Self-Regulatory Organizations; MIAX PEARL LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 404, Series of Option Contracts Open for Trading To Amend the Short Term Option Series Program, 32480-32485 [2024-08807]
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32480
Federal Register / Vol. 89, No. 82 / Friday, April 26, 2024 / Notices
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposed rule change should be
approved or disapproved by May 17,
2024. Any person who wishes to file a
rebuttal to any other person’s
submission must file that rebuttal by
May 31, 2024.
Comments may be submitted by any
of the following methods:
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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–
FINRA–2024–004 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–FINRA–2024–004. 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
FINRA. 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–FINRA–2024–004 and should be
consideration of a particular proposal by a selfregulatory organization. See Securities Acts
Amendments of 1975, Senate Comm. on Banking,
Housing & Urban Affairs, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
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submitted on or before May 17, 2024.
Rebuttal comments should be submitted
by May 31, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.80
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–08946 Filed 4–25–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99997; File No. SR–
PEARL–2024–21]
Self-Regulatory Organizations; MIAX
PEARL LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Exchange
Rule 404, Series of Option Contracts
Open for Trading To Amend the Short
Term Option Series Program
April 19, 2024.
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 April 18,
2024, MIAX PEARL, LLC (‘‘MIAX Pearl’’
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend the Short Term Option Series
Program.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxglobal.com/markets/
us-equities/pearl-equities/rule-filings, at
MIAX Pearl’s principal office, 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
80 17
CFR 200.30–3(a)(57).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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
Interpretations and Policies .02 of
Exchange Rule 404, ‘‘Series of Options
Contracts Open for Trading.’’ The
Exchange proposes to expand the Short
Term Option Series program to permit
the listing and trading of options series
with Tuesday and Thursday expirations
for options on iShares Russell 2000 ETF
(‘‘IWM’’), specifically permitting two
expiration dates for the proposed
Tuesday and Thursday expirations in
IWM. These proposed rule changes are
based on a similar proposal submitted
by Nasdaq ISE, LLC (‘‘ISE’’) and
approved by the Commission.3
Currently, Table 1 in Interpretations
and Policies .02 of Exchange Rule 404
specifies each symbol that qualifies as a
Short Term Option Daily Expiration.4
Today, Table 1 permits the listing and
trading of Monday Short Term Option
Daily Expirations and Wednesday Short
Term Option Daily Expirations for IWM.
At this time, the Exchange proposes to
expand the Short Term Option Series
Program to permit the listing and
trading of no more than a total of two
IWM Short Term Option Daily
Expirations beyond the current week for
each of Monday, Tuesday, Wednesday,
and Thursday expirations at one time.5
3 See Securities Exchange Act Release No. 99946
(April 11, 2024), File No. SR–ISE–2024–06 (Order
Approving a Proposed Rule Change to Amend the
Short Term Option Program).
4 The Exchange may open for trading on any
Thursday or Friday that is a business day series of
options on that class that expire at the close of
business open each of the next five Fridays that are
business days and are not Fridays in which
standard expiration options series, Monthly
Options Series, or Quarterly Options Series. Of
these series of options, the Exchange may have no
more than a total of five Short Term Option
Expiration Dates. In addition, the Exchange may
open for trading series of options on certain
symbols that expire at the close of business on each
of the next two Mondays, Tuesdays, Wednesdays,
and Thursdays, respectively, that are business days
beyond the current week and are not business days
in which standard expiration options series,
Monthly Options Series, or Quarterly Options
Series expire (‘‘Short Term Option Daily
Expirations’’). See Interpretations and Policies .02
of Exchange Rule 404.
5 The Exchange would amend the Tuesday and
Thursday expirations for IWM in Table 1 in
Interpetations and Policies .02 of Exchange Rule
404 from ‘‘0’’ to ‘‘2’’ to permit Tuesday and
Thursday expirations for options on IWM listed
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The listing and trading of Tuesday and
Thursday Short Term Option Daily
Expirations would be subject to
Interpretations and Policies .02 of
Exchange Rule 404.
Today, Tuesday Short Term Option
Daily Expirations in SPDR S&P 500 ETF
Trust (‘‘SPY’’) and Invesco QQQ Trust
(‘‘QQQ’’) may open for trading on any
Monday or Tuesday that is a business
day series of options on the symbols
provided in Table 1 that expire at the
close of business on each of the next
two Tuesdays that are business days and
are not business days in which standard
expiration options series, Monthly
Options Series, or Quarterly Options
Series expire (‘‘Tuesday Short Term
Option Expiration Date’’).6 Also, today,
Thursday Short Term Option Daily
Expirations in SPY and QQQ may open
for trading on any Tuesday or
Wednesday that is a business day series
of options on the symbols provided in
Table 1 that expire at the close of
business on each of the next two
Wednesdays that are business days and
are not business days in which standard
expiration options series, Monthly
Options Series, or Quarterly Options
Series expire (‘‘Wednesday Short Term
Option Expiration Date’’).
In the event that options on IWM
expire on a Tuesday or Thursday and
that Tuesday or Thursday is a business
day in which standard expiration
options series, Monthly Options Series,
or Quarterly Options Series expire, the
Exchange would skip that week’s listing
and instead list the following week; the
two weeks would therefore not be
consecutive. With this proposal, the
Exchange would be able to open for
trading series of options on IWM that
expire at the close of business on each
of the next two Mondays, Tuesdays,
Wednesdays, and Thursdays,
pursuant to the Short Term Option Series. The
Exchange notes that Cboe Exchange, Inc. (‘‘Cboe’’)
began listing Tuesday and Thursday expirations in
the Russell 2000 Index Weeklys® (‘‘RUTW’’) and
Mini-Russell 2000 Index Weeklys® (‘‘MRUT’’) on
January 8, 2024. See Securities Exchange Act
Release No. 98621 (September 28, 2023), 88 FR
68896 (October 4, 2024) (SR–CBOE–2023–054) (a
Proposed Rule Change To Amend Rule 4.13);
Securities Exchange Act Release No. 98957
(November 15, 2023), 88 FR 81130 (November 21,
2023) (SR–CBOE–2023–054) (Order Approving a
Proposed Rule Change To Amend Rule 4.13 To
Expand the Nonstandard Expirations Program To
Include P.M.-Settled Options on Broad-Based
Indexes That Expire on Tuesday or Thursday); See
also Cboe Global Markets, Inc., Cboe To Offer Daily
Expiries For Russell 2000 Index Options Suite,
Beginning January 8, 2024, available at https://
ir.cboe.com/news/news-details/2023/Cboe-TOOFFER-DAILY-EXPIRIES-FOR-RUSSELL-2000INDEX-OPTIONS-SUITE-BEGINNING-JANUARY-82024/default.aspx (last visit February 14, 2024).
6 See Interpretations and Policies .02 of Exchange
Rule 404.
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respectively, that are business days
beyond the current week and are not
business days in which standard
expiration options series, Monthly
Options Series, or Quarterly Options
Series expire.7
The interval between strike prices for
the proposed Tuesday and Thursday
IWM Short Term Option Daily
Expirations will be the same as those for
Tuesday and Thursday Short Term
Option Daily Expirations in SPY and
QQQ, applicable to the Short Term
Option Series Program.8 Interpretations
and Policies .10 of Exchange Rule 404
provides that, notwithstanding any
other provision regarding the interval of
strike prices of series of options on
Exchange-Traded Fund Shares in
Exchange Rule 404, the interval of strike
prices on options on IWM will be $1 or
greater.9 Further, Interpretations and
Policies .02(e) of Exchange Rule 404
provides that the strike price interval for
Short Term Option Series may be $0.50
or greater for option classes that trade in
$1 strike price intervals and are in the
Short Term Option Series Program.
Therefore, the Tuesday and Thursday
IWM Short Term Option Daily
Expirations will have a $0.50 strike
interval minimum. As is the case with
other equity options series listed
pursuant to the Short Term Option
Series Program, the Tuesday and
Thursday IWM Short Term Option Daily
Expiration series will be P.M.-settled.
Pursuant to Exchange Rule 100,10
with respect to the Short Term Option
Series Program, a Tuesday or Thursday
expiration series shall expire on the first
business day immediately prior to that
Tuesday or Thursday, e.g., Monday or
Wednesday of that week, respectively, if
7 Today, IWM may trade on Mondays and
Wednesdays in addition to Fridays, as is the case
for all options series.
8 See Interpretations and Policies .10 of Exchange
Rule 404.
9 Options on SPY, iShares Core S&P 500 ETF
(‘‘IVV’’), QQQ, IWM, and the SPDR Dow Jones
Industrial Average ETF (‘‘DIA’’) are also subject to
Interpretations and Policies .10 of Exchange Rule
404.
10 The term ‘‘Short Term Option Series’’ means a
series in an option class that is approved for listing
and trading on the Exchange in which the series is
opened for trading on any Monday, Tuesday,
Wednesday, Thursday or Friday that is a business
day and that expires on the Monday, Tuesday,
Wednesday, Thursday, or Friday of the next
business week, or, in the case of a series that is
listed on a Friday and expires on a Monday, is
listed one business week and one business day
prior to that expiration. If a Tuesday, Wednesday,
Thursday or Friday is not a business day, the series
may be opened (or shall expire) on the first business
day immediately prior to that Tuesday, Wednesday,
Thursday or Friday, respectively. For a series listed
pursuant to this section for Monday, expiration, if
a Monday is not a business day, the series shall
expire on that first business day immediately
following that Monday. See Exchange Rule 100.
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32481
the Tuesday or Thursday is not a
business day.
Currently, for each option class
eligible for participation in the Short
Term Option Series Program, the
Exchange is limited to opening thirty
(30) series for each expiration date for
the specific class.11 The thirty (30)
series restriction does not include series
that are open by other securities
exchanges under their respective weekly
rules; the Exchange may list these
additional series that are listed by other
options exchanges.12 This thirty (30)
series restriction would apply to
Tuesday and Thursday IWM Short Term
Option Daily Expiration series as well.
With this proposal, Tuesday and
Thursday IWM Expirations would be
treated the same as Tuesday and
Thursday Expirations in SPY and QQQ.
With respect to standard expiration
option series, Short Term Option Daily
Expirations may expire in the same
week in which standard expiration
option series on the same class expire.
In the case of Monthly Options Series
and Quarterly Options Series, no Short
Term Option Series may expire on the
same day as an expiration of a Monthly
Options Series or Quarterly Options
Series, respectively, in the same class.13
Therefore, all Short Term Option Daily
Expirations would expire at the close of
business on each of the next two
Mondays, Tuesdays, Wednesdays, and
Thursdays, respectively, that are
business days beyond the current week
and are not business days in which
standard expiration options series,
Monthly Options Series, or Quarterly
Options Series expire.
The Exchange does not believe that
any market disruptions will be
encountered with the introduction of
P.M.-settled Tuesday and Thursday
IWM Short Term Option Daily
Expirations. The Exchange has the
necessary capacity and surveillance
programs in place to support and
properly monitor trading in the
proposed Tuesday and Thursday Short
Term Option Daily Expirations. The
Exchange currently trades P.M.-settled
Short Term Option Series that expire
Tuesday and Thursday for SPY and
QQQ and has not experienced any
market disruptions nor issues with
capacity. Today, the Exchange has
surveillance programs in place to
support and properly monitor trading in
Short Term Option Series that expire
11 See Interpretations and Policies .02(c) and (d)
of Exchange Rule 404.
12 See Interpretations and Policies .02 of
Exchange Rule 404.
13 See Interpretations and Policies .02(b) of
Exchange Rule 404.
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Federal Register / Vol. 89, No. 82 / Friday, April 26, 2024 / Notices
Tuesday and Thursday for SPY and
QQQ.
Impact of Proposal
The Exchange notes that listings in
the Short Term Option Series Program
comprise a significant part of the
standard listing in options markets. The
below diagram taken from the Nasdaq
ISE proposal demonstrates the
percentage of weekly listings as
compared to monthly, quarterly, and
Long-Term Option Series in 2023 in the
options industry.14 The Exchange notes
that during this time period all options
exchanges mitigated weekly strike
intervals.
Similar to SPY and QQQ, the
Exchange would limit the number of
Short Term Option Daily Expirations for
IWM to two expirations for Tuesday and
Thursday expirations while expanding
the Short Term Option Series Program
to permit Tuesday and Thursday
expirations for IWM. Expanding the
Short Term Option Series Program to
permit the listing of Tuesday and
Thursday expirations in IWM will
account for the addition of 6.77% of
strikes for IWM.15 With respect to the
impact to the Short Term Option Series
Program on IWM overall, the impact
would be a 20% increase in strikes.16
With respect to the impact to the Short
Term Options Series Program overall,
the impact would be a 0.1% increase in
strikes.17
Members will continue to be able to
expand hedging tools because all days
of the week would be available to
permit Members to tailor their
investment and hedging needs more
effectively in IWM.
14 See Securities Exchange Act Release No. 99604
(February 26, 2024), 89 FR 15235 (March 1, 2024)
(SRISE–2024–06) (Notice of Proposed Rule Change
to Amend the Short Term Option Series Program).
(ISE sourced this information from The Options
Clearing Corporation (‘‘OCC’’). The information
includes time averaged data (the number of strikes
by maturity date divided from the number of
trading days) for all 17 options markets through
December 8, 2023.)
15 See supra note 14. (ISE sourced this
information, which are estimates, from LiveVol®.
The information includes data for all 17 options
markets as of January 3, 2024.)
16 See supra note 14. (ISE sourced this
information, which are estimates, from LiveVol®.
The information includes data for all 17 options
markets as of January 3, 2024.)
17 See supra note 14. (ISE sourced this
information, which are estimates, from LiveVol®.
The information includes data for all 17 options
markets as of January 3, 2024.)
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Number of Strikes - 2023
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32483
Total Volume - 2023
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2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,19 in general, and furthers the
objectives of Section 6(b)(5) of the Act,20
in particular, in that it is designed to
promote just and equitable principles of
trade, 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.
The Exchange believes that IWM
Tuesday and Thursday Short Term
Daily Expirations will allow market
18 See supra note 14. (The chart represents
industry volume in terms of overall contracts.
Weeklies comprise 48.30% of volume while only
comprising 17.22% of the strikes. ISE sourced this
information from OCC. The information includes
data for all 17 options markets through December
8, 2023.)
19 15 U.S.C. 78f(b).
20 15 U.S.C. 78f(b)(5).
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participants to purchase IWM options
based on their timing as needed and
allow them to tailor their investment
and hedging needs more effectively.
Further, the proposal to permit Tuesday
and Thursday Short Term Daily
Expirations for options on IWM listed
pursuant to the Short Term Option
Series Program, subject to the proposed
limitation of two nearest expirations,
would protect investors and the public
interest by providing the investing
public and other market participants
more flexibility to closely tailor their
investment and hedging decisions in
IWM options, thus allowing them to
better manage their risk exposure.
In particular, the Exchange believes
the Short Term Option Series Program
has been successful to date and that
Tuesday and Thursday IWM Short Term
Daily Expirations should simply expand
the ability of investors to hedge risk
against market movements stemming
from economic releases or market events
that occur throughout the month in the
same way that the Short Term Option
Series Program has expanded the
landscape of hedging. Similarly, the
Exchange believes Tuesday and
Thursday IWM Short Term Daily
Expirations should create greater trading
and hedging opportunities and provide
customers the flexibility to tailor their
investment objectives more effectively.
The Exchange currently lists SPY and
QQQ Tuesday and Thursday Short Term
Daily Expirations.21
With this proposal, Tuesday and
Thursday IWM Expirations would be
21 See Interpretations and Policies .02 of
Exchange Rule 404.
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treated similar to existing Tuesday and
Thursday SPY and QQQ Expirations
and would expire in the same week that
standard monthly options expire on
Fridays.22 Further, today, Tuesday and
Thursday Short Term Option Daily
Expirations do not expire on a business
day in which monthly options series or
Quarterly Options Series expire.23
Today, all Short Term Option Daily
Expirations expire at the close of
business on each of the next two
Mondays, Tuesdays, Wednesdays, and
Thursdays, respectively, that are
business days and are not business days
in which monthly options series or
Quarterly Options Series expire. There
are no material differences in the
treatment of Tuesday and Thursday SPY
and QQQ Short Term Daily Expirations
as compared to the proposed Tuesday
and Thursday IWM Short Term Daily
Expirations.
Finally, the Exchange represents that
it has an adequate surveillance program
in place to detect manipulative trading
in the proposed Tuesday and Thursday
IWM Short Term Daily Expirations, in
the same way that it monitors trading in
the current Short Term Option Series
and trading in Tuesday and Thursday
SPY and QQQ Expirations. The
Exchange also represents that it has the
necessary systems capacity to support
the new options series. Finally, the
Exchange does not believe that any
market disruptions will be encountered
with the introduction of Tuesday and
22 See Interpretations and Policies .02(b) of
Exchange Rule 404.
23 See Interpretations and Policies .02 of
Exchange Rule 404.
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Weeklies comprise 48.30% of the total
volume of options contracts.18 The
Exchange believes that inner weeklies
(first two weeks) represent high volume
as compared to outer weeklies (the last
three weeks) and would be more
attractive to market participants.
The introduction of IWM Tuesday
and Thursday expirations will, among
other things, expand hedging tools
available to market participants and
continue the reduction of the premium
cost of buying protection. The Exchange
believes that IWM Tuesday and
Thursday expirations will allow market
participants to purchase IWM options
based on their timing as needed and
allow them to tailor their investment
and hedging needs more effectively.
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Federal Register / Vol. 89, No. 82 / Friday, April 26, 2024 / Notices
Thursday IWM Short Term Daily
Expirations.
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.
Similar to SPY and QQQ Tuesday and
Thursday Expirations, the introduction
of IWM Tuesday and Thursday Short
Term Daily Expirations does not impose
an undue burden on competition. The
Exchange believes that it will, among
other things, expand hedging tools
available to market participants and
continue the reduction of the premium
cost of buying protection. The Exchange
believes that IWM Tuesday and
Thursday Short Term Daily Expirations
will allow market participants to
purchase IWM options based on their
timing as needed and allow them to
tailor their investment and hedging
needs more effectively. The Exchange
notes that Cboe began listing Tuesday
and Thursday expirations in RUTW and
MRUT on January 8, 2024.24
The Exchange does not believe the
proposal will impose any burden on
inter-market competition, as nothing
prevents other options exchanges from
proposing similar rules to list and trade
Short-Term Option Series with Tuesday
and Thursday Short Term Daily
Expirations. The Exchange notes that
having Tuesday and Thursday IWM
expirations is not a novel proposal, as
SPY and QQQ Tuesday and Thursday
Expirations are currently listed on the
Exchange.25
Further, the Exchange does not
believe the proposal will impose any
burden on intramarket competition, as
all market participants will be treated in
the same manner under this proposal.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor 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 26 and Rule
19b–4(f)(6) thereunder.27 Because the
foregoing proposed rule change does
24 See
supra note 5.
Interpretations and Policies .02 of
Exchange Rule 404.
26 15 U.S.C. 78s(b)(3)(A)(iii).
27 17 CFR 240.19b–4(f)(6).
25 See
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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 28 and
subparagraph (f)(6) of Rule 19b–4
thereunder.29
A proposed rule change filed under
Rule 19b–4(f)(6) 30 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),31 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. According to the Exchange, the
proposed rule change is a competitive
response to a filing submitted by Nasdaq
ISE that was recently approved by the
Commission.32 The Exchange has stated
that waiver of the 30-day operative
delay would permit the Exchange to
implement the proposal at the same
time as at least one other exchange, thus
enhancing competition among
exchanges by allowing Tuesday and
Thursday IWM expirations to be traded
on multiple exchanges. 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 30-day operative delay and
designates the proposed rule change as
operative upon filing.33
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
28 15
U.S.C. 78s(b)(3)(A)(iii).
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.
30 17 CFR 240.19b–4(f)(6).
31 17 CFR 240.19b–4(f)(6)(iii).
32 See supra note 3.
33 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).
29 17
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Sfmt 4703
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–
PEARL–2024–21 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–PEARL–2024–21. 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–PEARL–2024–21 and should be
submitted on or before May 17, 2024.
E:\FR\FM\26APN1.SGM
26APN1
Federal Register / Vol. 89, No. 82 / Friday, April 26, 2024 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–08807 Filed 4–25–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100003; File No. SR–
MSRB–2024–01]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Order Instituting Proceedings
To Determine Whether To Approve or
Disapprove a Proposed Rule Change
Consisting of Proposed Rule Change
To Amend MSRB Rule G–14 To
Shorten the Timeframe for Reporting
Trades in Municipal Securities to the
MSRB
April 22, 2024.
I. Introduction
ddrumheller on DSK120RN23PROD with NOTICES1
On January 12, 2024, the Municipal
Securities Rulemaking Board (‘‘MSRB’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
(1) amend MSRB Rule G–14 (‘‘Rule G–
14’’), on reports of sales or purchases, to
(i) shorten the amount of time within
which brokers, dealers, and municipal
securities dealers (collectively,
‘‘dealers,’’ and each individually, a
‘‘dealer’’) must report most transactions
to the MSRB; and (ii) require dealers to
report certain transactions with a new
trade indicator, and make certain
clarifying amendments, and (2) make
conforming amendments to MSRB Rule
G–12, on uniform practice (‘‘Rule G–
12’’), and the MSRB’s Real-Time
Transaction Reporting System (‘‘RTRS’’)
Information Facility (‘‘IF–1’’) to reflect
the shortened reporting timeframe
(collectively, the ‘‘proposed rule
change’’).3 The proposed rule change
was published for comment in the
Federal Register on January 26, 2024.4
The Commission received comments in
response to the proposed rule change.5
34 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 34–99402
(Jan. 19, 2024), 89 FR 5384 (Jan. 26, 2024)
(‘‘Notice’’).
4 Notice, 89 FR at 5384.
5 Comment letters received by the Commission
are available on our website at https://www.sec.gov/
comments/sr-msrb-2024-01/srmsrb202401.htm.
1 15
VerDate Sep<11>2014
20:31 Apr 25, 2024
Jkt 262001
This order institutes proceedings under
Section 19(b)(2)(B) of the Act 6 to
determine whether to approve or
disapprove the proposed rule change.
II. Description of the Proposed Rule
Change
Rule G–14 on reports of sales or
purchases requires dealers to report
their transactions to RTRS within 15
minutes of the Time of Trade,7 absent
an exception,8 in accordance with Rule
G–14, the Rule G–14 RTRS Procedures,
and the RTRS Users Manual.9 Since the
current 15-minute requirement went
into effect in 2005, the fixed income
markets have changed dramatically,
including a significant increase in the
use of electronic trading platforms or
other electronic communication
protocols to facilitate the execution of
transactions. As described in more
detail in the Notice, the proposed rule
change is intended to bring about
greater market transparency through
more timely disclosure and
dissemination of information to market
participants and market-supporting
vendors so that the information better
reflects current market conditions on a
real-time basis, while carefully
balancing the considerations raised by
commenters throughout the rulemaking
process.10 Additionally, the proposed
rule change would also make certain
conforming technical changes to Rule
G–12(f)(i) and IF–1. The MSRB has
stated that it will review the available
trade reporting information and data
arising from implementation of the
changes to trade reporting introduced by
the proposed rule change, including but
not limited to the two exceptions to the
one-minute reporting requirement,11 to
inform any further potential changes by
the MSRB, through future rulemaking,
to the trade reporting requirements due
to increasing marketplace and
technology efficiencies, process
improvements, continuing or new
barriers to accelerated reporting,
unanticipated market impacts, or other
factors.12
6 15
U.S.C. 78s(b)(2)(B).
G–14 RTRS Procedures Section (d)(iii)
defines ‘‘Time of Trade’’ as the time at which a
contract is formed for a sale or purchase of
municipal securities at a set quantity and set price.
8 See Notice, 89 FR at 5384 n.5 (describing
transactions currently exempt from the reporting
requirements under Rule G–14(b)(v)).
9 The RTRS Users Manual is available at https://
www.msrb.org/RTRS-Users-Manual.
10 Id.
11 Id.
12 Id.
7 Rule
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
32485
A. New Baseline Reporting
Requirement: One Minute After the
Time of Trade
The proposed amendments to Rule G–
14 RTRS Procedures Section (a)(ii)
generally would provide that
transactions effected with a Time of
Trade during the hours of an RTRS
Business Day 13 must be reported to an
RTRS Portal 14 ‘‘as soon as practicable,
but no later than one minute’’ (rather
than within the current 15-minute
standard) after the Time of Trade,
subject to several existing reporting
exceptions, which would be retained in
the amended rule,15 and two new intraday reporting exceptions relating to
dealers with limited trading activity and
trades with a manual component that
would be added by the proposed rule
change.16 Except for those trades that
would qualify for a reporting exception,
all trades currently required to be
reported within 15 minutes after the
Time of Trade would, under the
proposed rule change, be required to be
reported no later than one minute after
the Time of Trade.
i. New Requirement To Report Trades
‘‘as Soon as Practicable’’
Section (a)(ii) of the proposed
amendment to Rule G–14 RTRS
Procedures adds a new requirement
that, absent an exception, trades must be
reported as soon as practicable (but no
later than one minute after the Time of
Trade).17 This ‘‘as soon as practicable’’
requirement would also apply to trades
subject to longer trade reporting
deadlines under the two new exceptions
for dealers with limited trading activity
pursuant to Rule G–14 RTRS Procedures
Section (a)(ii)(C)(1) and Supplementary
Material .01, or trades with a manual
component pursuant to Rule G–14 RTRS
Procedures Section (a)(ii)(C)(2) and
Supplementary Material .02.18 Although
Rule G–14 RTRS Procedures do not
currently explicitly prohibit a dealer
from waiting until the existing 15minute deadline to report a trade
notwithstanding the fact that the dealer
could reasonably have reported such
13 Rule G–14 RTRS Procedures Section (d)(ii)
defines ‘‘RTRS Business Day’’ as 7:30 a.m. to 6:30
p.m., Eastern Time, Monday through Friday, unless
otherwise announced by the MSRB.
14 See Notice, 89 at 5385 n.13 (discussing the
various portals).
15 See Notice, 89 FR at 5385 n.14 (describing the
existing exceptions).
16 The two new intra-day reporting exceptions,
consisting of trades by dealers with limited trading
activity and trades with a manual component,
would be designated as Rule G–14 RTRS
Procedures Sections (a)(ii)(C)(1) and (2),
respectively. See Notice, 89 FR at 5385 n.15.
17 Notice, 89 FR at 5386.
18 Id.
E:\FR\FM\26APN1.SGM
26APN1
]]>Agencies
[Federal Register Volume 89, Number 82 (Friday, April 26, 2024)]
[Notices]
[Pages 32480-32485]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08807]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99997; File No. SR-PEARL-2024-21]
Self-Regulatory Organizations; MIAX PEARL LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange
Rule 404, Series of Option Contracts Open for Trading To Amend the
Short Term Option Series Program
April 19, 2024.
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 April 18, 2024, MIAX PEARL, LLC (``MIAX Pearl'' 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 is filing a proposal to amend the Short Term Option
Series Program.
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxglobal.com/markets/us-equities/pearl-equities/rule-filings, at MIAX Pearl's principal office, 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 Interpretations and Policies .02 of
Exchange Rule 404, ``Series of Options Contracts Open for Trading.''
The Exchange proposes to expand the Short Term Option Series program to
permit the listing and trading of options series with Tuesday and
Thursday expirations for options on iShares Russell 2000 ETF (``IWM''),
specifically permitting two expiration dates for the proposed Tuesday
and Thursday expirations in IWM. These proposed rule changes are based
on a similar proposal submitted by Nasdaq ISE, LLC (``ISE'') and
approved by the Commission.\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 99946 (April 11,
2024), File No. SR-ISE-2024-06 (Order Approving a Proposed Rule
Change to Amend the Short Term Option Program).
---------------------------------------------------------------------------
Currently, Table 1 in Interpretations and Policies .02 of Exchange
Rule 404 specifies each symbol that qualifies as a Short Term Option
Daily Expiration.\4\ Today, Table 1 permits the listing and trading of
Monday Short Term Option Daily Expirations and Wednesday Short Term
Option Daily Expirations for IWM. At this time, the Exchange proposes
to expand the Short Term Option Series Program to permit the listing
and trading of no more than a total of two IWM Short Term Option Daily
Expirations beyond the current week for each of Monday, Tuesday,
Wednesday, and Thursday expirations at one time.\5\
[[Page 32481]]
The listing and trading of Tuesday and Thursday Short Term Option Daily
Expirations would be subject to Interpretations and Policies .02 of
Exchange Rule 404.
---------------------------------------------------------------------------
\4\ The Exchange may open for trading on any Thursday or Friday
that is a business day series of options on that class that expire
at the close of business open each of the next five Fridays that are
business days and are not Fridays in which standard expiration
options series, Monthly Options Series, or Quarterly Options Series.
Of these series of options, the Exchange may have no more than a
total of five Short Term Option Expiration Dates. In addition, the
Exchange may open for trading series of options on certain symbols
that expire at the close of business on each of the next two
Mondays, Tuesdays, Wednesdays, and Thursdays, respectively, that are
business days beyond the current week and are not business days in
which standard expiration options series, Monthly Options Series, or
Quarterly Options Series expire (``Short Term Option Daily
Expirations''). See Interpretations and Policies .02 of Exchange
Rule 404.
\5\ The Exchange would amend the Tuesday and Thursday
expirations for IWM in Table 1 in Interpetations and Policies .02 of
Exchange Rule 404 from ``0'' to ``2'' to permit Tuesday and Thursday
expirations for options on IWM listed pursuant to the Short Term
Option Series. The Exchange notes that Cboe Exchange, Inc.
(``Cboe'') began listing Tuesday and Thursday expirations in the
Russell 2000 Index Weeklys[reg] (``RUTW'') and Mini-Russell 2000
Index Weeklys[reg] (``MRUT'') on January 8, 2024. See Securities
Exchange Act Release No. 98621 (September 28, 2023), 88 FR 68896
(October 4, 2024) (SR-CBOE-2023-054) (a Proposed Rule Change To
Amend Rule 4.13); Securities Exchange Act Release No. 98957
(November 15, 2023), 88 FR 81130 (November 21, 2023) (SR-CBOE-2023-
054) (Order Approving a Proposed Rule Change To Amend Rule 4.13 To
Expand the Nonstandard Expirations Program To Include P.M.-Settled
Options on Broad-Based Indexes That Expire on Tuesday or Thursday);
See also Cboe Global Markets, Inc., Cboe To Offer Daily Expiries For
Russell 2000 Index Options Suite, Beginning January 8, 2024,
available at https://ir.cboe.com/news/news-details/2023/Cboe-TO-OFFER-DAILY-EXPIRIES-FOR-RUSSELL-2000-INDEX-OPTIONS-SUITE-BEGINNING-JANUARY-8-2024/default.aspx (last visit February 14, 2024).
---------------------------------------------------------------------------
Today, Tuesday Short Term Option Daily Expirations in SPDR S&P 500
ETF Trust (``SPY'') and Invesco QQQ Trust (``QQQ'') may open for
trading on any Monday or Tuesday that is a business day series of
options on the symbols provided in Table 1 that expire at the close of
business on each of the next two Tuesdays that are business days and
are not business days in which standard expiration options series,
Monthly Options Series, or Quarterly Options Series expire (``Tuesday
Short Term Option Expiration Date'').\6\ Also, today, Thursday Short
Term Option Daily Expirations in SPY and QQQ may open for trading on
any Tuesday or Wednesday that is a business day series of options on
the symbols provided in Table 1 that expire at the close of business on
each of the next two Wednesdays that are business days and are not
business days in which standard expiration options series, Monthly
Options Series, or Quarterly Options Series expire (``Wednesday Short
Term Option Expiration Date'').
---------------------------------------------------------------------------
\6\ See Interpretations and Policies .02 of Exchange Rule 404.
---------------------------------------------------------------------------
In the event that options on IWM expire on a Tuesday or Thursday
and that Tuesday or Thursday is a business day in which standard
expiration options series, Monthly Options Series, or Quarterly Options
Series expire, the Exchange would skip that week's listing and instead
list the following week; the two weeks would therefore not be
consecutive. With this proposal, the Exchange would be able to open for
trading series of options on IWM that expire at the close of business
on each of the next two Mondays, Tuesdays, Wednesdays, and Thursdays,
respectively, that are business days beyond the current week and are
not business days in which standard expiration options series, Monthly
Options Series, or Quarterly Options Series expire.\7\
---------------------------------------------------------------------------
\7\ Today, IWM may trade on Mondays and Wednesdays in addition
to Fridays, as is the case for all options series.
---------------------------------------------------------------------------
The interval between strike prices for the proposed Tuesday and
Thursday IWM Short Term Option Daily Expirations will be the same as
those for Tuesday and Thursday Short Term Option Daily Expirations in
SPY and QQQ, applicable to the Short Term Option Series Program.\8\
Interpretations and Policies .10 of Exchange Rule 404 provides that,
notwithstanding any other provision regarding the interval of strike
prices of series of options on Exchange-Traded Fund Shares in Exchange
Rule 404, the interval of strike prices on options on IWM will be $1 or
greater.\9\ Further, Interpretations and Policies .02(e) of Exchange
Rule 404 provides that the strike price interval for Short Term Option
Series may be $0.50 or greater for option classes that trade in $1
strike price intervals and are in the Short Term Option Series Program.
Therefore, the Tuesday and Thursday IWM Short Term Option Daily
Expirations will have a $0.50 strike interval minimum. As is the case
with other equity options series listed pursuant to the Short Term
Option Series Program, the Tuesday and Thursday IWM Short Term Option
Daily Expiration series will be P.M.-settled.
---------------------------------------------------------------------------
\8\ See Interpretations and Policies .10 of Exchange Rule 404.
\9\ Options on SPY, iShares Core S&P 500 ETF (``IVV''), QQQ,
IWM, and the SPDR Dow Jones Industrial Average ETF (``DIA'') are
also subject to Interpretations and Policies .10 of Exchange Rule
404.
---------------------------------------------------------------------------
Pursuant to Exchange Rule 100,\10\ with respect to the Short Term
Option Series Program, a Tuesday or Thursday expiration series shall
expire on the first business day immediately prior to that Tuesday or
Thursday, e.g., Monday or Wednesday of that week, respectively, if the
Tuesday or Thursday is not a business day.
---------------------------------------------------------------------------
\10\ The term ``Short Term Option Series'' means a series in an
option class that is approved for listing and trading on the
Exchange in which the series is opened for trading on any Monday,
Tuesday, Wednesday, Thursday or Friday that is a business day and
that expires on the Monday, Tuesday, Wednesday, Thursday, or Friday
of the next business week, or, in the case of a series that is
listed on a Friday and expires on a Monday, is listed one business
week and one business day prior to that expiration. If a Tuesday,
Wednesday, Thursday or Friday is not a business day, the series may
be opened (or shall expire) on the first business day immediately
prior to that Tuesday, Wednesday, Thursday or Friday, respectively.
For a series listed pursuant to this section for Monday, expiration,
if a Monday is not a business day, the series shall expire on that
first business day immediately following that Monday. See Exchange
Rule 100.
---------------------------------------------------------------------------
Currently, for each option class eligible for participation in the
Short Term Option Series Program, the Exchange is limited to opening
thirty (30) series for each expiration date for the specific class.\11\
The thirty (30) series restriction does not include series that are
open by other securities exchanges under their respective weekly rules;
the Exchange may list these additional series that are listed by other
options exchanges.\12\ This thirty (30) series restriction would apply
to Tuesday and Thursday IWM Short Term Option Daily Expiration series
as well.
---------------------------------------------------------------------------
\11\ See Interpretations and Policies .02(c) and (d) of Exchange
Rule 404.
\12\ See Interpretations and Policies .02 of Exchange Rule 404.
---------------------------------------------------------------------------
With this proposal, Tuesday and Thursday IWM Expirations would be
treated the same as Tuesday and Thursday Expirations in SPY and QQQ.
With respect to standard expiration option series, Short Term Option
Daily Expirations may expire in the same week in which standard
expiration option series on the same class expire. In the case of
Monthly Options Series and Quarterly Options Series, no Short Term
Option Series may expire on the same day as an expiration of a Monthly
Options Series or Quarterly Options Series, respectively, in the same
class.\13\ Therefore, all Short Term Option Daily Expirations would
expire at the close of business on each of the next two Mondays,
Tuesdays, Wednesdays, and Thursdays, respectively, that are business
days beyond the current week and are not business days in which
standard expiration options series, Monthly Options Series, or
Quarterly Options Series expire.
---------------------------------------------------------------------------
\13\ See Interpretations and Policies .02(b) of Exchange Rule
404.
---------------------------------------------------------------------------
The Exchange does not believe that any market disruptions will be
encountered with the introduction of P.M.-settled Tuesday and Thursday
IWM Short Term Option Daily Expirations. The Exchange has the necessary
capacity and surveillance programs in place to support and properly
monitor trading in the proposed Tuesday and Thursday Short Term Option
Daily Expirations. The Exchange currently trades P.M.-settled Short
Term Option Series that expire Tuesday and Thursday for SPY and QQQ and
has not experienced any market disruptions nor issues with capacity.
Today, the Exchange has surveillance programs in place to support and
properly monitor trading in Short Term Option Series that expire
[[Page 32482]]
Tuesday and Thursday for SPY and QQQ.
Impact of Proposal
The Exchange notes that listings in the Short Term Option Series
Program comprise a significant part of the standard listing in options
markets. The below diagram taken from the Nasdaq ISE proposal
demonstrates the percentage of weekly listings as compared to monthly,
quarterly, and Long-Term Option Series in 2023 in the options
industry.\14\ The Exchange notes that during this time period all
options exchanges mitigated weekly strike intervals.
---------------------------------------------------------------------------
\14\ See Securities Exchange Act Release No. 99604 (February 26,
2024), 89 FR 15235 (March 1, 2024) (SRISE-2024-06) (Notice of
Proposed Rule Change to Amend the Short Term Option Series Program).
(ISE sourced this information from The Options Clearing Corporation
(``OCC''). The information includes time averaged data (the number
of strikes by maturity date divided from the number of trading days)
for all 17 options markets through December 8, 2023.)
[GRAPHIC] [TIFF OMITTED] TN26AP24.087
Similar to SPY and QQQ, the Exchange would limit the number of
Short Term Option Daily Expirations for IWM to two expirations for
Tuesday and Thursday expirations while expanding the Short Term Option
Series Program to permit Tuesday and Thursday expirations for IWM.
Expanding the Short Term Option Series Program to permit the listing of
Tuesday and Thursday expirations in IWM will account for the addition
of 6.77% of strikes for IWM.\15\ With respect to the impact to the
Short Term Option Series Program on IWM overall, the impact would be a
20% increase in strikes.\16\ With respect to the impact to the Short
Term Options Series Program overall, the impact would be a 0.1%
increase in strikes.\17\
---------------------------------------------------------------------------
\15\ See supra note 14. (ISE sourced this information, which are
estimates, from LiveVol[supreg]. The information includes data for
all 17 options markets as of January 3, 2024.)
\16\ See supra note 14. (ISE sourced this information, which are
estimates, from LiveVol[supreg]. The information includes data for
all 17 options markets as of January 3, 2024.)
\17\ See supra note 14. (ISE sourced this information, which are
estimates, from LiveVol[supreg]. The information includes data for
all 17 options markets as of January 3, 2024.)
---------------------------------------------------------------------------
Members will continue to be able to expand hedging tools because
all days of the week would be available to permit Members to tailor
their investment and hedging needs more effectively in IWM.
[[Page 32483]]
[GRAPHIC] [TIFF OMITTED] TN26AP24.088
Weeklies comprise 48.30% of the total volume of options
contracts.\18\ The Exchange believes that inner weeklies (first two
weeks) represent high volume as compared to outer weeklies (the last
three weeks) and would be more attractive to market participants.
---------------------------------------------------------------------------
\18\ See supra note 14. (The chart represents industry volume in
terms of overall contracts. Weeklies comprise 48.30% of volume while
only comprising 17.22% of the strikes. ISE sourced this information
from OCC. The information includes data for all 17 options markets
through December 8, 2023.)
---------------------------------------------------------------------------
The introduction of IWM Tuesday and Thursday expirations will,
among other things, expand hedging tools available to market
participants and continue the reduction of the premium cost of buying
protection. The Exchange believes that IWM Tuesday and Thursday
expirations will allow market participants to purchase IWM options
based on their timing as needed and allow them to tailor their
investment and hedging needs more effectively.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\19\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\20\ in particular, in that it is designed to
promote just and equitable principles of trade, 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.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that IWM Tuesday and Thursday Short Term
Daily Expirations will allow market participants to purchase IWM
options based on their timing as needed and allow them to tailor their
investment and hedging needs more effectively. Further, the proposal to
permit Tuesday and Thursday Short Term Daily Expirations for options on
IWM listed pursuant to the Short Term Option Series Program, subject to
the proposed limitation of two nearest expirations, would protect
investors and the public interest by providing the investing public and
other market participants more flexibility to closely tailor their
investment and hedging decisions in IWM options, thus allowing them to
better manage their risk exposure.
In particular, the Exchange believes the Short Term Option Series
Program has been successful to date and that Tuesday and Thursday IWM
Short Term Daily Expirations should simply expand the ability of
investors to hedge risk against market movements stemming from economic
releases or market events that occur throughout the month in the same
way that the Short Term Option Series Program has expanded the
landscape of hedging. Similarly, the Exchange believes Tuesday and
Thursday IWM Short Term Daily Expirations should create greater trading
and hedging opportunities and provide customers the flexibility to
tailor their investment objectives more effectively. The Exchange
currently lists SPY and QQQ Tuesday and Thursday Short Term Daily
Expirations.\21\
---------------------------------------------------------------------------
\21\ See Interpretations and Policies .02 of Exchange Rule 404.
---------------------------------------------------------------------------
With this proposal, Tuesday and Thursday IWM Expirations would be
treated similar to existing Tuesday and Thursday SPY and QQQ
Expirations and would expire in the same week that standard monthly
options expire on Fridays.\22\ Further, today, Tuesday and Thursday
Short Term Option Daily Expirations do not expire on a business day in
which monthly options series or Quarterly Options Series expire.\23\
Today, all Short Term Option Daily Expirations expire at the close of
business on each of the next two Mondays, Tuesdays, Wednesdays, and
Thursdays, respectively, that are business days and are not business
days in which monthly options series or Quarterly Options Series
expire. There are no material differences in the treatment of Tuesday
and Thursday SPY and QQQ Short Term Daily Expirations as compared to
the proposed Tuesday and Thursday IWM Short Term Daily Expirations.
---------------------------------------------------------------------------
\22\ See Interpretations and Policies .02(b) of Exchange Rule
404.
\23\ See Interpretations and Policies .02 of Exchange Rule 404.
---------------------------------------------------------------------------
Finally, the Exchange represents that it has an adequate
surveillance program in place to detect manipulative trading in the
proposed Tuesday and Thursday IWM Short Term Daily Expirations, in the
same way that it monitors trading in the current Short Term Option
Series and trading in Tuesday and Thursday SPY and QQQ Expirations. The
Exchange also represents that it has the necessary systems capacity to
support the new options series. Finally, the Exchange does not believe
that any market disruptions will be encountered with the introduction
of Tuesday and
[[Page 32484]]
Thursday IWM Short Term Daily Expirations.
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.
Similar to SPY and QQQ Tuesday and Thursday Expirations, the
introduction of IWM Tuesday and Thursday Short Term Daily Expirations
does not impose an undue burden on competition. The Exchange believes
that it will, among other things, expand hedging tools available to
market participants and continue the reduction of the premium cost of
buying protection. The Exchange believes that IWM Tuesday and Thursday
Short Term Daily Expirations will allow market participants to purchase
IWM options based on their timing as needed and allow them to tailor
their investment and hedging needs more effectively. The Exchange notes
that Cboe began listing Tuesday and Thursday expirations in RUTW and
MRUT on January 8, 2024.\24\
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\24\ See supra note 5.
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The Exchange does not believe the proposal will impose any burden
on inter-market competition, as nothing prevents other options
exchanges from proposing similar rules to list and trade Short-Term
Option Series with Tuesday and Thursday Short Term Daily Expirations.
The Exchange notes that having Tuesday and Thursday IWM expirations is
not a novel proposal, as SPY and QQQ Tuesday and Thursday Expirations
are currently listed on the Exchange.\25\
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\25\ See Interpretations and Policies .02 of Exchange Rule 404.
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Further, the Exchange does not believe the proposal will impose any
burden on intramarket competition, as all market participants will be
treated in the same manner under this proposal.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor 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 \26\ and Rule 19b-4(f)(6) thereunder.\27\
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 \28\ and subparagraph (f)(6) of
Rule 19b-4 thereunder.\29\
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\26\ 15 U.S.C. 78s(b)(3)(A)(iii).
\27\ 17 CFR 240.19b-4(f)(6).
\28\ 15 U.S.C. 78s(b)(3)(A)(iii).
\29\ 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 under Rule 19b-4(f)(6) \30\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\31\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. According to
the Exchange, the proposed rule change is a competitive response to a
filing submitted by Nasdaq ISE that was recently approved by the
Commission.\32\ The Exchange has stated that waiver of the 30-day
operative delay would permit the Exchange to implement the proposal at
the same time as at least one other exchange, thus enhancing
competition among exchanges by allowing Tuesday and Thursday IWM
expirations to be traded on multiple exchanges. 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 30-day operative delay and designates the proposed rule
change as operative upon filing.\33\
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\30\ 17 CFR 240.19b-4(f)(6).
\31\ 17 CFR 240.19b-4(f)(6)(iii).
\32\ See supra note 3.
\33\ 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-PEARL-2024-21 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-PEARL-2024-21. 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-PEARL-2024-21 and should be
submitted on or before May 17, 2024.
[[Page 32485]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-08807 Filed 4-25-24; 8:45 am]
BILLING CODE 8011-01-P
