Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend Rule 903, 48925-48937 [2024-12592]

Download as PDF Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.31 Sherry R. Haywood, Assistant Secretary. Dated: June 6, 2024. Vanessa A. Countryman, Secretary. [FR Doc. 2024–12741 Filed 6–6–24; 4:15 pm] BILLING CODE 8011–01–P [FR Doc. 2024–12591 Filed 6–7–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION [Release No. 34–100272; File No. SR– NYSEAMER–2024–34] Sunshine Act Meetings 2:00 p.m. on Thursday, June 13, 2024. PLACE: The meeting will be held via remote means and/or at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. STATUS: This meeting will be closed to the public. MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the Commission’s website at https:// www.sec.gov. The General Counsel of the Commission, or her designee, has certified that, in her opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. The subject matter of the closed meeting will consist of the following topics: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Resolution of litigation claims; and Other matters relating to examinations and enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters. CONTACT PERSON FOR MORE INFORMATION: For further information, please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. lotter on DSK11XQN23PROD with NOTICES1 TIME AND DATE: (Authority: 5 U.S.C. 552b) Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend Rule 903 June 4, 2024. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on May 30, 2024, NYSE American LLC (‘‘NYSE American’’ 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 self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 903 (Series of Options Open For Trading) and to make certain conforming changes. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those 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 parts of such statements. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 31 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 PO 00000 Frm 00059 Fmt 4703 48925 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing is to amend Rule 903 (Series of Options Open For Trading) to adopt a Monthly Options Series Program; to adopt a Low-Priced Strike Priced Interval Program; to permit the listing and trading of five additional classes with Short Term Option Daily Expirations; to permit Tuesday and Thursday expirations for certain classes with Short Term Option Daily Expirations; and to permit the listing of two Wednesday expirations for options on certain ETPs. Each of the proposed changes would align Exchange rules with already-approved and implemented rules in place on at least one other options exchange as noted herein. Monthly Options Series Program 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’’). This is a competitive filing that is based on a proposal recently submitted Cboe Exchange, Inc (‘‘CBOE’’).4 Pursuant to proposed Commentary .11 to Rule 903 and Rule 903C(a)(v), 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’’).5 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.6 The Exchange 4 See Securities Exchange Act Release No. 98915 (Nov. 13, 2023) 88 FR 81495 (November 17, 2023 (SR–CBOE–2023–049) (Order Approving a Proposed Rule Change To Adopt Monthly Options Series). See also Cboe Rules 4.5, 4.11, 8.31, and 8.32. 5 The Exchange proposes to amend Rule 903(h) to provide that new Commentary .11 to Rule 903 (which has been in Reserve) will describe how the Exchange will fix a specific expiration date and exercise price for Monthly Options Series and that proposed Commentary .11 to Rule 903 will govern the procedures for opening Monthly Options Series, respectively. This is consistent with language in current Rule 903 for other Short Term Options Series and Quarterly Options Series. Consistent with this proposal, the Exchange proposes to adopt a definition of Monthly options Series. See proposed Rule 1.1. 6 The Exchange’s proposal is based on CBOE’s approved rule change, see supra note 4. The Exchange notes that other options exchanges have since adopted similar programs. See, e.g., Securities Exchange Act Release No. 98973 (November 16, 2023) 88 FR 81495 (November 22, 2023) (SR– Continued Sfmt 4703 E:\FR\FM\10JNN1.SGM 10JNN1 48926 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 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.7 Other expirations in the same class are not counted as part of the maximum numbers of Monthly Options Series expirations for a class.8 Monthly Options Series will be P.M.-settled.9 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.10 Additional Monthly MIAX–2023–44) (immediately effective filing to accommodate the listing of Monthly Options Series). 7 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 not roll their exposures in the longerdated options (e.g., January 2025) prior to the expiration of the nearer dated option (e.g., January 2024). 8 See proposed Commentary .11(b) to Rule 903 and proposed Rule 903C(a)(v)(2). 9 See proposed Commentary .11(c) to Rule 903 and proposed Rule 903C(a)(v)(3). 10 See proposed Commentaries .11(d) to Rule 903 and proposed Rule 903C(a)(v)(4). The Exchange VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 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 ATP Holder demand,11 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 ATP Holder interest exists for such series, as expressed by institutional, corporate, ATP Holder or their brokers. Market Makers trading for their own account will not be considered when determining ATP Holder 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 notes these proposed provisions are consistent with the initial series provision for the Quarterly Options Series program in Rule 903C(iv)(4). While different than the initial strike listing provision for the Quarterly Options Series program (set forth in Commentary .09(c) to Rule 903), 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 Commentary .09(c) to Rule 903 to incorporate the same provision for initial series. The Exchange proposes a technical change to re-number the sub-paragraphs of Commentary .0(f) into separate paragraphs, which technical change would add clarity, transparency and internal consistent to Exchange rules. See proposed Commentary .09(f)–(h). 11 An ‘‘ATP’’ is an Options Trading Permit issued by the Exchange for effecting approved securities transactions on the Exchange. See Rule 900.2NY. An ‘‘ATP Holder’’ refers to a natural person, in good standing who has been issued an ATP and is a registered broker or dealer pursuant to Section 15 of the Securities Exchange Act of 1934. Id. 12 See proposed Commentary .11(e) to Rule 903. 13 See proposed Commentary .11(f) to Rule 903; see also Commentaries .05 and .06 to Rule 903 (permissible strike prices for ETF classes); and Commentary .05(a). and .13 (regarding ‘‘$0.50 and $1 Strike Price Intervals for Options Used to Calculate Volatility Indexes’’) to Rule 903. See also Commentary.04 to Rule 903C (permissible strike prices index options). The Exchange notes that there are two Commentaries .13 to Rule 903 and, to correct this duplicate and avoid confusion, the Exchange proposes to re-locate the text of Commentary .13 that relate to ‘‘$0.50 and $1 Strike Price Intervals for Options Used to Calculate Volatility Indexes’’ to Commentary .08, which is currently held as Reserved. See proposed Commentary .08. The Exchange notes that this PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 By definition, Monthly Options Series can never expire in the same week that a standard options series that expires on the third Friday of a month in the same class expires. The same, however, is not the case with respect to Short Term Options Series or Quarterly Options Series. Therefore, to avoid any confusion in the marketplace, the Exchange proposes to amend Rule 903(h) to provide that the Exchange will not list a Short Term Options Series in a class on a date on which a Monthly Options Series or Quarterly Options Series expires.14 Similarly, proposed Commentary .11 to Rule 903 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 Terms Options Series on an index or ETF if a Monthly Options Series on that index or ETF were to expire on the same date, nor will the Exchange list a Monthly Options Series on an index or ETF if a Quarterly Options Series on that ETF were to expire on the same date to prevent the listing of series with concurrent expirations.15 With respect to Monthly Options Series added pursuant to proposed Commentary .11(a)–(f) to Rule 903, 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 strike: (i) higher than the highest strike price with open interest in the put and/or call series for a given expiration month; and (ii) lower than the lowest strike price with open interest in the put and/or call series for a given expiration month. proposed change is non-substantive and would add clarity and transparency to Exchange rules. 14 See proposed Rule 903(h). The Exchange also proposes to make a non-substantive change throughout Rule 903(h) and Commentary .10(f) thereto to change current references to ‘‘monthly options series’’ to ‘‘standard expiration options series’’ (i.e., series that expire on the third Friday of a month), to eliminate potential confusion. The current references to ‘‘monthly options series’’ are intended to refer to those series that expire on the third Friday of a month, which are generally referred to in the industry as standard expirations. 15 The Exchange notes this would not prevent the Exchange from listing a P.M.-settled Monthly Options Series on an index with the same expiration date as an A.M.-settled Short Term Options Series on the same index, both of which may expire on a Friday. The Exchange believes this concurrent listing would provide investors with yet another hedging mechanism and is reasonable given these series would not be identical (unlike if they were both P.M.-settled). This could not occur with respect to ETFs, as all Short Term Options Series on ETFs are P.M.-settled. E:\FR\FM\10JNN1.SGM 10JNN1 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 Notwithstanding this delisting policy, ATP Holders 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, to ensure uniform series delisting of multiply listed Monthly Options Series.16 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 options 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 Options Price Reporting Authority (‘‘OPRA’’) and the Exchange’s quoting capacity. The Exchange represents it has the necessary systems capacity to support new options series that will result from the introduction of Monthly Options Series. The Exchange also proposes to amend Rules 904C(b) and (c) to provide that positions in Monthly Options Series will be aggregated with positions in options contracts on the same underlying security or index.17 This is consistent with how position (and exercise) limits are currently imposed on series with other expirations (Short Term Options Series and Quarterly Options Series). Therefore, positions in options within class of index or ETF options, regardless of their expirations, would continue to be subject to existing position (and exercise) limits. The Exchange believes this will address potential manipulative schemes and adverse market impacts surrounding the use of options. The Exchange also represents its current surveillance programs will apply to Monthly Options Series and will properly monitor trading in the proposed Monthly Options Series. The Exchange currently lists Quarterly 16 See proposed Commentary .11(g) to Rule 903. Pursuant to Rule 905, exercise limits for impacted index and ETF classes would be equal to the applicable position limits. 17 See proposed Rules 904C(b) (regarding position limits for broad-based index options) and 904C(c) (regarding position limits for industry index options). Consistent with the adoption of Monthly Options series for equity and index options, the Exchange proposes to adopt the definition of ‘‘Monthly Option Series’’ as relates to index options in proposed Rule 900C(b)(29). VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 Options Series in certain ETF classes,18 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 Options 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. Low-Priced Stock Interval Program Miami International Securities Exchange, LLC (‘‘MIAX’’) recently received approval to amend its Rule 404 to implement a new strike interval program for stocks that are priced less than $2.50 and have an average daily trading volume of at least 1,000,000 shares per day for the 3 preceding calendar months.19 At this time, the Exchange proposes to adopt rules substantively identical to MIAX, which are set forth in proposed new Commentary .16 to Rule 903, and to make a conforming change to the table in Commentary .07 of Rule 903 to align that that table with the proposed rule text. Background Rule 903 describes the process and procedures for listing and trading series 18 The Exchange notes it currently lists quarterly expirations on certain ETF options pursuant to Rule 903 Commentary .09. 19 See Securities Exchange Act Release No. 98917 (November 13, 2023), 88 FR 80361 (November 17, 2023) (SR–MIAX–2023–36) (Order Approving a Proposed Rule Change To Amend Exchange Rule 404, Series of Option Contracts Open for Trading). Other options exchanges have since adopted similar programs. See also MIAX Rule 404, Interpretations and Policies .11 and .12. The Exchange notes that other options exchanges have since adopted similar programs. See, e.g., Securities Exchange Act Release No. 99113 (December 7, 2023) 88 FR 86413 (December 7, 2023) (SR–CBOE–2023–065) (immediately effective filing ‘‘[t]o adopt a Low Priced Stock Strike Price Interval Program’). PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 48927 of options on the Exchange.20 Rule 903 provides for a $2.50 Strike Price Program, where the Exchange may select up to 60 option classes on individual stocks for which the interval of strike prices will be $2.50 where the strike price is greater than $25.00 but less than $50.00.21 Rule 903 also provides for a $1 Strike Price Interval Program, where the interval between strike prices of series of options on individual stocks may be $1.00 or greater provided the strike price is $50.00 or less, but not less than $1.00.22 Additionally, Rule 903 provides for a $0.50 Strike Program.23 The interval of strike prices of series of options on individual stocks may be $0.50 or greater beginning at $0.50 where the strike price is $5.50 or less, but only for options classes whose underlying security closed at or below $5.00 in its primary market on the previous trading day and which have national average daily volume that equals or exceeds 1,000 contracts per day as determined by The Options Clearing Corporation during the preceding three calendar months. The listing of $0.50 strike prices is limited to options classes overlying no more than 20 individual stocks (the ‘‘$0.50 Strike Program’’) as specifically designated by the Exchange. The Exchange may list $0.50 strike prices on any other option classes if those classes are specifically designated by other securities exchanges that employ a similar $0.50 Strike Program under their respective rules. A stock will remain in the $0.50 Strike Program until otherwise designated by the Exchange.24 Proposal To Adopt Low-Priced Stock Interval Program The Exchange proposes to adopt a new strike interval program for underlying stocks that are not in the aforementioned $0.50 Strike Program (or the Short Term Option Series Program) 25 and that close below $2.50 and have an average daily trading volume of at least 1,000,000 shares per day for the three (3) preceding calendar months.26 The $0.50 Strike Program considers stocks that have a closing price at or below $5.00 whereas the Exchange’s proposal will consider 20 Per Rule 1.1, ‘‘series of options’’ refers to ‘‘all options contracts of the same class of options having the same expiration date and expiration price, and the same unit of trading.’’ 21 See Commentary .07 to Rule 903. 22 See Commentary .06 to Rule 903. 23 See Commentary .13 to Rule 903 (regarding the ‘‘$0.50 Strike Program’’). 24 Id. 25 See Commentary .07 to Rule 903. 26 See proposed Commentary .11 to Rule 903. E:\FR\FM\10JNN1.SGM 10JNN1 48928 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 stocks that have a closing price below $2.50. Currently, there is a subset of stocks that are not included in the $0.50 Strike Program as a result of the limitations of that program which provides that the listing of $0.50 strike prices shall be limited to option classes overlying no more than 20 individual stocks as specifically designated by the Exchange and requires a national average daily volume that equals or exceeds 1,000 contracts per day as determined by The Options Clearing Corporation during the preceding three calendar months.27 Therefore, the Exchange is proposing to implement a new strike interval program termed the ‘‘Low-Priced Stock Strike Price Interval Program.’’ 28 To be eligible for the inclusion in the Low-Priced Stock Strike Price Interval Program, an underlying stock must (i) close below $2.50 in its primary market on the previous trading day; and (ii) have an average daily trading volume of at least 1,000,000 shares per day for the three (3) preceding calendar months. The Exchange notes that there is no limit to the number of classes that will be eligible for inclusion in the proposed program, provided, of course, that the underlying stocks satisfy both the price and average daily trading volume requirements of the proposed program. The Exchange also proposes that after a stock is added to the Low-Priced Stock Strike Price Interval Program, the Exchange may list $0.50 strike price intervals from $0.50 up to $2.00.29 For the purpose of adding strikes under the Low-Priced Stock Strike Price Interval Program, the ‘‘price of the underlying stock’’ shall be measured in the same way as ‘‘the price of the underlying security’’ as set forth in Rule 903A(b)(i).30 Further, no additional series in $0.50 intervals may be listed if the underlying stock closes at or above $2.50 in its primary market. Additional series in $0.50 intervals may not be added until the underlying stock again closes below $2.50. The Exchange’s proposal addresses a gap in strike coverage for low-priced stocks. The $0.50 Strike Program considers stocks that close below $5.00 27 See Commentary .13 to Rule 903 (regarding the ‘‘$0.50 Strike Program’’). 28 The Exchange proposes to include a hyphen to the modifier ‘‘Low-Priced.’’ See proposed Commentary .16 to Rule 903. 29 While the Exchange may list new strikes on underlying stocks that meet the eligibility requirements of the new program the Exchange will exercise its discretion and will not list strikes on underlying stocks the Exchange believes are subject to imminent delisting from their primary exchange. 30 The Exchange notes this is the same methodology used in the $1 Strike Price Interval Program. See Commentary .06 to Rule 903. VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 and limits the number of option classes listed to no more than 20 individual stocks (provided that the open interest criteria is also satisfied). Whereas, the Exchange’s proposal has a narrower focus, with respect to the underlying’s stock price, and is targeted to those stocks that close below $2.50 and does not limit the number of stocks that may participate in the program (provided that the average daily trading volume is also satisfied). The Exchange does not believe that any market disruptions will be encountered with the addition of these new strikes. The Exchange represents that it has the necessary capacity and surveillance programs in place to support and properly monitor trading in the proposed Low-Priced Stock Strike Price Interval Program. The Exchange believes that its average daily trading volume requirement of 1,000,000 shares is a reasonable threshold to ensure adequate liquidity in eligible underlying stocks as it is substantially greater than the thresholds used for listing options on equities, American Depository Receipts (‘‘ADRs’’), and broad-based indexes. Specifically, underlying securities with respect to which put or call option contracts are approved for listing and trading on the Exchange must meet certain criteria as determined by the Exchange. One of those requirements is that trading volume (in all markets in which the underlying security is traded) has been at least 2,400,000 shares in the preceding twelve (12) months.31 Rule 915(d) provides the criteria for listing options on ADRs if they meet certain criteria and guidelines set forth in Rule 915. One of the requirements is that the average daily trading volume for the security in the U.S. markets over the three (3) months preceding the selection of the ADR for options trading is 100,000 or more shares.32 Finally, the Exchange may trade options on a broadbased index pursuant to Rule 19b–4(e) of the Act provided a number of conditions are satisfied. One of those conditions is that each component security that accounts for at least one percent (1%) of the weight of the index has an average daily trading volume of at least 90,000 shares during the last sixmonth period.33 Additionally, the Exchange proposes to amend the table in Commentary .11(e) to Rule 903 (the ‘‘Table’’) to insert a new column to harmonize the Exchange’s proposal to the strike intervals for Short Term Options Series as described in proposed Commentary 31 See Commentary .01(3) to Rule 915. Commentary .03 Rule 915 . 33 See Commentary .02(a)(7) to Rule 900C . 32 See PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 .16 to Rule 903. The Table is intended to limit the intervals between strikes for multiply listed equity options within the Short Term Options Series (‘‘STOS’’) Program that have an expiration date more than twenty-one days from the listing date. Specifically, the Table defines the applicable strike intervals for options on underlying stocks given the closing price on the primary market on the last day of the calendar quarter, and a corresponding average daily volume of the total number of options contracts traded in a given security for the applicable calendar quarter divided by the number of trading days in the applicable calendar quarter.34 However, the lowest share price column is titled ‘‘Less than $25.’’ The Exchange now proposes to insert a column titled ‘‘Less than $2.50’’ and to set the strike interval at $0.50 for each average daily volume tier represented in the Table. Also, the Exchange proposes to amend the heading of the column currently titled ‘‘Less than $25,’’ to ‘‘$2.50 to less than $25’’ as a result of the adoption of the new proposed column, ‘‘Less than $2.50.’’ The Exchange believes this change will remove any potential conflict between the strike intervals under the STOS Program and those described herein under the Exchange’s proposal. The Exchange recognizes that its proposal will introduce new strikes in the marketplace and further acknowledges that there has been significant effort undertaken by the industry to curb strike proliferation. For example, the Exchange filed a proposal focused on the removal, and prevention of the listing, of strikes which are extraneous and do not add value to the marketplace (the ‘‘Strike Interval Proposal’’).35 The Strike Interval Proposal was intended to remove repetitive and unnecessary strike listings across the weekly expiries. Specifically, the Strike Interval Proposal aimed to reduce the density of strike intervals that would be listed in the later weeks, by creating limitations for intervals between strikes which have an expiration date more than twenty-one days from the listing date.36 The Strike Interval Proposal took into account OCC customer-cleared volume, using it as an appropriate proxy for demand. The Strike Interval Proposal was designed to maintain strikes where there was customer demand and eliminate strikes 34 See Securities Exchange Release Act No. 92336 (July 7, 2021), 86 FR 36827 (July 13, 2021) (SR– NYSEAMER–2021–32) (immediately effective filing to amend Rule 903 to limit Short Term Options Series intervals). 35 Id. 36 Id. E:\FR\FM\10JNN1.SGM 10JNN1 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices where there wasn’t. At the time of its proposal, the Exchange estimated that the Strike Interval Proposal would reduce the number of strikes it listed by 81,000.37 The Exchange proposes to amend the Table to define the strike interval at $0.50 for underlying stocks with a share price of less than $2.50.38 The Exchange believes this amendment will harmonize the Exchange’s proposal with the Strike Interval Proposal described above. The Exchange recognizes that its proposal will moderately increase the total number of option series available on the Exchange. However, the Exchange’s proposal is designed to only add strikes where there is investor demand,39 which will improve market quality.40 The Exchange does not believe that its proposal contravenes the industry’s efforts to curtail unnecessary strikes. The Exchange’s proposal is targeted to only underlying stocks that close at less than $2.50 and that also meet the average daily trading volume requirement. Additionally, because the strike increment is $0.50 there are only a total of four strikes that may be listed under the program ($0.50, $1.00, $1.50, and $2.00) for an eligible underlying stock. Finally, if an eligible underlying stock is in another program (e.g., the $0.50 Strike Program or the $1 Strike Price Interval Program) the number of strikes that may be added is further reduced if there are pre-existing strikes as part of another strike listing program. Therefore, the Exchange does not believe that it will list any unnecessary or repetitive strikes as part of its 37 Id. 38 See proposed Commentary .11(e) to Rule 903. proposed Commentary .16 to Rule 903, which requires that an underlying stock have an average daily trading volume of 1,000,000 shares for the three (3) preceding months to be eligible for inclusion in the Low-Priced Stock Strike Price Interval Program. 40 For example, MIAX determined that, as of August 9, 2023, 106 symbols met the criteria of the Low-Priced Stock Program. Of those symbols 36 are currently in the $1 Strike Price Interval Program with $1.00 and $2.00 strikes listed. Further, MIAX determined that this would add the $0.50 and $1.50 strikes for these symbols for the current expiration terms. The remaining 70 symbols eligible under MIAX’s proposal would have $0.50, $1.00, $1.50, and $2.00 strikes added to their current expiration terms. Therefore, for the 106 symbols eligible for the Low-Priced Stock Strike Price Interval Program on MIAX a total of approximately 3,250 options would be added. Finally, as of August 16, 2023, MIAX listed 1,090,414 options, therefore the additional options that would be listed under this proposal would represent a very minor increase of 0.298% in the number of options. See Securities Exchange Act Release No. 98917 (November 13, 2023), 88 FR 80361, 80362 (November 17, 2023) (SR–MIAX–2023–36) (Order Approving a Proposed Rule Change To Amend Exchange Rule 404, Series of Option Contracts Open for Trading). lotter on DSK11XQN23PROD with NOTICES1 39 See VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 program, and that the strikes that will be listed will improve market quality and satisfy investor demand. The Exchange further believes that the Options Price Reporting Authority (‘‘OPRA’’), has the necessary systems capacity to handle any additional messaging traffic associated with this proposed rule change. The Exchange also believes that ATP Holders will not have a capacity issue as a result of the proposed rule change. Finally, the Exchange believes that the additional options will serve to increase liquidity, provide additional trading and hedging opportunities for all market participants, and improve market quality. Expand the STOS Program Add Wednesday Expirations for Options on Certain ETPs The Exchange proposes to amend Rule 903, Commentary .10(e) to expand the STOS Program to permit the listing of two Wednesday expirations for options on United States Oil Fund, LP (‘‘USO’’), United States Natural Gas Fund, LP (‘‘UNG’’), SPDR Gold Shares (‘‘GLD’’), iShares Silver Trust (‘‘SLV’’), and iShares 20+ Year Treasury Bond ETF (‘‘TLT’’) (collectively ‘‘Exchange Traded Products’’ or ‘‘ETPs’’). This is a competitive filing based on a rule change submitted by Nasdaq ISE, LLC (‘‘Nasdaq ISE’’) and approved by the Commission.41 Currently, as set forth in Rule 903(h), after an option class has been approved for listing and trading on the Exchange, the Exchange may open for trading on any Thursday or Friday that is a business day (‘‘Short Term Option Opening Date’’) series of options on that class that expire at the close of business on each of the next five Fridays that are business days and are not Fridays on which monthly options series or Quarterly Options Series expire (‘‘Friday Short Term Option Expiration Dates’’). The Exchange may have no more than a total of five Friday Short Term Option Expiration Dates (‘‘Short Term Option Weekly Expirations’’). If the Exchange is not open for business on the respective Thursday or Friday, the Short Term Option Opening Date for 41 See Securities Exchange Act Release No. 98905 (November 13, 2023) (SR–ISE–2023–11) (order approving expansion of Short Term Option Series Program to permit the listing of Wednesday Expirations for options on certain ETPs). See also Nasdaq ISE Supplementary Material to Options 4, Section 5. The Exchange notes that other options exchanges have since adopted similar rule changes. See, e.g., Securities Exchange Act Release No. 99035 (November 29, 2023), 88 FR 84367 (December 5, 2023) (SR–Cboe–2023–062) (immediately effective filing to permit Wednesday expiration for options on certain ETPs). PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 48929 Short Term Option Weekly Expirations will be the first business day immediately prior to that respective Thursday or Friday. Similarly, if the Exchange is not open for business on a Friday, the Short Term Option Expiration Date for Short Term Option Weekly Expirations will be the first business day immediately prior to that Friday. Additionally, the Exchange may open for trading series of options on the symbols provided in Table 1 of Commentary .10(f) to Rule 903 that 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 (‘‘Short Term Option Daily Expirations’’). For those symbols listed in Table 1, the Exchange may have no more than a total of two Short Term Option Daily Expirations for each of Monday, Tuesday, Wednesday, and Thursday expirations at one time. At this time, the Exchange proposes to expand the Short Term Option Daily Expirations to permit the listing and trading of options on USO, UNG, GLD, SLV, and TLT expiring on Wednesdays. The Exchange proposes to permit two Short Term Option Expiration Dates beyond the current week for each Wednesday expiration at one time. In order to effectuate the proposed changes, the Exchange would add USO, UNG, GLD, SLV, and TLT to Table 1 of Commentary .10(f) to Rule 903, which specifies each symbol that qualifies as a Short Term Option Daily Expiration.42 The proposed Wednesday USO, UNG, GLD, SLV, and TLT expirations will be similar to the current Wednesday Short Term Option Daily Expirations on SPDR® S&P 500® ETF (‘‘SPY’’), PowerShares QQQ Trust (‘‘QQQ’’), and iShares Russell 2000 Index Fund (‘‘IWM’’) SPY, QQQ, and IWM, as set forth in Rule 903(h), such that the Exchange may open for trading on any Tuesday or Wednesday that is a business day (beyond the current week) series of options on USO, UNG, GLD, SLV, and TLT to expire on any Wednesday of the month that is a business day and is not a Wednesday in which standard expiration option series, Monthly Options Series, or Quarterly Options Series expire (‘‘Wednesday USO Expirations,’’ ‘‘Wednesday UNG Expirations,’’ ‘‘Wednesday GLD Expirations,’’ ‘‘Wednesday SLV Expirations,’’ and ‘‘Wednesday TLT Expirations’’) (collectively, ‘‘Wednesday 42 See proposed Commentary .10(f) to Rule 903 (updates to Table 1). E:\FR\FM\10JNN1.SGM 10JNN1 48930 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 ETP Expirations’’).43 In the event Short Term Option Daily Expirations expire on a Wednesday and that Wednesday is the same day that a standard expiration option series, Monthly Options Series, or Quarterly Options Series or expires, the Exchange would skip that week’s listing and instead list the following week; the two weeks would therefore not be consecutive. Today, Wednesday expirations in SPY, QQQ, and IWM similarly skip the weekly listing in the event the weekly listing expires on the same day in the same class as a Quarterly Option Series. The Exchange notes that USO, UNG, GLD, SLV, and TLT Friday expirations would continue to have a total of five Short Term Option Expiration Dates, provided those Friday expirations are not Fridays in which standard expiration option series, Monthly Options Series, or Quarterly Options Series expire (‘‘Friday Short Term Option Expiration Dates’’). Like Wednesday SPY, QQQ, and IWM Short Term Option Daily Expirations within Rule 903(h) and Commentary .10(f) to that Rule, the Exchange proposes that it may open for trading on any Tuesday or Wednesday that is a business day series of options on USO, UNG, GLD, SLV, and TLT 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 option series, Monthly Options Series, or Quarterly Options Series expire. The interval between strike prices for the proposed Wednesday ETP Expirations will be the same as those for the current Short Term Option Series for Friday expirations applicable to the STOS Program.44 Specifically, the Wednesday ETP Expirations will have a strike interval of $0.50 or greater for strike prices below $100, $1 or greater for strike prices between $100 and $150, and $2.50 or greater for strike prices above $150.45 As is the case with other equity options listed pursuant to the STOS Program, the Wednesday ETP Expirations series will be P.M.-settled. Pursuant to Rule 903(h), with respect to the STOS Program, a Wednesday expiration series shall expire on the first business day immediately prior to that Wednesday, e.g., Tuesday of that week if the Wednesday is not a business day. 43 While the relevant rule text in Commentary .10(f) to Rule 903 also indicates that the Exchange will not list such expirations on a Wednesday that is a business day in which standard expiration options series expire, practically speaking this would not occur. 44 See Commentary .10(e) to Rule 903. 45 Id. VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 Currently, for each option class eligible for participation in the STOS Program, the Exchange is limited to opening thirty (30) series for each expiration date for the specific class.46 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.47 With the proposed changes, this thirty (30) series restriction would apply to Wednesday USO, UNG, GLD, SLV, and TLT Short Term Option Daily Expirations as well. In addition, the Exchange will be able to list series that are listed by other exchanges, assuming that they file similar rules with the Commission to list Wednesday ETP Expirations. With this proposal, Wednesday ETP Expirations would be treated similarly to existing Wednesday SPY, QQQ, and IWM Expirations.48 With respect to standard expiration options series, Short Term Option Daily Expirations will be permitted to expire in the same week in which standard expiration option series, on the same class expire. Not listing Short Term Option Daily Expirations for one week every month because there was a monthly on that same class on the Friday of that week would create investor confusion. Further, as with Wednesday SPY, QQQ, and IWM Expirations, the Exchange would not permit Wednesday ETP Expirations to expire on a business day in which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire. Therefore, all Short Term Option Daily Expirations would 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. The Exchange believes that it is reasonable to not permit two expirations on the same day in which a standard expiration option series, Monthly Options Series, or a Quarterly Options Series would expire because those options would be duplicative of each other. 46 See Commentary .07(c) to Rule 903. 47 Id. 48 See proposed Commentary .10(f) to Rule 903. (proving that, with respect to Wednesday Expirations, the Exchange may open for trading on any Tuesday or Wednesday that is a business day series of options on the symbols provided in Table 1 above that expire at the close of business on each of the next two Wednesdays that are business days and are not business days on which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire’’). PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 The Exchange does not believe that any market disruptions will be encountered with the introduction of Wednesday ETP Expirations. The Exchange has the necessary capacity and surveillance programs in place to support and properly monitor trading in the proposed Wednesday ETP Expirations. The Exchange currently trades P.M.-settled Short Term Option Series that expire on Wednesday for SPY, QQQ, and IWM 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 Wednesday for SPY, QQQ, and IWM. Add Tuesday and Thursday Expirations for Options on IWM The Exchange proposes to expand the STOS Program to permit the listing and trading of options series with Tuesday and Thursday expirations for options on IWM, specifically permitting two expiration dates for the proposed Tuesday and Thursday expirations in IWM. This is a competitive filing based on a rule change submitted by Nasdaq ISE and approved by the Commission.49 As noted above, Table 1 in Commentary .10(f) to Rule 903, specifies each symbol that currently qualifies as a Short Term Option Daily Expiration.50 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 49 See Securities Exchange Act Release No. 99946 (April 11, 2024), 89 FR 27471 (April 17, 2024) (SR– ISE–2024–06) (order approving expansion of Short Term Option Series Program to permit the listing of Tuesday and Thursday expirations in IWM). See also Nasdaq ISE Options 4, Section 5, Supplementary Material .03. The Exchange notes that other options exchanges have since adopted similar rule changes. See, e.g., Securities Exchange Act Release No. 99981 (April 17, 2024), 89 FR 30425 (April 23, 2024) (SR–CboeEDGX–2024–022 (immediately effective filing to permit Tuesday and Thursday expiration for options on IWM). 50 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 on 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 Commentary .10(f) to Rule 903. E:\FR\FM\10JNN1.SGM 10JNN1 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 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.51 The listing and trading of Tuesday and Thursday Short Term Option Daily Expirations would be subject to Rule 903(h). Today, Tuesday Short Term Option Daily Expirations in SPY and 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’’).52 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’’).53 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.54 The interval between strike prices for the proposed Tuesday and Thursday 51 The Exchange proposes to amend the Tuesday and Thursday expirations for IWM from ‘‘0’’ to ‘‘2’’ to permit Tuesday and Thursday expirations for options on IWM listed pursuant to the Short Term Option Series. See proposed Commentary .10(f) to Rule 903. 52 See Commentary .10(f) to Rule 903. 53 Id. 54 Today, IWM may trade on Mondays and Wednesdays, in addition to Fridays, as is the case for all options series. VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 IWM Short Term Option Daily Expirations will be the same as those for Tuesday and Thursday IWM Short Term Option Daily Expirations in SPY and QQQ, applicable to the Short Term Option Series Program.55 Specifically, 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 Commentary .10(f) to Rule 903, 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. 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.56 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.57 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 monthly option series, Short Term Option Daily Expirations expire in the same week in which monthly option series on the same class expire.58 Further, as is the case today with other Tuesday and Thursday Short Term Option Daily Expirations, the Exchange would not permit Tuesday and Thursday Short Term Option Daily Expirations to expire on a business day in which monthly options series or Quarterly Options Series expire.59 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 55 See Commentary .10(f) to Rule 903. 56 See Commentary .10(a) to Rule 903. 57 See Commentary .10(b) to Rule 903. 58 See Commentary .10(e) to Rule 903. 59 See Commentary .10(f) to Rule 903. PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 48931 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 Tuesday and Thursday for SPY and QQQ. Impact of Proposal To Add Tuesday and Thursday Expirations for Options on IWM 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 table sets forth the percentage of weekly listings as compared to monthly (standard expiration), quarterly, and Long-Term Option Series in 2023 in the options industry.60 The Exchange notes that during this time period all options exchanges mitigated weekly strike intervals. NUMBER OF STRIKES—2023 Expiration Monthly ................................. Weekly .................................. LEAP ..................................... Quarterly ............................... Percent of total series (%) 62.82 17.22 17.77 2.20 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 60 Per Nasdaq ISE, this information was sourced from The Options Clearing Corporation (‘‘OCC’’). The information includes time averaged data for all 17 options markets through December 8, 2023. See Securities Exchange Act Release No. 99604 (February 26, 2024), 89 FR 15235 (March 1, 2024) (SR–ISE–2024–06). E:\FR\FM\10JNN1.SGM 10JNN1 48932 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices strikes for IWM.61 With respect to the impact to the Short Term Option Series Program on IWM overall, the impact would be a 20% increase in strikes.62 With respect to the impact to the Short Term Options Series Program overall, the impact would be a 0.1% increase in strikes.63 ATP Holders will continue to be able to expand hedging tools because all days of the week would be available to permit ATP Holders to tailor their investment and hedging needs more effectively in IWM. NUMBER OF STRIKES—2023 Expiration Monthly ................................. Weekly .................................. LEAP ..................................... Quarterly ............................... Percent of total series (%) 35.13 48.30 12.87 3.70 Weeklies comprise 48.30% of the total volume of options contracts.64 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. lotter on DSK11XQN23PROD with NOTICES1 2. Statutory Basis The Exchange believes that its proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.65 Specifically, 61 Nasdaq ISE sourced this information, which are estimates, from LiveVol®. The information includes data for all 17 options markets as of January 3, 2024. See id. 62 Nasdaq ISE sourced this information, which are estimates, from LiveVol®. The information includes data for all 17 options markets as of January 3, 2024. See id. 63 Nasdaq ISE sourced this information, which are estimates, from LiveVol®. The information includes data for all 17 options markets as of January 3, 2024. See id. 64 This table sets forth industry volume. Weeklies comprise 48.30% of volume while only comprising 17.22% of the strikes. Nasdaq ISE sourced this information from OCC. The information includes data for all 17 options markets through December 8, 2023. See Securities Exchange Act Release No. 99604 (February 26, 2024), 89 FR 15235 (March 1, 2024) (SR–ISE–2024–06). 65 15 U.S.C. 78f(b) VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 the Exchange believes that its proposed rule change is consistent with Section 6(b)(5) 66 requirements in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in, securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. Monthly Options Series Program 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 timings 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 month’s end 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 Options Series, which will 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 66 15 PO 00000 67 Compare proposed Commentary .11 to Rule 903 with Commentary .09 to Rule 903. U.S.C. 78f(b)(5). Frm 00066 Fmt 4703 substantively the same as the current terms of Quarterly Options Series.67 Quarterly Options Series expire on the last business day of a calendar quarter, which is the last business day of every third month. The proposed Monthly Options Series would fill the gaps between Quarterly Options Series expirations by permitting series to expire on the last business day of every month, rather than every third month. The proposed Monthly Options Series may be listed in accordance with the same terms as Quarterly Options Series, including permissible strikes. As is the case with Quarterly Options Series, no Short Term Options Series may expire on the same day as a Monthly Options Series. Similarly, as proposed, no Monthly Options Series may expire on the same day as a Quarterly Options Series. The Exchange believes preventing listing series with concurrent expirations in a class will eliminate potential investors confusion and thus protect investors and the public interest. Given that Quarterly Options Series the Exchange currently lists are essentially Monthly Options Series that can expire at the end of only certain calendar months, the Exchange believes it is reasonable to list Monthly Options Series in accordance with the same terms, as it will promote just and equitable principles of trade. The Exchange believes limiting Monthly Options Series to five classes will ensure the addition of these new series will have a negligible impact on the Exchange 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 Options Series and Quarterly Options Series). Therefore, options positions within ETF or index option classes for which Monthly Options Series are listed, regardless of their expirations, would Sfmt 4703 E:\FR\FM\10JNN1.SGM 10JNN1 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 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. As mentioned above, the Exchange currently trades Quarterly Options Series in certain ETF classes, which expire at the close of business at the end of three 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 Options 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. Finally, the Exchange believes that the proposed technical change to Rule 903, Commentary.09 would add clarity, transparency and internal consistent to Exchange rules. Low-Priced Stock Strike Price Interval Program The Exchange believes the introduction of the Low-Priced Stock Strike Price Interval Program 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. In particular, the Exchange believes its proposal promotes just and equitable principles of trade and removes impediments to and perfects the mechanisms of a free and open market and a national market system as the Exchange has identified a subset of stocks that are trading under $2.50 and do not have meaningful strikes available. For example, on August 9, 2023, symbol SOND closed at $0.50 and had open interest of over 44,000 contracts and an average daily VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 trading volume in the underlying stock of over 1,900,000 shares for the three preceding calendar months.68 Currently the lowest strike listed is for $2.50, making the lowest strike 400% away from the closing stock price. Another symbol, CTXR, closed at $0.92 on August 9, 2023, and had open interest of 63,000 contracts and an average daily trading volume in the underlying stock of over 1,900,000 shares for the three preceding calendar months.69 Similarly, the lowest strike listed is for $2.50, making the lowest strike more than 170% away from the closing stock price. Currently, such products have no at-themoney options, as well as no in-themoney calls or out-of-the-money puts. The Exchange’s proposal will provide additional strikes in $0.50 increments from $0.50 up to $2.00 to provide more meaningful trading and hedging opportunities for this subset of stocks. Given the increased granularity of strikes as proposed under the Exchange’s proposal out-of-the-money puts and in-the-money calls will be created. The Exchange believes this will allow market participants to tailor their investment and hedging needs more effectively. The Exchange believes its proposal promotes just and equitable principles of trade and removes impediments to and perfects the mechanisms of a free and open market and a national market system and, in general, protects investors and the public interest by adding strikes that improves market quality and satisfies investor demand. The Exchange does not believe that the number of strikes that will be added under the program will negatively impact the market. Additionally, the proposal does not run counter to any previous efforts to curb strike proliferation as those efforts focused on the removal and prevention of extraneous strikes where there was no investor demand. The Exchange’s proposal requires the satisfaction of an average daily trading volume threshold in addition to the underlying stock closing at a price below $2.50 to be eligible for the program. The Exchange believes that the average daily trading volume threshold of the program ensures that only strikes with investor demand will be listed and fills a gap in strike interval coverage as described above. Further, being that the strike interval is $0.50, there are only a maximum of four strikes that may be added ($0.50, $1.00, $1.50, and $2.00). 68 See Yahoo! Finance, https:// finance.yahoo.com/quote/SOND/history?p=SOND (last visited August 10, 2023). 69 Id. PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 48933 Therefore, the Exchange does not believe that its proposal will undermine any previous efforts to eliminate repetitive and unnecessary strikes in any fashion. The Exchange believes that the proposed program’s average daily trading volume threshold promotes just and equitable principles of trade and removes impediments to and perfects the mechanisms of a free and open market and a national market system and, in general, protects investors and the public interest as it is designed to permit only those stocks with demonstrably high levels of trading activity to participate in the program. The Exchange notes that the proposed program’s average daily trading volume requirement is substantially greater than the average daily trading requirement currently in place on the Exchange for options on equity underlyings,70 ADRs,71 and broad-based indexes.72 The Exchange also believes the proposed rule change is consistent with Section 6(b)(1) of the Act,73 which provides that the Exchange be organized and have the capacity to be able to carry out the purposes of the Act and to enforce compliance by the Exchange’s ATP Holders and persons associated with its ATP Holders with the Act, the rules and regulations thereunder, and the rules of the Exchange. The proposed rule change allows the Exchange to respond to customer demand to provide meaningful strikes for low priced stocks. The Exchange does not believe that the proposed rule would create any capacity issue or negatively affect market functionality. Additionally, the Exchange represents that it has the necessary systems capacity to support the new options series and handle additional messaging traffic associated with this proposed rule change. The Exchange also believes that its ATP Holders will not experience any capacity issues as a result of this proposal. In addition, the Exchange represents that it believes that additional strikes for low priced stocks will serve to increase liquidity available as well as improve price efficiency by providing more trading opportunities for all market participants. The Exchange believes that the proposed rule change will benefit investors by giving them increased opportunities to execute their investment and hedging decisions. Finally, the Exchange believes its proposal is designed to prevent 70 See Commentary .01(3) to Rule 915. Commentary .03 to Rule 915. 72 See Commentary .02(a)(7) to Rule 900C. 73 15 U.S.C. 78f(b)(1). 71 See E:\FR\FM\10JNN1.SGM 10JNN1 48934 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices fraudulent and manipulative acts and practices as options may only be listed on underlyings that satisfy the listing requirements of the Exchange as described in Rule 915. Specifically, Rule 915 requires that underlying securities for which put or call option contracts are approved for listing and trading on the Exchange must be duly registered (with the Commission) and be an ‘‘NMS stock’’ (as defined in Rule 600 of Regulation NMS under the Act). Further, the underlying security is characterized by a substantial number of outstanding shares that are widely held and actively traded. In particular, Rule 915, provides that absent exceptional circumstances, an underlying security will not be selected for options transactions unless: (1) there are a minimum of 7,000,000 shares of the underlying security which are owned by persons other than those required to report their stock holdings under Section 16(a) of the Act; (2) there are a minimum of 2,000 holders of the underlying security; (3) the issuer is in compliance with any applicable requirements of the Act; and (4) trading volume (in all markets in which the underlying security is traded) has been at least 2,400,000 shares in the preceding 12 months. The Exchange’s proposal does not impact the eligibility of an underlying stock to have options listed on it, but rather addresses only the listing of new additional option classes on an underlying listed on the Exchange in accordance with the Exchange’s listings rules. As such, the Exchange believes that the listing requirements described in Rule 915 address potential concerns regarding possible manipulation. Additionally, in conjunction with the proposed average daily volume requirement described herein, the Exchange believes any possible market manipulation is further mitigated. lotter on DSK11XQN23PROD with NOTICES1 Expand STOS Program Add Wednesday Expirations for Options on Certain ETPs The Exchange believes that the proposal to expand the STOS Program to allow the Wednesday ETP Expirations (subject to the proposed limitation of two expirations beyond the current week) is consistent with the Act for the following reasons. Like Wednesday expirations in SPY, QQQ, and IWM, the proposed Wednesday ETP Expirations would protect investors and the public interest by providing the investing public and other market participants more choice and flexibility to closely tailor their investment and hedging decisions in these options and VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 allow for a reduced premium cost of buying portfolio protection, thus allowing them to better manage their risk exposure. The Exchange represents that it has an adequate surveillance program in place to detect manipulative trading in the proposed option expirations, in the same way that it monitors trading in the current Short Term Option Series for Wednesday SPY, QQQ and IWM expirations. The Exchange also represents that it has the necessary system capacity to support the new expirations. Finally, the Exchange does not believe that any market disruptions will be encountered with the introduction of these option expirations. As discussed above, the Exchange believes that its proposal is a modest expansion of weekly expiration dates for GLD, SLV, USO, UNG, and TLT given that it will be limited to two Wednesday expirations beyond the current week. Lastly, the Exchange believes its proposal will not be a strain on liquidity providers because of the multi-class nature of GLD, SLV, USO, UNG, and TLT and the available hedges in highly correlated instruments, as described above. The Exchange believes that the proposal is consistent with the Act as the proposal would overall add a small number of Wednesday ETP Expirations by limiting the addition of two Wednesday expirations beyond the current week. The addition of Wednesday ETP Expirations would remove impediments to and perfect the mechanism of a free and open market by encouraging Market Makers to continue to deploy capital more efficiently and improve market quality. The Exchange believes that the proposal will allow market participants to expand hedging tools and tailor their investment and hedging needs more effectively in USO, UNG, GLD, SLV, and TLT as these funds are most likely to be utilized by market participants to hedge the underlying asset classes. Similar to Wednesday SPY, QQQ, and IWM expirations, the introduction of Wednesday ETP Expirations is consistent with the Act as it will, among other things, expand hedging tools available to market participants and allow for a reduced premium cost of buying portfolio protection. The Exchange believes that Wednesday ETP Expirations will allow market participants to purchase options on USO, UNG, GLD, SLV, and TLT based on their timing as needed and allow them to tailor their investment and hedging needs more effectively, thus 9 allowing them to better manage their risk exposure. Today, the Exchange lists PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 Wednesday SPY, QQQ, and IWM Expirations.74 The Exchange believes the STOS Program has been successful to date and that Wednesday ETP 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 STOS Program has expanded the landscape of hedging. There are no material differences in the treatment of Wednesday SPY, QQQ, and IWM expirations compared to the proposed Wednesday ETP Expirations. Given the similarities between Wednesday SPY, QQQ, and IWM expirations and the proposed Wednesday ETP Expirations, the Exchange believes that applying the provisions in Commentary .10(f) to Rule 903, that currently apply to Wednesday SPY, QQQ, and IWM expirations is justified and will benefit investors and minimize investor confusion by providing such expirations in a continuous and uniform manner. Add Tuesday and Thursday Expirations for Options on IWM 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 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 74 See E:\FR\FM\10JNN1.SGM Commentary .10(f) to Rule 903. 10JNN1 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices Tuesday and Thursday Short Term Daily Expirations.75 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.76 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.77 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 Thursday IWM Short Term Daily Expirations. lotter on DSK11XQN23PROD with NOTICES1 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed changes would allow the Exchange to compete on more equal footing with other options exchanges that have already adopted substantively identical rules as noted herein. Thus, the Exchange believes this proposal would encourage competition. Monthly Options Series Program The Exchange does not believe the proposed rule change to list Monthly Options Series will impose any burden 75 Id. on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act, as any Monthly Options Series the Exchange lists for trading will be available in the same manner for all market participants who wish to trade such options. The Exchange notes the proposed terms of the 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.78 Quarterly Options Series expire on the last business day of a calendar quarter, which is the last business day of every third month, making the concept of Monthly Options Series in a limited number of index and ETF options not novel. The proposed Monthly Options Series will fill the gaps between Quarterly Options Series expirations by permitting series to expire on the last business day of every month, rather than every third month. The proposed Monthly Options Series may be listed in accordance with the same terms as Quarterly Options Series, including permissible strikes. Monthly Options Series will trade on the Exchange in the same manner as other options in the same class. The Exchange does not believe the proposed rule change to list Monthly Options Series will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act, as nothing prevents other options exchanges from proposing similar rules. As discussed above, the proposed rule change would permit listing of Monthly Options Series in five index or ETF options, as well as any other classes that other exchanges may list under similar programs. To the extent that the availability of Monthly Options Series makes the Exchange a more attractive marketplace to market participants at other exchanges, market participants are free to elect to become market participants on the Exchange. The Exchange believes that the proposed rule change may relieve any burden on, or otherwise promote, competition. Similar to Short Term Options Series and Quarterly Options Series, the Exchange believes the introduction of Monthly Options Series will not impose an undue burden on competition. The Exchange believes that it will, among other things, expand hedging tools available to market participants. The Exchange believes 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. 76 Id. 77 See Rule 903(h). VerDate Sep<11>2014 17:13 Jun 07, 2024 78 See Jkt 262001 PO 00000 Commentary .09 to Rule 903. Frm 00069 Fmt 4703 Sfmt 4703 48935 The Exchange does not believe the proposed rule change to provide positions in Monthly Options Series will be aggregated with positions in options contracts on the same underlying index or security for purposes of determining compliance with position (and exercise) limits will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act, as it will apply in the same manner to all market participants. The Exchange proposes to apply position (and exercise) limits to Monthly Options Series in the same manner it applies position limits to series with other expirations (Short Term Options Series and Quarterly Options Series). Therefore, positions in options in a class of ETF or index options, regardless of their expirations, would continue to be subject to existing position (and exercise) limits. Additionally, the Exchange does not believe this proposed 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. Consequently, the Exchange does not believe that the proposed change implicates competition at all. Additionally, and as stated above, this proposal to accommodate the listing of options series that would expire at the close of business on the last business day of a calendar month is substantively similar to that of at least one other options exchange.79 Low-Priced Stock Interval Program The Exchange does not believe that its proposed rule change will impose any burden on intramarket competition as the Rules of the Exchange apply equally to all ATP Holders and all of whom may trade the new proposed strikes if they so choose. Instead, the Exchange believes that investors and market participants will significantly benefit from the availability of finer strike price intervals for stocks priced below $2.50, which will allow them to tailor their investment and hedging needs more effectively. The Exchange’s proposal is substantively identical to MIAX Interpretations and Policies .11 and .12 to Rule 404.80 The Exchange does not believe that its proposed rule change will impose any 79 See supra note 4 (regarding SR–CBOE–2023– 049). 80 See supra note 19 (regarding SR–MIAX–2023– 36). E:\FR\FM\10JNN1.SGM 10JNN1 48936 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices burden on intermarket competition, as nothing prevents other options exchanges from proposing similar rules to list and trade options on low priced stocks. Rather the Exchange believes that its proposal will promote intermarket competition, as the Exchange’s proposal will result in additional opportunities for investors to achieve their investment and trading objectives, to the benefit of investors, market participants, and the marketplace in general. Expand STOS Program lotter on DSK11XQN23PROD with NOTICES1 Add Wednesday Expirations for Options on Certain ETPs The Exchange does not believe that its proposed rule change to permit Wednesday expirations in certain ETPs will impose any undue burden on competition. In this regard and as indicated above, the Exchange notes that this proposed rule change is being proposed as a competitive response to the already-approved rule change submitted by Nasdaq ISE.81 While the proposal will expand the Short Term Options Expirations to allow Wednesday ETP Expirations to be listed on the Exchange, the Exchange believes that this limited expansion for Wednesday expirations for options on USO, UNG, GLD, SLV, and TLT will not impose an undue burden on competition; rather, it will meet customer demand. The Exchange believes that market participants will continue to be able to expand hedging tools and tailor their investment and hedging needs more effectively in USO, UNG, GLD, SLV, and TLT given multiclass nature of these products and the available hedges in highly correlated instruments, as described above. Similar to Wednesday SPY, QQQ, and IWM expirations, the introduction of Wednesday ETP 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 allow for a reduced premium cost of buying portfolio protection. The Exchange believes that Wednesday ETP Expirations will allow market participants to purchase options on USO, UNG, GLD, SLV, and TLT based on their timing as needed and allow them to tailor their investment and hedging needs more effectively. The Exchange does not believe the proposal will impose any burden on inter-market competition, as nothing prevents the other options exchanges from proposing similar rules to list and trade Wednesday ETP Expirations. Further, the Exchange does not believe the proposal will impose any burden on intra-market competition, as all market participants will be treated in the same manner under this proposal. Add Tuesday and Thursday Expirations for Options on IWM 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 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.82 Additionally, as noted above, the Commission recently approved a substantively identical proposal of another exchange.83 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 No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the 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 prior to 30 days from the date on which it was filed, or such shorter 82 See 81 See supra note 41 (regarding SR–ISE–2023–11). VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 83 See PO 00000 Commentary .10(f) to Rule 903. supra note 49 (regarding SR–ISE–2024–06). Frm 00070 Fmt 4703 Sfmt 4703 time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 84 and Rule 19b–4(f)(6) thereunder.85 A proposed rule change filed under Rule 19–4(f)(6) 86 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),87 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay. The Exchange states that waiver of the operative delay would allow the Exchange to implement, without delay, its proposal to: (i) adopt a Monthly Option Series Program; (ii) adopt a Low-Priced Strike Priced Interval Program; (iii) permit the listing and trading of five additional classes with Short Term Option Daily Expirations, specifically, by permitting the listing of two Wednesday expirations for options on certain ETPs; and (iv) permit Tuesday and Thursday expirations on IWM. The Exchange further states the proposed rule change does not present any new or novel issues, as at least one other exchange permits each of the proposed programs and expirations.88 Because the proposal does not raise any new or novel issues, the Commission believes that waiver of the 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 proposal operative upon filing.89 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 84 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) 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. 86 17 CFR 240.19b–4(f)(6). 87 17 CFR 240.19b–4(f)(6)(iii). 88 See supra notes 4, 19, 41, and 49. 89 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). 85 17 E:\FR\FM\10JNN1.SGM 10JNN1 Federal Register / Vol. 89, No. 112 / Monday, June 10, 2024 / Notices Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 90 of the Act to determine whether the proposed rule change 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: lotter on DSK11XQN23PROD with NOTICES1 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– NYSEAMER–2024–34 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–NYSEAMER–2024–34. 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 90 15 U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 17:13 Jun 07, 2024 Jkt 262001 48937 submissions should refer to file number SR–NYSEAMER–2024–34 and should be submitted on or before July 1, 2024. set forth in sections A, B, and C below, of the most significant parts of such statements. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.91 Sherry R. Haywood, Assistant Secretary. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change [FR Doc. 2024–12592 Filed 6–7–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–100273; File No. SR– NYSEARCA–2024–43] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 6.4–O June 4, 2024. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on May 30, 2024, NYSE Arca, Inc. (‘‘NYSE Arca’’ 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 self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 6.4–O (Series of Options Open For Trading) and to make certain conforming changes. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, 91 17 CFR 200.30–3(a)(12), (59). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 1. Purpose The purpose of this filing is to amend Rule 6.4–O (Series of Options Open For Trading) to adopt a Monthly Options Series Program; to adopt a Low-Priced Strike Priced Interval Program; to permit the listing and trading of five additional classes with Short Term Option Daily Expirations; to permit Tuesday and Thursday expirations for certain classes with Short Term Option Daily Expirations; and to permit the listing of two Wednesday expirations for options on certain ETPs. Each of the proposed changes would align Exchange rules with already-approved and implemented rules in place on at least one other options exchange as noted herein. Monthly Options Series Program 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’’). This is a competitive filing that is based on a proposal recently submitted Cboe Exchange, Inc (‘‘CBOE’’).4 Pursuant to proposed Commentary .09 to Rule 6.4–O and Rule 5.19–O(a)(3)(B), 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’’).5 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.6 The Exchange 4 See Securities Exchange Act Release No. 98915 (Nov. 13, 2023) 88 FR 81495 (November 17, 2023 (SR–CBOE–2023–049) (Order Approving a Proposed Rule Change To Adopt Monthly Options Series). See also Cboe Rules 4.5, 4.11, 8.31, and 8.32. 5 The Exchange proposes to amend Rule 6.4–O(a) to provide that new Commentary .09 to rule 6.4– O (which has been held in Reserve) will describe how the Exchange will fix a specific expiration date and exercise price for Monthly Options Series and that proposed Commentary .09 to Rule 6.40–O will govern the procedures for opening Monthly Options Series, respectively. This is consistent with language in current Rule 6.4–O for other Short Term Options Series and Quarterly Options Series. Consistent with this proposal, the Exchange proposes to adopt a definition of Monthly options Series. See proposed Rules 1.1 and 5.19–O(b)(27). 6 The Exchange’s proposal is based on CBOE’s approved rule change, see supra note 4. The Continued E:\FR\FM\10JNN1.SGM 10JNN1

Agencies

[Federal Register Volume 89, Number 112 (Monday, June 10, 2024)]
[Notices]
[Pages 48925-48937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-12592]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100272; File No. SR-NYSEAMER-2024-34]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Change To Amend Rule 903

June 4, 2024.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on May 30, 2024, NYSE American LLC (``NYSE American'' 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 self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 903 (Series of Options Open For 
Trading) and to make certain conforming changes. The proposed rule 
change is available on the Exchange's website at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to amend Rule 903 (Series of Options 
Open For Trading) to adopt a Monthly Options Series Program; to adopt a 
Low-Priced Strike Priced Interval Program; to permit the listing and 
trading of five additional classes with Short Term Option Daily 
Expirations; to permit Tuesday and Thursday expirations for certain 
classes with Short Term Option Daily Expirations; and to permit the 
listing of two Wednesday expirations for options on certain ETPs. Each 
of the proposed changes would align Exchange rules with already-
approved and implemented rules in place on at least one other options 
exchange as noted herein.
Monthly Options Series Program
    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''). 
This is a competitive filing that is based on a proposal recently 
submitted Cboe Exchange, Inc (``CBOE'').\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 98915 (Nov. 13, 
2023) 88 FR 81495 (November 17, 2023 (SR-CBOE-2023-049) (Order 
Approving a Proposed Rule Change To Adopt Monthly Options Series). 
See also Cboe Rules 4.5, 4.11, 8.31, and 8.32.
---------------------------------------------------------------------------

    Pursuant to proposed Commentary .11 to Rule 903 and Rule 
903C(a)(v), 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'').\5\ 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.\6\ The Exchange

[[Page 48926]]

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.\7\ Other expirations in the same 
class are not counted as part of the maximum numbers of Monthly Options 
Series expirations for a class.\8\ Monthly Options Series will be P.M.-
settled.\9\
---------------------------------------------------------------------------

    \5\ The Exchange proposes to amend Rule 903(h) to provide that 
new Commentary .11 to Rule 903 (which has been in Reserve) will 
describe how the Exchange will fix a specific expiration date and 
exercise price for Monthly Options Series and that proposed 
Commentary .11 to Rule 903 will govern the procedures for opening 
Monthly Options Series, respectively. This is consistent with 
language in current Rule 903 for other Short Term Options Series and 
Quarterly Options Series. Consistent with this proposal, the 
Exchange proposes to adopt a definition of Monthly options Series. 
See proposed Rule 1.1.
    \6\ The Exchange's proposal is based on CBOE's approved rule 
change, see supra note 4. The Exchange notes that other options 
exchanges have since adopted similar programs. See, e.g., Securities 
Exchange Act Release No. 98973 (November 16, 2023) 88 FR 81495 
(November 22, 2023) (SR-MIAX-2023-44) (immediately effective filing 
to accommodate the listing of Monthly Options Series).
    \7\ 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 not 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).
    \8\ See proposed Commentary .11(b) to Rule 903 and proposed Rule 
903C(a)(v)(2).
    \9\ See proposed Commentary .11(c) to Rule 903 and proposed Rule 
903C(a)(v)(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.\10\ 
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 ATP Holder demand,\11\ 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 ATP Holder interest exists for such series, 
as expressed by institutional, corporate, ATP Holder or their brokers. 
Market Makers trading for their own account will not be considered when 
determining ATP Holder 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\
---------------------------------------------------------------------------

    \10\ See proposed Commentaries .11(d) to Rule 903 and proposed 
Rule 903C(a)(v)(4). The Exchange notes these proposed provisions are 
consistent with the initial series provision for the Quarterly 
Options Series program in Rule 903C(iv)(4). While different than the 
initial strike listing provision for the Quarterly Options Series 
program (set forth in Commentary .09(c) to Rule 903), 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 Commentary .09(c) 
to Rule 903 to incorporate the same provision for initial series. 
The Exchange proposes a technical change to re-number the sub-
paragraphs of Commentary .0(f) into separate paragraphs, which 
technical change would add clarity, transparency and internal 
consistent to Exchange rules. See proposed Commentary .09(f)-(h).
    \11\ An ``ATP'' is an Options Trading Permit issued by the 
Exchange for effecting approved securities transactions on the 
Exchange. See Rule 900.2NY. An ``ATP Holder'' refers to a natural 
person, in good standing who has been issued an ATP and is a 
registered broker or dealer pursuant to Section 15 of the Securities 
Exchange Act of 1934. Id.
    \12\ See proposed Commentary .11(e) to Rule 903.
    \13\ See proposed Commentary .11(f) to Rule 903; see also 
Commentaries .05 and .06 to Rule 903 (permissible strike prices for 
ETF classes); and Commentary .05(a). and .13 (regarding ``$0.50 and 
$1 Strike Price Intervals for Options Used to Calculate Volatility 
Indexes'') to Rule 903. See also Commentary.04 to Rule 903C 
(permissible strike prices index options). The Exchange notes that 
there are two Commentaries .13 to Rule 903 and, to correct this 
duplicate and avoid confusion, the Exchange proposes to re-locate 
the text of Commentary .13 that relate to ``$0.50 and $1 Strike 
Price Intervals for Options Used to Calculate Volatility Indexes'' 
to Commentary .08, which is currently held as Reserved. See proposed 
Commentary .08. The Exchange notes that this proposed change is non-
substantive and would add clarity and transparency to Exchange 
rules.
---------------------------------------------------------------------------

    By definition, Monthly Options Series can never expire in the same 
week that a standard options series that expires on the third Friday of 
a month in the same class expires. The same, however, is not the case 
with respect to Short Term Options Series or Quarterly Options Series. 
Therefore, to avoid any confusion in the marketplace, the Exchange 
proposes to amend Rule 903(h) to provide that the Exchange will not 
list a Short Term Options Series in a class on a date on which a 
Monthly Options Series or Quarterly Options Series expires.\14\ 
Similarly, proposed Commentary .11 to Rule 903 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 Terms Options Series on 
an index or ETF if a Monthly Options Series on that index or ETF were 
to expire on the same date, nor will the Exchange list a Monthly 
Options Series on an index or ETF if a Quarterly Options Series on that 
ETF were to expire on the same date to prevent the listing of series 
with concurrent expirations.\15\
---------------------------------------------------------------------------

    \14\ See proposed Rule 903(h). The Exchange also proposes to 
make a non-substantive change throughout Rule 903(h) and Commentary 
.10(f) thereto to change current references to ``monthly options 
series'' to ``standard expiration options series'' (i.e., series 
that expire on the third Friday of a month), to eliminate potential 
confusion. The current references to ``monthly options series'' are 
intended to refer to those series that expire on the third Friday of 
a month, which are generally referred to in the industry as standard 
expirations.
    \15\ The Exchange notes this would not prevent the Exchange from 
listing a P.M.-settled Monthly Options Series on an index with the 
same expiration date as an A.M.-settled Short Term Options Series on 
the same index, both of which may expire on a Friday. The Exchange 
believes this concurrent listing would provide investors with yet 
another hedging mechanism and is reasonable given these series would 
not be identical (unlike if they were both P.M.-settled). This could 
not occur with respect to ETFs, as all Short Term Options Series on 
ETFs are P.M.-settled.
---------------------------------------------------------------------------

    With respect to Monthly Options Series added pursuant to proposed 
Commentary .11(a)-(f) to Rule 903, 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 strike: (i) higher than the highest strike 
price with open interest in the put and/or call series for a given 
expiration month; and (ii) lower than the lowest strike price with open 
interest in the put and/or call series for a given expiration month.

[[Page 48927]]

Notwithstanding this delisting policy, ATP Holders 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, to ensure uniform series delisting of multiply listed Monthly 
Options Series.\16\
---------------------------------------------------------------------------

    \16\ See proposed Commentary .11(g) to Rule 903. Pursuant to 
Rule 905, exercise limits for impacted index and ETF classes would 
be equal to the applicable position limits.
---------------------------------------------------------------------------

    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 options 
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 Options Price Reporting Authority (``OPRA'') 
and the Exchange's quoting capacity. The Exchange represents it has the 
necessary systems capacity to support new options series that will 
result from the introduction of Monthly Options Series.
    The Exchange also proposes to amend Rules 904C(b) and (c) to 
provide that positions in Monthly Options Series will be aggregated 
with positions in options contracts on the same underlying security or 
index.\17\ This is consistent with how position (and exercise) limits 
are currently imposed on series with other expirations (Short Term 
Options Series and Quarterly Options Series). Therefore, positions in 
options within class of index or ETF options, regardless of their 
expirations, would continue to be subject to existing position (and 
exercise) limits. The Exchange believes this will address potential 
manipulative schemes and adverse market impacts surrounding the use of 
options.
---------------------------------------------------------------------------

    \17\ See proposed Rules 904C(b) (regarding position limits for 
broad-based index options) and 904C(c) (regarding position limits 
for industry index options). Consistent with the adoption of Monthly 
Options series for equity and index options, the Exchange proposes 
to adopt the definition of ``Monthly Option Series'' as relates to 
index options in proposed Rule 900C(b)(29).
---------------------------------------------------------------------------

    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,\18\ 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 Options 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.
---------------------------------------------------------------------------

    \18\ The Exchange notes it currently lists quarterly expirations 
on certain ETF options pursuant to Rule 903 Commentary .09.
---------------------------------------------------------------------------

Low-Priced Stock Interval Program
    Miami International Securities Exchange, LLC (``MIAX'') recently 
received approval to amend its Rule 404 to implement a new strike 
interval program for stocks that are priced less than $2.50 and have an 
average daily trading volume of at least 1,000,000 shares per day for 
the 3 preceding calendar months.\19\ At this time, the Exchange 
proposes to adopt rules substantively identical to MIAX, which are set 
forth in proposed new Commentary .16 to Rule 903, and to make a 
conforming change to the table in Commentary .07 of Rule 903 to align 
that that table with the proposed rule text.
---------------------------------------------------------------------------

    \19\ See Securities Exchange Act Release No. 98917 (November 13, 
2023), 88 FR 80361 (November 17, 2023) (SR-MIAX-2023-36) (Order 
Approving a Proposed Rule Change To Amend Exchange Rule 404, Series 
of Option Contracts Open for Trading). Other options exchanges have 
since adopted similar programs. See also MIAX Rule 404, 
Interpretations and Policies .11 and .12. The Exchange notes that 
other options exchanges have since adopted similar programs. See, 
e.g., Securities Exchange Act Release No. 99113 (December 7, 2023) 
88 FR 86413 (December 7, 2023) (SR-CBOE-2023-065) (immediately 
effective filing ``[t]o adopt a Low Priced Stock Strike Price 
Interval Program').
---------------------------------------------------------------------------

Background
    Rule 903 describes the process and procedures for listing and 
trading series of options on the Exchange.\20\ Rule 903 provides for a 
$2.50 Strike Price Program, where the Exchange may select up to 60 
option classes on individual stocks for which the interval of strike 
prices will be $2.50 where the strike price is greater than $25.00 but 
less than $50.00.\21\ Rule 903 also provides for a $1 Strike Price 
Interval Program, where the interval between strike prices of series of 
options on individual stocks may be $1.00 or greater provided the 
strike price is $50.00 or less, but not less than $1.00.\22\ 
Additionally, Rule 903 provides for a $0.50 Strike Program.\23\ The 
interval of strike prices of series of options on individual stocks may 
be $0.50 or greater beginning at $0.50 where the strike price is $5.50 
or less, but only for options classes whose underlying security closed 
at or below $5.00 in its primary market on the previous trading day and 
which have national average daily volume that equals or exceeds 1,000 
contracts per day as determined by The Options Clearing Corporation 
during the preceding three calendar months. The listing of $0.50 strike 
prices is limited to options classes overlying no more than 20 
individual stocks (the ``$0.50 Strike Program'') as specifically 
designated by the Exchange. The Exchange may list $0.50 strike prices 
on any other option classes if those classes are specifically 
designated by other securities exchanges that employ a similar $0.50 
Strike Program under their respective rules. A stock will remain in the 
$0.50 Strike Program until otherwise designated by the Exchange.\24\
---------------------------------------------------------------------------

    \20\ Per Rule 1.1, ``series of options'' refers to ``all options 
contracts of the same class of options having the same expiration 
date and expiration price, and the same unit of trading.''
    \21\ See Commentary .07 to Rule 903.
    \22\ See Commentary .06 to Rule 903.
    \23\ See Commentary .13 to Rule 903 (regarding the ``$0.50 
Strike Program'').
    \24\ Id.
---------------------------------------------------------------------------

Proposal To Adopt Low-Priced Stock Interval Program
    The Exchange proposes to adopt a new strike interval program for 
underlying stocks that are not in the aforementioned $0.50 Strike 
Program (or the Short Term Option Series Program) \25\ and that close 
below $2.50 and have an average daily trading volume of at least 
1,000,000 shares per day for the three (3) preceding calendar 
months.\26\ The $0.50 Strike Program considers stocks that have a 
closing price at or below $5.00 whereas the Exchange's proposal will 
consider

[[Page 48928]]

stocks that have a closing price below $2.50. Currently, there is a 
subset of stocks that are not included in the $0.50 Strike Program as a 
result of the limitations of that program which provides that the 
listing of $0.50 strike prices shall be limited to option classes 
overlying no more than 20 individual stocks as specifically designated 
by the Exchange and requires a national average daily volume that 
equals or exceeds 1,000 contracts per day as determined by The Options 
Clearing Corporation during the preceding three calendar months.\27\ 
Therefore, the Exchange is proposing to implement a new strike interval 
program termed the ``Low-Priced Stock Strike Price Interval Program.'' 
\28\
---------------------------------------------------------------------------

    \25\ See Commentary .07 to Rule 903.
    \26\ See proposed Commentary .11 to Rule 903.
    \27\ See Commentary .13 to Rule 903 (regarding the ``$0.50 
Strike Program'').
    \28\ The Exchange proposes to include a hyphen to the modifier 
``Low-Priced.'' See proposed Commentary .16 to Rule 903.
---------------------------------------------------------------------------

    To be eligible for the inclusion in the Low-Priced Stock Strike 
Price Interval Program, an underlying stock must (i) close below $2.50 
in its primary market on the previous trading day; and (ii) have an 
average daily trading volume of at least 1,000,000 shares per day for 
the three (3) preceding calendar months. The Exchange notes that there 
is no limit to the number of classes that will be eligible for 
inclusion in the proposed program, provided, of course, that the 
underlying stocks satisfy both the price and average daily trading 
volume requirements of the proposed program.
    The Exchange also proposes that after a stock is added to the Low-
Priced Stock Strike Price Interval Program, the Exchange may list $0.50 
strike price intervals from $0.50 up to $2.00.\29\ For the purpose of 
adding strikes under the Low-Priced Stock Strike Price Interval 
Program, the ``price of the underlying stock'' shall be measured in the 
same way as ``the price of the underlying security'' as set forth in 
Rule 903A(b)(i).\30\ Further, no additional series in $0.50 intervals 
may be listed if the underlying stock closes at or above $2.50 in its 
primary market. Additional series in $0.50 intervals may not be added 
until the underlying stock again closes below $2.50.
---------------------------------------------------------------------------

    \29\ While the Exchange may list new strikes on underlying 
stocks that meet the eligibility requirements of the new program the 
Exchange will exercise its discretion and will not list strikes on 
underlying stocks the Exchange believes are subject to imminent 
delisting from their primary exchange.
    \30\ The Exchange notes this is the same methodology used in the 
$1 Strike Price Interval Program. See Commentary .06 to Rule 903.
---------------------------------------------------------------------------

    The Exchange's proposal addresses a gap in strike coverage for low-
priced stocks. The $0.50 Strike Program considers stocks that close 
below $5.00 and limits the number of option classes listed to no more 
than 20 individual stocks (provided that the open interest criteria is 
also satisfied). Whereas, the Exchange's proposal has a narrower focus, 
with respect to the underlying's stock price, and is targeted to those 
stocks that close below $2.50 and does not limit the number of stocks 
that may participate in the program (provided that the average daily 
trading volume is also satisfied). The Exchange does not believe that 
any market disruptions will be encountered with the addition of these 
new strikes. The Exchange represents that it has the necessary capacity 
and surveillance programs in place to support and properly monitor 
trading in the proposed Low-Priced Stock Strike Price Interval Program.
    The Exchange believes that its average daily trading volume 
requirement of 1,000,000 shares is a reasonable threshold to ensure 
adequate liquidity in eligible underlying stocks as it is substantially 
greater than the thresholds used for listing options on equities, 
American Depository Receipts (``ADRs''), and broad-based indexes. 
Specifically, underlying securities with respect to which put or call 
option contracts are approved for listing and trading on the Exchange 
must meet certain criteria as determined by the Exchange. One of those 
requirements is that trading volume (in all markets in which the 
underlying security is traded) has been at least 2,400,000 shares in 
the preceding twelve (12) months.\31\ Rule 915(d) provides the criteria 
for listing options on ADRs if they meet certain criteria and 
guidelines set forth in Rule 915. One of the requirements is that the 
average daily trading volume for the security in the U.S. markets over 
the three (3) months preceding the selection of the ADR for options 
trading is 100,000 or more shares.\32\ Finally, the Exchange may trade 
options on a broad-based index pursuant to Rule 19b-4(e) of the Act 
provided a number of conditions are satisfied. One of those conditions 
is that each component security that accounts for at least one percent 
(1%) of the weight of the index has an average daily trading volume of 
at least 90,000 shares during the last six-month period.\33\
---------------------------------------------------------------------------

    \31\ See Commentary .01(3) to Rule 915.
    \32\ See Commentary .03 Rule 915 .
    \33\ See Commentary .02(a)(7) to Rule 900C .
---------------------------------------------------------------------------

    Additionally, the Exchange proposes to amend the table in 
Commentary .11(e) to Rule 903 (the ``Table'') to insert a new column to 
harmonize the Exchange's proposal to the strike intervals for Short 
Term Options Series as described in proposed Commentary .16 to Rule 
903. The Table is intended to limit the intervals between strikes for 
multiply listed equity options within the Short Term Options Series 
(``STOS'') Program that have an expiration date more than twenty-one 
days from the listing date. Specifically, the Table defines the 
applicable strike intervals for options on underlying stocks given the 
closing price on the primary market on the last day of the calendar 
quarter, and a corresponding average daily volume of the total number 
of options contracts traded in a given security for the applicable 
calendar quarter divided by the number of trading days in the 
applicable calendar quarter.\34\ However, the lowest share price column 
is titled ``Less than $25.'' The Exchange now proposes to insert a 
column titled ``Less than $2.50'' and to set the strike interval at 
$0.50 for each average daily volume tier represented in the Table. 
Also, the Exchange proposes to amend the heading of the column 
currently titled ``Less than $25,'' to ``$2.50 to less than $25'' as a 
result of the adoption of the new proposed column, ``Less than $2.50.'' 
The Exchange believes this change will remove any potential conflict 
between the strike intervals under the STOS Program and those described 
herein under the Exchange's proposal.
---------------------------------------------------------------------------

    \34\ See Securities Exchange Release Act No. 92336 (July 7, 
2021), 86 FR 36827 (July 13, 2021) (SR-NYSEAMER-2021-32) 
(immediately effective filing to amend Rule 903 to limit Short Term 
Options Series intervals).
---------------------------------------------------------------------------

    The Exchange recognizes that its proposal will introduce new 
strikes in the marketplace and further acknowledges that there has been 
significant effort undertaken by the industry to curb strike 
proliferation. For example, the Exchange filed a proposal focused on 
the removal, and prevention of the listing, of strikes which are 
extraneous and do not add value to the marketplace (the ``Strike 
Interval Proposal'').\35\ The Strike Interval Proposal was intended to 
remove repetitive and unnecessary strike listings across the weekly 
expiries. Specifically, the Strike Interval Proposal aimed to reduce 
the density of strike intervals that would be listed in the later 
weeks, by creating limitations for intervals between strikes which have 
an expiration date more than twenty-one days from the listing date.\36\ 
The Strike Interval Proposal took into account OCC customer-cleared 
volume, using it as an appropriate proxy for demand. The Strike 
Interval Proposal was designed to maintain strikes where there was 
customer demand and eliminate strikes

[[Page 48929]]

where there wasn't. At the time of its proposal, the Exchange estimated 
that the Strike Interval Proposal would reduce the number of strikes it 
listed by 81,000.\37\ The Exchange proposes to amend the Table to 
define the strike interval at $0.50 for underlying stocks with a share 
price of less than $2.50.\38\ The Exchange believes this amendment will 
harmonize the Exchange's proposal with the Strike Interval Proposal 
described above.
---------------------------------------------------------------------------

    \35\ Id.
    \36\ Id.
    \37\ Id.
    \38\ See proposed Commentary .11(e) to Rule 903.
---------------------------------------------------------------------------

    The Exchange recognizes that its proposal will moderately increase 
the total number of option series available on the Exchange. However, 
the Exchange's proposal is designed to only add strikes where there is 
investor demand,\39\ which will improve market quality.\40\
---------------------------------------------------------------------------

    \39\ See proposed Commentary .16 to Rule 903, which requires 
that an underlying stock have an average daily trading volume of 
1,000,000 shares for the three (3) preceding months to be eligible 
for inclusion in the Low-Priced Stock Strike Price Interval Program.
    \40\ For example, MIAX determined that, as of August 9, 2023, 
106 symbols met the criteria of the Low-Priced Stock Program. Of 
those symbols 36 are currently in the $1 Strike Price Interval 
Program with $1.00 and $2.00 strikes listed. Further, MIAX 
determined that this would add the $0.50 and $1.50 strikes for these 
symbols for the current expiration terms. The remaining 70 symbols 
eligible under MIAX's proposal would have $0.50, $1.00, $1.50, and 
$2.00 strikes added to their current expiration terms. Therefore, 
for the 106 symbols eligible for the Low-Priced Stock Strike Price 
Interval Program on MIAX a total of approximately 3,250 options 
would be added. Finally, as of August 16, 2023, MIAX listed 
1,090,414 options, therefore the additional options that would be 
listed under this proposal would represent a very minor increase of 
0.298% in the number of options. See Securities Exchange Act Release 
No. 98917 (November 13, 2023), 88 FR 80361, 80362 (November 17, 
2023) (SR-MIAX-2023-36) (Order Approving a Proposed Rule Change To 
Amend Exchange Rule 404, Series of Option Contracts Open for 
Trading).
---------------------------------------------------------------------------

    The Exchange does not believe that its proposal contravenes the 
industry's efforts to curtail unnecessary strikes. The Exchange's 
proposal is targeted to only underlying stocks that close at less than 
$2.50 and that also meet the average daily trading volume requirement. 
Additionally, because the strike increment is $0.50 there are only a 
total of four strikes that may be listed under the program ($0.50, 
$1.00, $1.50, and $2.00) for an eligible underlying stock. Finally, if 
an eligible underlying stock is in another program (e.g., the $0.50 
Strike Program or the $1 Strike Price Interval Program) the number of 
strikes that may be added is further reduced if there are pre-existing 
strikes as part of another strike listing program. Therefore, the 
Exchange does not believe that it will list any unnecessary or 
repetitive strikes as part of its program, and that the strikes that 
will be listed will improve market quality and satisfy investor demand.
    The Exchange further believes that the Options Price Reporting 
Authority (``OPRA''), has the necessary systems capacity to handle any 
additional messaging traffic associated with this proposed rule change. 
The Exchange also believes that ATP Holders will not have a capacity 
issue as a result of the proposed rule change. Finally, the Exchange 
believes that the additional options will serve to increase liquidity, 
provide additional trading and hedging opportunities for all market 
participants, and improve market quality.
Expand the STOS Program
Add Wednesday Expirations for Options on Certain ETPs
    The Exchange proposes to amend Rule 903, Commentary .10(e) to 
expand the STOS Program to permit the listing of two Wednesday 
expirations for options on United States Oil Fund, LP (``USO''), United 
States Natural Gas Fund, LP (``UNG''), SPDR Gold Shares (``GLD''), 
iShares Silver Trust (``SLV''), and iShares 20+ Year Treasury Bond ETF 
(``TLT'') (collectively ``Exchange Traded Products'' or ``ETPs''). This 
is a competitive filing based on a rule change submitted by Nasdaq ISE, 
LLC (``Nasdaq ISE'') and approved by the Commission.\41\
---------------------------------------------------------------------------

    \41\ See Securities Exchange Act Release No. 98905 (November 13, 
2023) (SR-ISE-2023-11) (order approving expansion of Short Term 
Option Series Program to permit the listing of Wednesday Expirations 
for options on certain ETPs). See also Nasdaq ISE Supplementary 
Material to Options 4, Section 5. The Exchange notes that other 
options exchanges have since adopted similar rule changes. See, 
e.g., Securities Exchange Act Release No. 99035 (November 29, 2023), 
88 FR 84367 (December 5, 2023) (SR-Cboe-2023-062) (immediately 
effective filing to permit Wednesday expiration for options on 
certain ETPs).
---------------------------------------------------------------------------

    Currently, as set forth in Rule 903(h), after an option class has 
been approved for listing and trading on the Exchange, the Exchange may 
open for trading on any Thursday or Friday that is a business day 
(``Short Term Option Opening Date'') series of options on that class 
that expire at the close of business on each of the next five Fridays 
that are business days and are not Fridays on which monthly options 
series or Quarterly Options Series expire (``Friday Short Term Option 
Expiration Dates''). The Exchange may have no more than a total of five 
Friday Short Term Option Expiration Dates (``Short Term Option Weekly 
Expirations''). If the Exchange is not open for business on the 
respective Thursday or Friday, the Short Term Option Opening Date for 
Short Term Option Weekly Expirations will be the first business day 
immediately prior to that respective Thursday or Friday. Similarly, if 
the Exchange is not open for business on a Friday, the Short Term 
Option Expiration Date for Short Term Option Weekly Expirations will be 
the first business day immediately prior to that Friday.
    Additionally, the Exchange may open for trading series of options 
on the symbols provided in Table 1 of Commentary .10(f) to Rule 903 
that 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 (``Short Term Option Daily 
Expirations''). For those symbols listed in Table 1, the Exchange may 
have no more than a total of two Short Term Option Daily Expirations 
for each of Monday, Tuesday, Wednesday, and Thursday expirations at one 
time.
    At this time, the Exchange proposes to expand the Short Term Option 
Daily Expirations to permit the listing and trading of options on USO, 
UNG, GLD, SLV, and TLT expiring on Wednesdays. The Exchange proposes to 
permit two Short Term Option Expiration Dates beyond the current week 
for each Wednesday expiration at one time. In order to effectuate the 
proposed changes, the Exchange would add USO, UNG, GLD, SLV, and TLT to 
Table 1 of Commentary .10(f) to Rule 903, which specifies each symbol 
that qualifies as a Short Term Option Daily Expiration.\42\
---------------------------------------------------------------------------

    \42\ See proposed Commentary .10(f) to Rule 903 (updates to 
Table 1).
---------------------------------------------------------------------------

    The proposed Wednesday USO, UNG, GLD, SLV, and TLT expirations will 
be similar to the current Wednesday Short Term Option Daily Expirations 
on SPDR[supreg] S&P 500[supreg] ETF (``SPY''), PowerShares QQQ Trust 
(``QQQ''), and iShares Russell 2000 Index Fund (``IWM'') SPY, QQQ, and 
IWM, as set forth in Rule 903(h), such that the Exchange may open for 
trading on any Tuesday or Wednesday that is a business day (beyond the 
current week) series of options on USO, UNG, GLD, SLV, and TLT to 
expire on any Wednesday of the month that is a business day and is not 
a Wednesday in which standard expiration option series, Monthly Options 
Series, or Quarterly Options Series expire (``Wednesday USO 
Expirations,'' ``Wednesday UNG Expirations,'' ``Wednesday GLD 
Expirations,'' ``Wednesday SLV Expirations,'' and ``Wednesday TLT 
Expirations'') (collectively, ``Wednesday

[[Page 48930]]

ETP Expirations'').\43\ In the event Short Term Option Daily 
Expirations expire on a Wednesday and that Wednesday is the same day 
that a standard expiration option series, Monthly Options Series, or 
Quarterly Options Series or expires, the Exchange would skip that 
week's listing and instead list the following week; the two weeks would 
therefore not be consecutive. Today, Wednesday expirations in SPY, QQQ, 
and IWM similarly skip the weekly listing in the event the weekly 
listing expires on the same day in the same class as a Quarterly Option 
Series.
---------------------------------------------------------------------------

    \43\ While the relevant rule text in Commentary .10(f) to Rule 
903 also indicates that the Exchange will not list such expirations 
on a Wednesday that is a business day in which standard expiration 
options series expire, practically speaking this would not occur.
---------------------------------------------------------------------------

    The Exchange notes that USO, UNG, GLD, SLV, and TLT Friday 
expirations would continue to have a total of five Short Term Option 
Expiration Dates, provided those Friday expirations are not Fridays in 
which standard expiration option series, Monthly Options Series, or 
Quarterly Options Series expire (``Friday Short Term Option Expiration 
Dates'').
    Like Wednesday SPY, QQQ, and IWM Short Term Option Daily 
Expirations within Rule 903(h) and Commentary .10(f) to that Rule, the 
Exchange proposes that it may open for trading on any Tuesday or 
Wednesday that is a business day series of options on USO, UNG, GLD, 
SLV, and TLT 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 option series, Monthly Options Series, or 
Quarterly Options Series expire.
    The interval between strike prices for the proposed Wednesday ETP 
Expirations will be the same as those for the current Short Term Option 
Series for Friday expirations applicable to the STOS Program.\44\ 
Specifically, the Wednesday ETP Expirations will have a strike interval 
of $0.50 or greater for strike prices below $100, $1 or greater for 
strike prices between $100 and $150, and $2.50 or greater for strike 
prices above $150.\45\ As is the case with other equity options listed 
pursuant to the STOS Program, the Wednesday ETP Expirations series will 
be P.M.-settled.
---------------------------------------------------------------------------

    \44\ See Commentary .10(e) to Rule 903.
    \45\ Id.
---------------------------------------------------------------------------

    Pursuant to Rule 903(h), with respect to the STOS Program, a 
Wednesday expiration series shall expire on the first business day 
immediately prior to that Wednesday, e.g., Tuesday of that week if the 
Wednesday is not a business day.
    Currently, for each option class eligible for participation in the 
STOS Program, the Exchange is limited to opening thirty (30) series for 
each expiration date for the specific class.\46\ 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.\47\ 
With the proposed changes, this thirty (30) series restriction would 
apply to Wednesday USO, UNG, GLD, SLV, and TLT Short Term Option Daily 
Expirations as well. In addition, the Exchange will be able to list 
series that are listed by other exchanges, assuming that they file 
similar rules with the Commission to list Wednesday ETP Expirations.
---------------------------------------------------------------------------

    \46\ See Commentary .07(c) to Rule 903.
    \47\ Id.
---------------------------------------------------------------------------

    With this proposal, Wednesday ETP Expirations would be treated 
similarly to existing Wednesday SPY, QQQ, and IWM Expirations.\48\ With 
respect to standard expiration options series, Short Term Option Daily 
Expirations will be permitted to expire in the same week in which 
standard expiration option series, on the same class expire. Not 
listing Short Term Option Daily Expirations for one week every month 
because there was a monthly on that same class on the Friday of that 
week would create investor confusion.
---------------------------------------------------------------------------

    \48\ See proposed Commentary .10(f) to Rule 903. (proving that, 
with respect to Wednesday Expirations, the Exchange may open for 
trading on any Tuesday or Wednesday that is a business day series of 
options on the symbols provided in Table 1 above that expire at the 
close of business on each of the next two Wednesdays that are 
business days and are not business days on which standard expiration 
options series, Monthly Options Series, or Quarterly Options Series 
expire'').
---------------------------------------------------------------------------

    Further, as with Wednesday SPY, QQQ, and IWM Expirations, the 
Exchange would not permit Wednesday ETP Expirations to expire on a 
business day in which standard expiration options series, Monthly 
Options Series, or Quarterly Options Series expire. Therefore, all 
Short Term Option Daily Expirations would 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. The 
Exchange believes that it is reasonable to not permit two expirations 
on the same day in which a standard expiration option series, Monthly 
Options Series, or a Quarterly Options Series would expire because 
those options would be duplicative of each other.
    The Exchange does not believe that any market disruptions will be 
encountered with the introduction of Wednesday ETP Expirations. The 
Exchange has the necessary capacity and surveillance programs in place 
to support and properly monitor trading in the proposed Wednesday ETP 
Expirations. The Exchange currently trades P.M.-settled Short Term 
Option Series that expire on Wednesday for SPY, QQQ, and IWM 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 Wednesday for 
SPY, QQQ, and IWM.
Add Tuesday and Thursday Expirations for Options on IWM
    The Exchange proposes to expand the STOS Program to permit the 
listing and trading of options series with Tuesday and Thursday 
expirations for options on IWM, specifically permitting two expiration 
dates for the proposed Tuesday and Thursday expirations in IWM. This is 
a competitive filing based on a rule change submitted by Nasdaq ISE and 
approved by the Commission.\49\
---------------------------------------------------------------------------

    \49\ See Securities Exchange Act Release No. 99946 (April 11, 
2024), 89 FR 27471 (April 17, 2024) (SR-ISE-2024-06) (order 
approving expansion of Short Term Option Series Program to permit 
the listing of Tuesday and Thursday expirations in IWM). See also 
Nasdaq ISE Options 4, Section 5, Supplementary Material .03. The 
Exchange notes that other options exchanges have since adopted 
similar rule changes. See, e.g., Securities Exchange Act Release No. 
99981 (April 17, 2024), 89 FR 30425 (April 23, 2024) (SR-CboeEDGX-
2024-022 (immediately effective filing to permit Tuesday and 
Thursday expiration for options on IWM).
---------------------------------------------------------------------------

    As noted above, Table 1 in Commentary .10(f) to Rule 903, specifies 
each symbol that currently qualifies as a Short Term Option Daily 
Expiration.\50\ 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

[[Page 48931]]

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.\51\ The listing and trading of Tuesday and Thursday Short Term 
Option Daily Expirations would be subject to Rule 903(h).
---------------------------------------------------------------------------

    \50\ 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 on 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 Commentary .10(f) to Rule 903.
    \51\ The Exchange proposes to amend the Tuesday and Thursday 
expirations for IWM from ``0'' to ``2'' to permit Tuesday and 
Thursday expirations for options on IWM listed pursuant to the Short 
Term Option Series. See proposed Commentary .10(f) to Rule 903.
---------------------------------------------------------------------------

    Today, Tuesday Short Term Option Daily Expirations in SPY and 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'').\52\
---------------------------------------------------------------------------

    \52\ See Commentary .10(f) to Rule 903.
---------------------------------------------------------------------------

    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'').\53\ 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.\54\
---------------------------------------------------------------------------

    \53\ Id.
    \54\ 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 IWM Short Term Option Daily Expirations 
in SPY and QQQ, applicable to the Short Term Option Series Program.\55\ 
Specifically, 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.
---------------------------------------------------------------------------

    \55\ See Commentary .10(f) to Rule 903.
---------------------------------------------------------------------------

    Pursuant to Commentary .10(f) to Rule 903, 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.
    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.\56\ 
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.\57\ 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 monthly option series, Short Term Option Daily 
Expirations expire in the same week in which monthly option series on 
the same class expire.\58\ Further, as is the case today with other 
Tuesday and Thursday Short Term Option Daily Expirations, the Exchange 
would not permit Tuesday and Thursday Short Term Option Daily 
Expirations to expire on a business day in which monthly options series 
or Quarterly Options Series expire.\59\ 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 Tuesday and 
Thursday for SPY and QQQ.
---------------------------------------------------------------------------

    \56\ See Commentary .10(a) to Rule 903.
    \57\ See Commentary .10(b) to Rule 903.
    \58\ See Commentary .10(e) to Rule 903.
    \59\ See Commentary .10(f) to Rule 903.
---------------------------------------------------------------------------

Impact of Proposal To Add Tuesday and Thursday Expirations for Options 
on IWM
    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 table sets forth the percentage of weekly listings 
as compared to monthly (standard expiration), quarterly, and Long-Term 
Option Series in 2023 in the options industry.\60\ The Exchange notes 
that during this time period all options exchanges mitigated weekly 
strike intervals.
---------------------------------------------------------------------------

    \60\ Per Nasdaq ISE, this information was sourced from The 
Options Clearing Corporation (``OCC''). The information includes 
time averaged data for all 17 options markets through December 8, 
2023. See Securities Exchange Act Release No. 99604 (February 26, 
2024), 89 FR 15235 (March 1, 2024) (SR-ISE-2024-06).

                         Number of Strikes--2023
------------------------------------------------------------------------
                                                            Percent of
                       Expiration                          total series
                                                                (%)
------------------------------------------------------------------------
Monthly.................................................           62.82
Weekly..................................................           17.22
LEAP....................................................           17.77
Quarterly...............................................            2.20
------------------------------------------------------------------------

    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

[[Page 48932]]

strikes for IWM.\61\ With respect to the impact to the Short Term 
Option Series Program on IWM overall, the impact would be a 20% 
increase in strikes.\62\ With respect to the impact to the Short Term 
Options Series Program overall, the impact would be a 0.1% increase in 
strikes.\63\ ATP Holders will continue to be able to expand hedging 
tools because all days of the week would be available to permit ATP 
Holders to tailor their investment and hedging needs more effectively 
in IWM.
---------------------------------------------------------------------------

    \61\ Nasdaq ISE sourced this information, which are estimates, 
from LiveVol[supreg]. The information includes data for all 17 
options markets as of January 3, 2024. See id.
    \62\ Nasdaq ISE sourced this information, which are estimates, 
from LiveVol[supreg]. The information includes data for all 17 
options markets as of January 3, 2024. See id.
    \63\ Nasdaq ISE sourced this information, which are estimates, 
from LiveVol[supreg]. The information includes data for all 17 
options markets as of January 3, 2024. See id.

                         Number of Strikes--2023
------------------------------------------------------------------------
                                                            Percent of
                       Expiration                          total series
                                                                (%)
------------------------------------------------------------------------
Monthly.................................................           35.13
Weekly..................................................           48.30
LEAP....................................................           12.87
Quarterly...............................................            3.70
------------------------------------------------------------------------

    Weeklies comprise 48.30% of the total volume of options 
contracts.\64\ 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.
---------------------------------------------------------------------------

    \64\ This table sets forth industry volume. Weeklies comprise 
48.30% of volume while only comprising 17.22% of the strikes. Nasdaq 
ISE sourced this information from OCC. The information includes data 
for all 17 options markets through December 8, 2023. See Securities 
Exchange Act Release No. 99604 (February 26, 2024), 89 FR 15235 
(March 1, 2024) (SR-ISE-2024-06).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\65\ Specifically, the Exchange believes that its proposed rule 
change is consistent with Section 6(b)(5) \66\ requirements in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in, securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \65\ 15 U.S.C. 78f(b)
    \66\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Monthly Options Series Program
    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 timings 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 month's end 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 Options Series, which will 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.\67\ Quarterly Options Series expire on the last business day of 
a calendar quarter, which is the last business day of every third 
month. The proposed Monthly Options Series would fill the gaps between 
Quarterly Options Series expirations by permitting series to expire on 
the last business day of every month, rather than every third month. 
The proposed Monthly Options Series may be listed in accordance with 
the same terms as Quarterly Options Series, including permissible 
strikes. As is the case with Quarterly Options Series, no Short Term 
Options Series may expire on the same day as a Monthly Options Series. 
Similarly, as proposed, no Monthly Options Series may expire on the 
same day as a Quarterly Options Series. The Exchange believes 
preventing listing series with concurrent expirations in a class will 
eliminate potential investors confusion and thus protect investors and 
the public interest. Given that Quarterly Options Series the Exchange 
currently lists are essentially Monthly Options Series that can expire 
at the end of only certain calendar months, the Exchange believes it is 
reasonable to list Monthly Options Series in accordance with the same 
terms, as it will promote just and equitable principles of trade. The 
Exchange believes limiting Monthly Options Series to five classes will 
ensure the addition of these new series will have a negligible impact 
on the Exchange 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.
---------------------------------------------------------------------------

    \67\ Compare proposed Commentary .11 to Rule 903 with Commentary 
.09 to Rule 903.
---------------------------------------------------------------------------

    The Exchange further believes the proposed rule change regarding 
the treatment of Monthly Options Series with respect to determining 
compliance with position and exercise limits is designed to prevent 
fraudulent and manipulative acts and practices and promote just and 
equitable principles of trade. Monthly Options Series will be 
aggregated with options overlying the same ETF or index for purposes of 
compliance with position (and exercise) limits, which is consistent 
with how position (and exercise) limits are currently imposed on series 
with other expirations (Short Term Options Series and Quarterly Options 
Series). Therefore, options positions within ETF or index option 
classes for which Monthly Options Series are listed, regardless of 
their expirations, would

[[Page 48933]]

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. As mentioned above, the Exchange currently 
trades Quarterly Options Series in certain ETF classes, which expire at 
the close of business at the end of three 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 Options 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.
    Finally, the Exchange believes that the proposed technical change 
to Rule 903, Commentary.09 would add clarity, transparency and internal 
consistent to Exchange rules.
Low-Priced Stock Strike Price Interval Program
    The Exchange believes the introduction of the Low-Priced Stock 
Strike Price Interval Program 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. In 
particular, the Exchange believes its proposal promotes just and 
equitable principles of trade and removes impediments to and perfects 
the mechanisms of a free and open market and a national market system 
as the Exchange has identified a subset of stocks that are trading 
under $2.50 and do not have meaningful strikes available. For example, 
on August 9, 2023, symbol SOND closed at $0.50 and had open interest of 
over 44,000 contracts and an average daily trading volume in the 
underlying stock of over 1,900,000 shares for the three preceding 
calendar months.\68\ Currently the lowest strike listed is for $2.50, 
making the lowest strike 400% away from the closing stock price. 
Another symbol, CTXR, closed at $0.92 on August 9, 2023, and had open 
interest of 63,000 contracts and an average daily trading volume in the 
underlying stock of over 1,900,000 shares for the three preceding 
calendar months.\69\ Similarly, the lowest strike listed is for $2.50, 
making the lowest strike more than 170% away from the closing stock 
price. Currently, such products have no at-the-money options, as well 
as no in-the-money calls or out-of-the-money puts. The Exchange's 
proposal will provide additional strikes in $0.50 increments from $0.50 
up to $2.00 to provide more meaningful trading and hedging 
opportunities for this subset of stocks. Given the increased 
granularity of strikes as proposed under the Exchange's proposal out-
of-the-money puts and in-the-money calls will be created. The Exchange 
believes this will allow market participants to tailor their investment 
and hedging needs more effectively.
---------------------------------------------------------------------------

    \68\ See Yahoo! Finance, https://finance.yahoo.com/quote/SOND/history?p=SOND (last visited August 10, 2023).
    \69\ Id.
---------------------------------------------------------------------------

    The Exchange believes its proposal promotes just and equitable 
principles of trade and removes impediments to and perfects the 
mechanisms of a free and open market and a national market system and, 
in general, protects investors and the public interest by adding 
strikes that improves market quality and satisfies investor demand. The 
Exchange does not believe that the number of strikes that will be added 
under the program will negatively impact the market. Additionally, the 
proposal does not run counter to any previous efforts to curb strike 
proliferation as those efforts focused on the removal and prevention of 
extraneous strikes where there was no investor demand. The Exchange's 
proposal requires the satisfaction of an average daily trading volume 
threshold in addition to the underlying stock closing at a price below 
$2.50 to be eligible for the program.
    The Exchange believes that the average daily trading volume 
threshold of the program ensures that only strikes with investor demand 
will be listed and fills a gap in strike interval coverage as described 
above. Further, being that the strike interval is $0.50, there are only 
a maximum of four strikes that may be added ($0.50, $1.00, $1.50, and 
$2.00). Therefore, the Exchange does not believe that its proposal will 
undermine any previous efforts to eliminate repetitive and unnecessary 
strikes in any fashion.
    The Exchange believes that the proposed program's average daily 
trading volume threshold promotes just and equitable principles of 
trade and removes impediments to and perfects the mechanisms of a free 
and open market and a national market system and, in general, protects 
investors and the public interest as it is designed to permit only 
those stocks with demonstrably high levels of trading activity to 
participate in the program. The Exchange notes that the proposed 
program's average daily trading volume requirement is substantially 
greater than the average daily trading requirement currently in place 
on the Exchange for options on equity underlyings,\70\ ADRs,\71\ and 
broad-based indexes.\72\
---------------------------------------------------------------------------

    \70\ See Commentary .01(3) to Rule 915.
    \71\ See Commentary .03 to Rule 915.
    \72\ See Commentary .02(a)(7) to Rule 900C.
---------------------------------------------------------------------------

    The Exchange also believes the proposed rule change is consistent 
with Section 6(b)(1) of the Act,\73\ which provides that the Exchange 
be organized and have the capacity to be able to carry out the purposes 
of the Act and to enforce compliance by the Exchange's ATP Holders and 
persons associated with its ATP Holders with the Act, the rules and 
regulations thereunder, and the rules of the Exchange. The proposed 
rule change allows the Exchange to respond to customer demand to 
provide meaningful strikes for low priced stocks. The Exchange does not 
believe that the proposed rule would create any capacity issue or 
negatively affect market functionality. Additionally, the Exchange 
represents that it has the necessary systems capacity to support the 
new options series and handle additional messaging traffic associated 
with this proposed rule change. The Exchange also believes that its ATP 
Holders will not experience any capacity issues as a result of this 
proposal. In addition, the Exchange represents that it believes that 
additional strikes for low priced stocks will serve to increase 
liquidity available as well as improve price efficiency by providing 
more trading opportunities for all market participants. The Exchange 
believes that the proposed rule change will benefit investors by giving 
them increased opportunities to execute their investment and hedging 
decisions.
---------------------------------------------------------------------------

    \73\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    Finally, the Exchange believes its proposal is designed to prevent

[[Page 48934]]

fraudulent and manipulative acts and practices as options may only be 
listed on underlyings that satisfy the listing requirements of the 
Exchange as described in Rule 915. Specifically, Rule 915 requires that 
underlying securities for which put or call option contracts are 
approved for listing and trading on the Exchange must be duly 
registered (with the Commission) and be an ``NMS stock'' (as defined in 
Rule 600 of Regulation NMS under the Act). Further, the underlying 
security is characterized by a substantial number of outstanding shares 
that are widely held and actively traded. In particular, Rule 915, 
provides that absent exceptional circumstances, an underlying security 
will not be selected for options transactions unless: (1) there are a 
minimum of 7,000,000 shares of the underlying security which are owned 
by persons other than those required to report their stock holdings 
under Section 16(a) of the Act; (2) there are a minimum of 2,000 
holders of the underlying security; (3) the issuer is in compliance 
with any applicable requirements of the Act; and (4) trading volume (in 
all markets in which the underlying security is traded) has been at 
least 2,400,000 shares in the preceding 12 months. The Exchange's 
proposal does not impact the eligibility of an underlying stock to have 
options listed on it, but rather addresses only the listing of new 
additional option classes on an underlying listed on the Exchange in 
accordance with the Exchange's listings rules. As such, the Exchange 
believes that the listing requirements described in Rule 915 address 
potential concerns regarding possible manipulation. Additionally, in 
conjunction with the proposed average daily volume requirement 
described herein, the Exchange believes any possible market 
manipulation is further mitigated.
Expand STOS Program
Add Wednesday Expirations for Options on Certain ETPs
    The Exchange believes that the proposal to expand the STOS Program 
to allow the Wednesday ETP Expirations (subject to the proposed 
limitation of two expirations beyond the current week) is consistent 
with the Act for the following reasons. Like Wednesday expirations in 
SPY, QQQ, and IWM, the proposed Wednesday ETP Expirations would protect 
investors and the public interest by providing the investing public and 
other market participants more choice and flexibility to closely tailor 
their investment and hedging decisions in these options and allow for a 
reduced premium cost of buying portfolio protection, thus allowing them 
to better manage their risk exposure.
    The Exchange represents that it has an adequate surveillance 
program in place to detect manipulative trading in the proposed option 
expirations, in the same way that it monitors trading in the current 
Short Term Option Series for Wednesday SPY, QQQ and IWM expirations. 
The Exchange also represents that it has the necessary system capacity 
to support the new expirations. Finally, the Exchange does not believe 
that any market disruptions will be encountered with the introduction 
of these option expirations. As discussed above, the Exchange believes 
that its proposal is a modest expansion of weekly expiration dates for 
GLD, SLV, USO, UNG, and TLT given that it will be limited to two 
Wednesday expirations beyond the current week. Lastly, the Exchange 
believes its proposal will not be a strain on liquidity providers 
because of the multi-class nature of GLD, SLV, USO, UNG, and TLT and 
the available hedges in highly correlated instruments, as described 
above.
    The Exchange believes that the proposal is consistent with the Act 
as the proposal would overall add a small number of Wednesday ETP 
Expirations by limiting the addition of two Wednesday expirations 
beyond the current week. The addition of Wednesday ETP Expirations 
would remove impediments to and perfect the mechanism of a free and 
open market by encouraging Market Makers to continue to deploy capital 
more efficiently and improve market quality. The Exchange believes that 
the proposal will allow market participants to expand hedging tools and 
tailor their investment and hedging needs more effectively in USO, UNG, 
GLD, SLV, and TLT as these funds are most likely to be utilized by 
market participants to hedge the underlying asset classes.
    Similar to Wednesday SPY, QQQ, and IWM expirations, the 
introduction of Wednesday ETP Expirations is consistent with the Act as 
it will, among other things, expand hedging tools available to market 
participants and allow for a reduced premium cost of buying portfolio 
protection. The Exchange believes that Wednesday ETP Expirations will 
allow market participants to purchase options on USO, UNG, GLD, SLV, 
and TLT based on their timing as needed and allow them to tailor their 
investment and hedging needs more effectively, thus 9 allowing them to 
better manage their risk exposure. Today, the Exchange lists Wednesday 
SPY, QQQ, and IWM Expirations.\74\
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    \74\ See Commentary .10(f) to Rule 903.
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    The Exchange believes the STOS Program has been successful to date 
and that Wednesday ETP 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 STOS Program has expanded the landscape of hedging. There 
are no material differences in the treatment of Wednesday SPY, QQQ, and 
IWM expirations compared to the proposed Wednesday ETP Expirations. 
Given the similarities between Wednesday SPY, QQQ, and IWM expirations 
and the proposed Wednesday ETP Expirations, the Exchange believes that 
applying the provisions in Commentary .10(f) to Rule 903, that 
currently apply to Wednesday SPY, QQQ, and IWM expirations is justified 
and will benefit investors and minimize investor confusion by providing 
such expirations in a continuous and uniform manner.
Add Tuesday and Thursday Expirations for Options on IWM
    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 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

[[Page 48935]]

Tuesday and Thursday Short Term Daily Expirations.\75\
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    \75\ Id.
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    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.\76\ 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.\77\ 
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.
---------------------------------------------------------------------------

    \76\ Id.
    \77\ See Rule 903(h).
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    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 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 changes will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange notes that the 
proposed changes would allow the Exchange to compete on more equal 
footing with other options exchanges that have already adopted 
substantively identical rules as noted herein. Thus, the Exchange 
believes this proposal would encourage competition.
Monthly Options Series Program
    The Exchange does not believe the proposed rule change to list 
Monthly Options Series will impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act, as any Monthly Options Series the Exchange lists 
for trading will be available in the same manner for all market 
participants who wish to trade such options. The Exchange notes the 
proposed terms of the 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.\78\ Quarterly Options Series 
expire on the last business day of a calendar quarter, which is the 
last business day of every third month, making the concept of Monthly 
Options Series in a limited number of index and ETF options not novel. 
The proposed Monthly Options Series will fill the gaps between 
Quarterly Options Series expirations by permitting series to expire on 
the last business day of every month, rather than every third month. 
The proposed Monthly Options Series may be listed in accordance with 
the same terms as Quarterly Options Series, including permissible 
strikes. Monthly Options Series will trade on the Exchange in the same 
manner as other options in the same class.
---------------------------------------------------------------------------

    \78\ See Commentary .09 to Rule 903.
---------------------------------------------------------------------------

    The Exchange does not believe the proposed rule change to list 
Monthly Options Series will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act, as nothing prevents other options exchanges from 
proposing similar rules. As discussed above, the proposed rule change 
would permit listing of Monthly Options Series in five index or ETF 
options, as well as any other classes that other exchanges may list 
under similar programs. To the extent that the availability of Monthly 
Options Series makes the Exchange a more attractive marketplace to 
market participants at other exchanges, market participants are free to 
elect to become market participants on the Exchange.
    The Exchange believes that the proposed rule change may relieve any 
burden on, or otherwise promote, competition. Similar to Short Term 
Options Series and Quarterly Options Series, the Exchange believes the 
introduction of Monthly Options Series will not impose an undue burden 
on competition. The Exchange believes that it will, among other things, 
expand hedging tools available to market participants. The Exchange 
believes Monthly Options Series will allow market participants to 
purchase options based on their timing as needed and allow them to 
tailor their investment and hedging needs more effectively.
    The Exchange does not believe the proposed rule change to provide 
positions in Monthly Options Series will be aggregated with positions 
in options contracts on the same underlying index or security for 
purposes of determining compliance with position (and exercise) limits 
will impose any burden on intramarket competition that is not necessary 
or appropriate in furtherance of the purposes of the Act, as it will 
apply in the same manner to all market participants. The Exchange 
proposes to apply position (and exercise) limits to Monthly Options 
Series in the same manner it applies position limits to series with 
other expirations (Short Term Options Series and Quarterly Options 
Series). Therefore, positions in options in a class of ETF or index 
options, regardless of their expirations, would continue to be subject 
to existing position (and exercise) limits. Additionally, the Exchange 
does not believe this proposed 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.
    Consequently, the Exchange does not believe that the proposed 
change implicates competition at all. Additionally, and as stated 
above, this proposal to accommodate the listing of options series that 
would expire at the close of business on the last business day of a 
calendar month is substantively similar to that of at least one other 
options exchange.\79\
---------------------------------------------------------------------------

    \79\ See supra note 4 (regarding SR-CBOE-2023-049).
---------------------------------------------------------------------------

Low-Priced Stock Interval Program
    The Exchange does not believe that its proposed rule change will 
impose any burden on intramarket competition as the Rules of the 
Exchange apply equally to all ATP Holders and all of whom may trade the 
new proposed strikes if they so choose. Instead, the Exchange believes 
that investors and market participants will significantly benefit from 
the availability of finer strike price intervals for stocks priced 
below $2.50, which will allow them to tailor their investment and 
hedging needs more effectively. The Exchange's proposal is 
substantively identical to MIAX Interpretations and Policies .11 and 
.12 to Rule 404.\80\
---------------------------------------------------------------------------

    \80\ See supra note 19 (regarding SR-MIAX-2023-36).
---------------------------------------------------------------------------

    The Exchange does not believe that its proposed rule change will 
impose any

[[Page 48936]]

burden on intermarket competition, as nothing prevents other options 
exchanges from proposing similar rules to list and trade options on low 
priced stocks. Rather the Exchange believes that its proposal will 
promote intermarket competition, as the Exchange's proposal will result 
in additional opportunities for investors to achieve their investment 
and trading objectives, to the benefit of investors, market 
participants, and the marketplace in general.
Expand STOS Program
Add Wednesday Expirations for Options on Certain ETPs
    The Exchange does not believe that its proposed rule change to 
permit Wednesday expirations in certain ETPs will impose any undue 
burden on competition. In this regard and as indicated above, the 
Exchange notes that this proposed rule change is being proposed as a 
competitive response to the already-approved rule change submitted by 
Nasdaq ISE.\81\
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    \81\ See supra note 41 (regarding SR-ISE-2023-11).
---------------------------------------------------------------------------

    While the proposal will expand the Short Term Options Expirations 
to allow Wednesday ETP Expirations to be listed on the Exchange, the 
Exchange believes that this limited expansion for Wednesday expirations 
for options on USO, UNG, GLD, SLV, and TLT will not impose an undue 
burden on competition; rather, it will meet customer demand. The 
Exchange believes that market participants will continue to be able to 
expand hedging tools and tailor their investment and hedging needs more 
effectively in USO, UNG, GLD, SLV, and TLT given multi-class nature of 
these products and the available hedges in highly correlated 
instruments, as described above. Similar to Wednesday SPY, QQQ, and IWM 
expirations, the introduction of Wednesday ETP 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 allow for a reduced premium cost of buying portfolio 
protection. The Exchange believes that Wednesday ETP Expirations will 
allow market participants to purchase options on USO, UNG, GLD, SLV, 
and TLT based on their timing as needed and allow them to tailor their 
investment and hedging needs more effectively.
    The Exchange does not believe the proposal will impose any burden 
on inter-market competition, as nothing prevents the other options 
exchanges from proposing similar rules to list and trade Wednesday ETP 
Expirations. Further, the Exchange does not believe the proposal will 
impose any burden on intra-market competition, as all market 
participants will be treated in the same manner under this proposal.
Add Tuesday and Thursday Expirations for Options on IWM
    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 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.\82\ Additionally, as noted above, 
the Commission recently approved a substantively identical proposal of 
another exchange.\83\
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    \82\ See Commentary .10(f) to Rule 903.
    \83\ See supra note 49 (regarding SR-ISE-2024-06).
---------------------------------------------------------------------------

    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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \84\ and Rule 
19b-4(f)(6) thereunder.\85\
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    \84\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \85\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19-4(f)(6) \86\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\87\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay. The Exchange states 
that waiver of the operative delay would allow the Exchange to 
implement, without delay, its proposal to: (i) adopt a Monthly Option 
Series Program; (ii) adopt a Low-Priced Strike Priced Interval Program; 
(iii) permit the listing and trading of five additional classes with 
Short Term Option Daily Expirations, specifically, by permitting the 
listing of two Wednesday expirations for options on certain ETPs; and 
(iv) permit Tuesday and Thursday expirations on IWM. The Exchange 
further states the proposed rule change does not present any new or 
novel issues, as at least one other exchange permits each of the 
proposed programs and expirations.\88\ Because the proposal does not 
raise any new or novel issues, the Commission believes that waiver of 
the 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 proposal operative upon 
filing.\89\
---------------------------------------------------------------------------

    \86\ 17 CFR 240.19b-4(f)(6).
    \87\ 17 CFR 240.19b-4(f)(6)(iii).
    \88\ See supra notes 4, 19, 41, and 49.
    \89\ 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).
---------------------------------------------------------------------------

    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

[[Page 48937]]

Commission takes such action, the Commission shall institute 
proceedings under Section 19(b)(2)(B) \90\ of the Act to determine 
whether the proposed rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \90\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-NYSEAMER-2024-34 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-NYSEAMER-2024-34. 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-NYSEAMER-2024-34 and should 
be submitted on or before July 1, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\91\
---------------------------------------------------------------------------

    \91\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-12592 Filed 6-7-24; 8:45 am]
BILLING CODE 8011-01-P
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