its
shareholders based on net asset value.
Expenses of $28,000 incurred in
connection with the liquidation were
E:\FR\FM\04JAN1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 3 (Thursday, January 4, 2024)]
[Notices]
[Pages 490-495]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-28950]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99252; File No. SR-MEMX-2023-37]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Rules To Accommodate the Listing of Options Series That
Would Expire at the Close of Business on the Last Business Day of a
Calendar Month (``Monthly Options Series'')
December 28, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 20, 2023, MEMX LLC (``MEMX'' 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 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).
\4\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing with the Commission a proposed rule change
to amend its Rules to accommodate the listing of options series that
would expire at the close of business on the last business day of a
calendar month (``Monthly Options Series''). The text of the proposed
rule change is provided in Exhibit 5.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 491]]
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 options series that would expire at the close of business on the
last business day of a calendar month (``Monthly Options Series'').
Pursuant to proposed Rules 19.5, Interpretation and Policy .08(a) and
29.11(k)(1),\5\ 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\
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\5\ The proposed rule change defines the term ``Monthly Options
series'' in Rule 29.2(k) (and re-letters current paragraphs (k)
through (o) to be (l) through (p)) as 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.
\6\ The Exchange proposes to amend Rule 19.5(a) and (b) to
provide that proposed Rule 19.5, Interpretation and Policy .08 will
describe how the Exchange will fix a specific expiration date and
exercise price for Monthly Options Series and will govern the
procedures for opening Monthly Options Series, respectively. The
proposed change to Rule 19.5(a) is consistent with language in
current Rule 19.5(a) for other Short Term Option Series and
Quarterly Options Series. The proposed rule change also makes a non-
substantive correction to pluralize the term ``policy'' (to become
``policies'') to be consistent with the terminology in the Rules.
Additionally, the proposed rule change adds to Rule 19.5(b) that
Interpretation and Policies .04 and .05 will govern the procedures
for opening Quarterly Options Series and Short Term Option Series,
respectively (as well as adding exception language to the beginning
of that paragraph). This is merely a clarification, as Rule 19.5,
Interpretations and Policies .04 and .05 clearly govern the opening
procedures for those options listing programs. This proposed change
is also consistent with Cboe Exchange, Inc. (``Cboe Options'') Rule
4.5(b), which has similar options listing programs.
\7\ The Securities and Exchange Commission (the ``Commission'')
recently approved a Cboe Options proposed rule change to adopt a
substantively identical Monthly Options Series program. See
Securities Exchange Act Release No. 98915 (November 13, 2023) (SR-
CBOE-2023-049) (``Cboe Options 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 Rules 19.5, Interpretation and Policy .08(b)
and 29.11(k)(2).
\10\ See proposed Rules 19.5, Interpretation and Policy .08(c)
and 29.11(k)(3).
---------------------------------------------------------------------------
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 Rules 19.5, Interpretation and Policy .08(d)
and 29.11(k)(4). The Exchange notes these proposed provisions are
consistent with the initial series provision for the Quarterly
Options Series program in Rule 29.11(g)(3). While different than the
initial strike listing provision for the Quarterly Options Series
program in current Rule 19.5, Interpretation and Policy .04(b), 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 Rule
19.5, Interpretation and Policy .04(b) to incorporate the same
provision for initial series.
\12\ See proposed Rules 19.5, Interpretation and Policy .08(e)
and 29.11(k)(5).
\13\ See proposed Rules 19.5, Interpretation and Policy .08(f)
and 29.11(k)(6); see also Rule 19.5(d), (f), (g) and Interpretations
and Policies .01-.03 and .06 (permissible strike prices for ETF
classes) and Rule 29.11(c) (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 Rules 19.5, Interpretation and Policy .05
(introductory paragraph), (b), and (h) and 29.11(h) (introductory
paragraph) and (2) 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
[[Page 492]]
Series expires.\15\ Similarly, proposed Rules 19.5, Interpretation and
Policy .08(b) and 29.11(k)(2) 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 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.\16\
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\14\ The proposed rule change clarifies in Rule 29.11(a)(3) that
index options have expiration months and weeks, which expirations
may occur in consecutive weeks as specified in Rule 29.11(h). This
is merely a clarification, as Rule 29.11(h) currently permits weekly
expirations. This language is consistent with Cboe Options Rule
4.13(a)(2). Additionally, the proposed rule change adds to rule
29.11(a)(3) that index options may expire more than 12 months out as
specified elsewhere in the Rule. This is consistent with current
Rule 29.11(b), which permits long term index options to expire
between 12 and 180 months after issuance, as well as proposed Rule
29.11(k)(2), as discussed above.
\15\ The Exchange also proposes to make a non-substantive change
to Rules 19.5, Interpretation and Policy .05 and 29.11(h) 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. The
proposed rule change also adds a heading to Rule 19.5,
Interpretation and Policy .05 for consistency with other
Interpretations and Policies in that Rule.
\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). This could
not occur with respect to ETFs, as all Short Term Option Series on
ETFs are P.M.-settled.
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With respect to Monthly Options Series added pursuant to proposed
Rules 19.5, Interpretation and Policy .08(a) through (f) and
29.11(k)(1) through (6), 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.\17\
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\17\ See proposed Rules 19.5, Interpretation and Policy .08(g)
and 22.11(k)(7).
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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 notes that Rules 18.7 and 29.5 through 29.7 regarding
position limits will apply to Monthly Options Series. These Rules
provide that the position limits fixed by MEMX Options \18\ and Cboe
Options \19\ apply to options contracts traded on MEMX Options, which
would include Monthly Options Series.\20\ As noted above, Cboe Options
recently received Commission approval to adopt a substantively
identical Monthly Options Series Program as the one proposed in this
rule filing.\21\ Pursuant to those recently approved Cboe Options
rules, Monthly Options Series will be aggregated with positions in
options contracts on the same underlying security or index.\22\ 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). Therefore, positions in options within a
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.
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\18\ See MEMX Rule 18.7.
\19\ See MEMX Rule 29.5.
\20\ The Exchange issued Regulatory Notice 23-12 on September
14, 2023 which clarified its specific position limits applicable to
options on the Exchange are those calculated and disseminated by the
Options Clearing Corporation (``OCC''). See: https://info.memxtrading.com/wp-content/uploads/2023/09/RegNotice-23-12-Options-Position-Limits.pdf.
\21\ See Cboe Options Approval Order.
\22\ See id.; see also Cboe Options Rules 8.30, Interpretation
and Policy .09 (regarding position limits for options on stocks and
ETFs), 8.31(e) (regarding position limits for broad-based index
options), 8.32(f) (regarding position limits for industry index
options), 8.33(c) (regarding position limits for micro and narrow-
based indexes), and 8.34(c) (regarding position limits for
individual stock or ETF based volatility index options). Pursuant to
Cboe Options Rule 8.42 (and Exchange Rules 18.9 and 29.9), exercise
limits for impacted index and ETF classes would be equal to the
applicable position limits.
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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 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.\23\
Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \24\ 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
[[Page 493]]
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) \25\
requirement that the rules of an exchange not be designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
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\23\ 15 U.S.C. 78f(b).
\24\ 15 U.S.C. 78f(b)(5).
\25\ Id.
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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 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 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.\26\ 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.\27\ 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 investor 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.
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\26\ Compare proposed Rules 19.5, Interpretation and Policy .08
and 29.11(k) to Rules 19.5, Interpretation and Policy .04 and
29.11(g), respectively.
\27\ The Exchange notes the proposed maximum number of
expirations is consistent with the maximum number of expirations
permitted for end-of-month series in index classes. See Rule
29.11(j)(2) (which references Rule 29.11(a)(3), which permits up to
12 standard monthly expirations on the majority of index options
currently listed on the Exchange).
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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 Option Series and Quarterly Options
Series).\28\ 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.
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\28\ See Cboe Options Approval Order; see also Cboe Options
Rules 8.30, Interpretation and Policy .09 (regarding position limits
for options on stocks and ETFs), 8.31(e) (regarding position limits
for broad-based index options), 8.32(f) (regarding position limits
for industry index options), 8.33(c) (regarding position limits for
micro narrow-based indexes), and 8.34(c) (regarding position limits
for individual stock or ETF based volatility index options).
Pursuant to Cboe Options Rule 8.42 (and Exchange Rules 18.9 and
29.9), exercise limits for impacted index and ETF classes would be
equal to the applicable position limits.
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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 that is 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
[[Page 494]]
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.\29\ 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.\30\ Monthly
Options Series will trade on the Exchange in the same manner as other
options in the same class.
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\29\ See Rules 19.5, Interpretation and Policy .04 and 29.11(g).
\30\ See supra note 27.
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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.\31\ 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.
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\31\ As noted above, at least one other options exchange
recently adopted a substantively identical Monthly Options Series
program. See Cboe Options 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 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 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
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \32\ and Rule 19b-4(f)(6) thereunder.\33\
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 \34\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\35\
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\32\ 15 U.S.C. 78s(b)(3)(A)(iii).
\33\ 17 CFR 240.19b-4(f)(6).
\34\ 15 U.S.C. 78s(b)(3)(A)(iii).
\35\ 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 \36\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \37\ 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 Exchange,
Inc. for its Monthly Options Series program.\38\ 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.\39\
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\36\ 17 CFR 240.19b-4(f)(6).
\37\ 17 CFR 240.19b-4(f)(6)(iii).
\38\ See Cboe Monthly Approval Order, supra note 7.
\39\ 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-MEMX-2023-37 on the subject line.
[[Page 495]]
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-MEMX-2023-37. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-MEMX-2023-37 and should be
submitted on or before January 25, 2023.
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\40\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\40\
Christina Z. Milnor,
Assistant Secretary.
[FR Doc. 2023-28950 Filed 1-3-24; 8:45 am]
BILLING CODE 8011-01-P
