Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 404, Series of Option Contracts Open for Trading, 65946-65957 [2024-17953]
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Federal Register / Vol. 89, No. 156 / Tuesday, August 13, 2024 / Notices
Applicants
equest an order to permit certain
business development companies
(‘‘BDCs’’) and closed-end management
investment companies to co-invest in
portfolio companies with each other and
with certain affiliated investment
entities.
APPLICANTS: Felicitas Private Markets
Fund, Skypoint Capital Advisors, LLC,
Felicitas Global Partners, LLC, Felicitas
SA1, LP, Felicitas Secondary Fund II,
LP, Felicitas Tactical Opportunities
Fund, LP, and Felicitas Debt Fund, LP.
FILING DATES: The application was filed
on April 6, 2023, and amended on
September 11, 2023, May 17, 2024, June
18, 2024, and August 7, 2024.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing on any application by
emailing the SEC’s Secretary at
Secretarys-Office@sec.gov and serving
the Applicants with a copy of the
request by email, if an email address is
listed for the relevant Applicant below,
or personally or by mail, if a physical
address is listed for the relevant
Applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on September 3, 2024, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary at
Secretarys-Office@sec.gov.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
joshua.deringer@faegredrinker.com and
reports@felicitasgp.com.
FOR FURTHER INFORMATION CONTACT:
Matthew Cook, Senior Counsel, or Terri
Jordan, Branch Chief, at (202) 551–6825
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: For
Applicants’ representations, legal
analysis, and conditions, please refer to
Applicants’ fourth amended and
restated application, dated August 7,
2024, which may be obtained via the
Commission’s website by searching for
the file number at the top of this
document, or for an Applicant using the
Company name search field, on the
SEC’s EDGAR system. The SEC’s
EDGAR system may be searched at,
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SUMMARY OF APPLICATION:
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https://www.sec.gov/edgar/searchedgar/
legacy/companysearch.html. You may
also call the SEC’s Public Reference
Room at (202) 551–8090.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–18013 Filed 8–12–24; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–100670; File No. SR–
SAPPHIRE–2024–02]
Self-Regulatory Organizations; MIAX
Sapphire, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Exchange
Rule 404, Series of Option Contracts
Open for Trading
August 7, 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 July 24,
2024, MIAX Sapphire, LLC (‘‘MIAX
Sapphire’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Exchange Rule 404, Series of Option
Contracts Open for Trading.
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxglobal.com/markets/
us-options/miax-sapphire/rule-filings, at
the Exchange’s principal office, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
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statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
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Background
In preparation for the launch of the
MIAX Sapphire Exchange,4 the
Exchange proposes to update Rule 404,
Series of Option Contracts 5 Open for
Trading, in order to update the Rule to
reflect changes that have occurred
within the industry, and that were made
to the Exchange’s affiliate, MIAX Pearl
Options, Rule 404, while MIAX
Sapphire’s Form 1 Application to
register as a national securities exchange
was pending approval.
The Exchange proposes to (i) copy a
proposal originally submitted by Nasdaq
ISE to adopt two Wednesday expirations
for options on certain Exchange Traded
Products (‘‘Wednesday Expirations’’); 6
(ii) copy a proposal originally submitted
by the Cboe Exchange to adopt the
listing of option series 7 that would
expire at the close of business on the
last business day of a calendar month
(‘‘Monthly Options Series’’); 8 (iii) copy
a proposal originally submitted by
Nasdaq ISE to permit the listing and
trading of option series with Tuesday
and Thursday expirations for options on
iShares Russell 2000 ETF (IWM)
(‘‘Tuesday and Thursday IWM
Expirations’’); 9 and (iv) copy a proposal
4 See Securities Exchange Act Release No. 100539
(July 15, 2024), 89 FR 58848 (July 19, 2024) (File
No. 10–240) (order approving application of MIAX
Sapphire, LLC for registration as a national
securities exchange).
5 The term ‘‘option contract’’ means a put or a call
issued, or subject to issuance, by the Clearing
Corporation pursuant to the Rules of the Clearing
Corporation. See Exchange Rule 100.
6 See Securities Exchange Act Release No. 98905
(November 13, 2023), 88 FR 80348 (November 17,
2023) (SR–ISE–2023–11) (Order Approving a
Proposed Rule Change to Amend the Short Term
Option Series Program to Permit the Listing of Two
Wednesday Expirations for Options on Certain
Exchange Traded Products).
7 The term ‘‘series of options’’ means all option
contracts of the same class having the same exercise
price and expiration date. See Exchange Rule 100.
8 See Securities Exchange Act Release No. 98915
(Nov. 13, 2023), 88 FR 80356 (November 17, 2023)
(SR–CBOE–2023–049) (Order Approving a
Proposed Rule Change To Adopt Monthly Options
Series).
9 See Securities Exchange Act Release No. 99946
(April 11, 2024), 89 FR 27471 (April 17, 2024) (SR–
ISE–2024–06) (Order Approving a Proposed Rule
Change to Amend the Short Term Option Series
Program).
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Federal Register / Vol. 89, No. 156 / Tuesday, August 13, 2024 / Notices
originally submitted by the Exchange’s
affiliate, MIAX Options, to adopt a new
strike interval program (‘‘Low Priced
Stock Strike Price Interval Program’’).10
Additionally, the Exchange notes that
all the changes contained in the
aforementioned proposals have been
adopted by the Exchange’s affiliate,
MIAX Pearl Options,11 and are currently
operative in MIAX Pearl Options Rule
404.
Proposal
Wednesday Expirations
The Exchange proposes to amend
Interpretations and Policies .02 to
expand the Short Term Option Series
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’’).
Currently, as set forth in Policy .02 of
Rule 404, after an option class 12 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 in 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 Short Term
Option Friday 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
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10 See
Securities Exchange Release Act 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).
11 See Securities Exchange Release Act Nos.
99180 (December 14, 2023), 88 FR 88148 (December
20, 2023) (SR–PEARL–2023–70); 99251 (December
29, 2023), 89 FR 819 (January 5, 2024) (SR–PEARL–
2023–72); 99997 (April 19, 2024), 89 FR 32480
(April 26, 2024) (SR–PEARL–2024–21); and 99034
(November 29, 2023), 88 FR 84379 (December 5,
2023) (SR–PEARL–2023–66).
12 The terms ‘‘class of options’’ or ‘‘option class’’
means all option contracts covering the same
underlying security. See Exchange Rule 100.
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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 Policy
.02 of Rule 404 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.13 In
order to effectuate the proposed
changes, the Exchange would add USO,
UNG, GLD, SLV, and TLT to Table 1 of
Policy .02 of Rule 404, which specifies
each symbol that qualifies as a Short
Term Option Daily Expiration.
The proposed Wednesday USO, UNG,
GLD, SLV, and TLT expirations will be
similar to the current Wednesday SPY,
QQQ, and IWM Short Term Option
Daily Expirations set forth in Policy .02
of Rule 404, 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 Quarterly
Options Series expire (‘‘Wednesday
USO Expirations,’’ ‘‘Wednesday UNG
Expirations,’’ ‘‘Wednesday GLD
Expirations,’’ ‘‘Wednesday SLV
Expirations,’’ and ‘‘Wednesday TLT
Expirations’’) (collectively, ‘‘Wednesday
ETP Expirations’’).14 In the event Short
13 Consistent with the current operation of the
rule, the Exchange notes that if it adds a Wednesday
expiration on a Tuesday, it could technically list
three outstanding Wednesday expirations at one
time. The Exchange will therefore clarify the rule
text in Policy .02 of Rule 404 to specify that it can
list two Short Term Option Expiration Dates beyond
the current week for each Monday, Tuesday,
Wednesday, and Thursday expiration.
14 While the relevant rule text in Policy .02 of
Rule 404 also indicates that the Exchange will not
list such expirations on a Wednesday that is a
business day in which monthly options series
expire, practically speaking this would not occur,
as the Exchange would not list any ‘‘Wednesday
Expirations’’ that would expire on the close of
business on a Wednesday that is a business day
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Term Option Daily Expirations expire
on a Wednesday and that Wednesday is
the same day that a Quarterly Options
Series 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.
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
monthly options series or Quarterly
Options Series expire (‘‘Friday Short
Term Option Expiration Dates’’).
Similar to Wednesday SPY, QQQ, and
IWM Short Term Option Daily
Expirations within Policy .02 of Rule
404, 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
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
Short Term Option Series Program.15
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 $150.16 As
is the case with other equity options
listed pursuant to the Short Term
Option Series Program, the Wednesday
ETP Expirations series will be P.M.settled.
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 of
Interpretations and Policies .02 of Rule
404, that expire at the close of business
on each of the next two Wednesdays.17
If that Wednesday is not a business day,
the series shall expire on the first
business day immediately prior to that
where standard expiration option series, Monthly
Option Series, or Quarterly Options Series expire.
15 See Policy .02(e) of Rule 404.
16 Id.
17 See Interpretation and Policy .02 of Exchange
Rule 404.
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Federal Register / Vol. 89, No. 156 / Tuesday, August 13, 2024 / Notices
Wednesday, e.g., Tuesday of that
week.18
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.19 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.20 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.
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 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 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
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. Additionally, the Exchange notes
that this change is substantively
identical to a proposal adopted by the
18 See Exchange Rule 100, ‘‘Short Term Option
Series.’’
19 See Policy .02(c) of Rule 404.
20 Id.
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Exchange’s affiliate, MIAX Pearl
Options.21
Monthly Options Series
The Exchange proposes to amend
Rule 404 to accommodate the listing of
options series that would expire at the
close of business on the last business
day of a calendar month (‘‘Monthly
Options Series’’).
Pursuant to new proposed
Interpretations and Policies .13 to
Exchange Rule 404, 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’’).22 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.23 The Exchange may list 12
expirations for Monthly Options Series.
Monthly Options Series need not be for
consecutive months; however, the
expiration date of a nonconsecutive
expiration may not be beyond what
would be considered the last expiration
date if the maximum number of
expirations were listed consecutively.24
21 See Securities Exchange Release Act No. 99180
(December 14, 2023), 88 FR 88148 (December 20,
2023) (SR–PEARL–2023–70).
22 The Exchange proposes to amend Exchange
Rule 404(a) to provide that proposed Interpretation
and Policy .13 to Exchange Rule 404 will describe
how the Exchange will fix a specific expiration date
and exercise price for Monthly Options Series and
that proposed Interpretation and Policy .13 to
Exchange Rule 404 will govern the procedures for
opening Monthly Options Series, respectively. This
is consistent with language in current Exchange
Rules 404(a) for other Short Term Options Series
and Quarterly Options Series.
23 Currently, Cboe Exchange, Inc. has a
substantively identical program. See Securities
Exchange Act Release No. 98915 (Nov. 13, 2023)
(SR–CBOE–2023–049) (Order Approving a
Proposed Rule Change To Adopt Monthly Options
Series). See also Cboe Exchange Rule 4.5(g).
24 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
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Fmt 4703
Sfmt 4703
Other expirations in the same class are
not counted as part of the maximum
numbers of Monthly Options Series
expirations for a class.25 Monthly
Options Series will be P.M.-settled.26
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.27 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
Member 28 demand, or when the market
price of the underlying security moves
substantially from the initial exercise
price or prices. To the extent that any
additional strike prices are listed by the
Exchange, such additional strike prices
will be within 30% above or below the
closing price of the underlying index or
security on the preceding day. The
Exchange may also open additional
strike prices of Monthly Options Series
that are more than 30% above or below
the current price of the underlying
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).
25 See proposed Interpretation and Policy .13(b)
to Exchange Rule 404.
26 See proposed Interpretation and Policy .13(c) to
Exchange Rule 404.
27 See proposed Interpretation and Policy .13(d).
The Exchange notes these proposed provisions are
consistent with the initial series provision for the
Quarterly Options Series program in Interpretation
and Policy .03 to Exchange Rule 404. While
different than the initial strike listing provision for
the Quarterly Options Series program in current
Interpretation and Policy .03 to Exchange Rule 404,
the Exchange believes the proposed provision is
appropriate, as it contemplates classes that may
have strike intervals of $5 or greater.
28 The term ‘‘Member’’ means an individual or
organization that is registered with the Exchange
pursuant to Chapter II of MIAX Pearl Rules for
purposes of trading on the Exchange as an
‘‘Electronic Exchange Member’’ or ‘‘Market Maker.’’
Members are deemed ‘‘members’’ under the
Exchange Act. See Exchange Rule 100.
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Federal Register / Vol. 89, No. 156 / Tuesday, August 13, 2024 / Notices
security, provided that demonstrated
Member interest exists for such series,
as expressed by institutional, corporate,
Members or their brokers. Market
Makers trading for their own account
will not be considered when
determining Member 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.29 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.30
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
Interpretation and Policy .02 to
Exchange Rule 404 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.31
Similarly, proposed Interpretation and
Policy .13(b) to Exchange Rule 404
provides 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.32
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29 See
proposed Interpretation and Policy .13(e) to
Exchange Rule 404.
30 See proposed Interpretation and Policy .13(f) to
Exchange Rule 404; see also Interpretations and
Policies .01 and .04, .06, .08, .09, .10 to Exchange
Rule 404 (permissible strike prices for ETF classes)
and Interpretations and Policies .05, .07, .11 to
Exchange Rule 404 (permissible strike prices for
index options).
31 The Exchange also proposes to make a nonsubstantive change to Interpretation and Policy .02
to Exchange Rule 404 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.
32 The Exchange notes this would not prevent the
Exchange from listing a P.M.-settled Monthly
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With respect to Monthly Options
Series added pursuant to proposed
Interpretation and Policy .13(a)–(f) to
Exchange Rule 404, 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. Notwithstanding this delisting
policy, Member requests to add strikes
and/or maintain strikes in Monthly
Options Series in series eligible for
delisting will be granted. In connection
with this delisting policy, if the
Exchange identifies series for delisting,
the Exchange will notify other options
exchanges with similar delisting
policies regarding eligible series for
delisting and will work with such other
exchanges to develop a uniform list of
series to be delisted, so as to ensure
uniform series delisting of multiply
listed Monthly Options Series.
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 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,33
which expire at the close of business at
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.
33 The Exchange notes it currently lists quarterly
expirations on certain ETF options pursuant to
Interpretation and Policy .03 to Exchange Rule 404.
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65949
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. Additionally,
the Exchange notes that this change is
substantively identical to a proposal
adopted by the Exchange’s affiliate,
MIAX Pearl Options.34
Tuesday and Thursday IWM Expirations
Currently, Table 1 in Interpretations
and Policies .02 of Exchange Rule 404
specifies each symbol that qualifies as a
Short Term Option Daily Expiration.35
Today, Table 1 permits the listing and
trading of Monday Short Term Option
Daily Expirations and Wednesday Short
Term Option Daily Expirations for IWM.
At this time, the Exchange proposes to
expand the Short Term Option Series
Program to permit the listing and
trading of no more than a total of two
IWM Short Term Option Daily
Expirations beyond the current week for
each of Monday, Tuesday, Wednesday,
34 See Securities Exchange Release Act No. 99251
(December 29, 2023), 89 FR 819 (January 5, 2024)
(SR–PEARL–2023–72).
35 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 Interpretations and Policies .02
of Exchange Rule 404.
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and Thursday expirations at one time.36
The listing and trading of Tuesday and
Thursday Short Term Option Daily
Expirations would be subject to
Interpretations and Policies .02 of
Exchange Rule 404.
Today, Tuesday Short Term Option
Daily Expirations in SPDR S&P 500 ETF
Trust (‘‘SPY’’) and Invesco QQQ
TrustSM (‘‘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’’).37 Also,
today, Thursday Short Term Option
Daily Expirations in SPY and QQQ may
open for trading on any Tuesday or
Wednesday that is a business day series
of options on the symbols provided in
Table 1 that expire at the close of
business on each of the next two
Wednesdays that are business days and
are not business days in which standard
expiration options series, Monthly
Options Series, or Quarterly Options
Series expire (‘‘Wednesday Short Term
Option Expiration Date’’).
In the event that options on IWM
expire on a Tuesday or Thursday and
that Tuesday or Thursday is a business
day in which standard expiration
options series, Monthly Options Series,
or Quarterly Options Series expire, the
Exchange would skip that week’s listing
and instead list the following week; the
two weeks would therefore not be
consecutive. With this proposal, the
36 The Exchange would amend the Tuesday and
Thursday expirations for IWM in Table 1 in
Interpretations and Policies .02 of Exchange Rule
404 from ‘‘0’’ to ‘‘2’’ to permit Tuesday and
Thursday expirations for options on IWM listed
pursuant to the Short Term Option Series. The
Exchange notes that Cboe Exchange, Inc. (‘‘Cboe’’)
began listing Tuesday and Thursday expirations in
the Russell 2000 Index Weeklys® (‘‘RUTW’’) and
Mini-Russell 2000 Index Weeklys® (‘‘MRUT’’) on
January 8, 2024. See Securities Exchange Act
Release No. 98621 (September 28, 2023), 88 FR
68896 (October 4, 2023) (SR–CBOE–2023–054) (a
Proposed Rule Change To Amend Rule 4.13);
Securities Exchange Act Release No. 98957
(November 15, 2023), 88 FR 81130 (November 21,
2023) (SR–CBOE–2023–054) (Order Approving a
Proposed Rule Change To Amend Rule 4.13 To
Expand the Nonstandard Expirations Program To
Include P.M.-Settled Options on Broad-Based
Indexes That Expire on Tuesday or Thursday); See
also Cboe Global Markets, Inc., Cboe To Offer Daily
Expiries For Russell 2000 Index Options Suite,
Beginning January 8, 2024, available at https://
ir.cboe.com/news/news-details/2023/Cboe-TOOFFER-DAILY-EXPIRIES-FOR-RUSSELL-2000INDEX-OPTIONS-SUITE-BEGINNING-JANUARY-82024/default.aspx (last visit February 14, 2024).
37 See Interpretation and Policy .02 of Exchange
Rule 404.
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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.38
The interval between strike prices for
the proposed Tuesday and Thursday
IWM Short Term Option Daily
Expirations will be the same as those for
Tuesday and Thursday Short Term
Option Daily Expirations in SPY and
QQQ, applicable to the Short Term
Option Series Program.39
Interpretations and Policies .10 of
Exchange Rule 404 provides that,
notwithstanding any other provision
regarding the interval of strike prices of
series of options on Exchange-Traded
Fund Shares in Exchange Rule 404, the
interval of strike prices on options on
IWM will be $1 or greater.40 Further,
Interpretations and Policies .02(e) of
Exchange Rule 404 provides that the
strike price interval for Short Term
Option Series may be $0.50 or greater
for option classes that trade in $1 strike
price intervals and are in the Short
Term Option Series Program. Therefore,
the Tuesday and Thursday IWM Short
Term Option Daily Expirations will
have a $0.50 strike interval minimum.
As is the case with other equity options
series listed pursuant to the Short Term
Option Series Program, the Tuesday and
Thursday IWM Short Term Option Daily
Expiration series will be P.M.-settled.
Pursuant to Exchange Rule 100,41
with respect to the Short Term Option
38 Today, IWM may trade on Mondays and
Wednesdays in addition to Fridays, as is the case
for all options series.
39 See Interpretation and Policy .10 of Exchange
Rule 404.
40 Options on SPY, iShares Core S&P 500 ETF
(‘‘IVV’’), QQQ, IWM, and the SPDR Dow Jones
Industrial Average ETF (‘‘DIA’’) are also subject to
Interpretations and Policies .10 of Exchange Rule
404.
41 The term ‘‘Short Term Option Series’’ means a
series in an option class that is approved for listing
and trading on the Exchange in which the series is
opened for trading on any Monday, Tuesday,
Wednesday, Thursday or Friday that is a business
day and that expires on the Monday, Tuesday,
Wednesday, Thursday, or Friday of the next
business week, or, in the case of a series that is
listed on a Friday and expires on a Monday, is
listed one business week and one business day
prior to that expiration. If a Tuesday, Wednesday,
Thursday or Friday is not a business day, the series
may be opened (or shall expire) on the first business
day immediately prior to that Tuesday, Wednesday,
Thursday or Friday, respectively. For a series listed
pursuant to this section for Monday expiration, if
a Monday is not a business day, the series shall
expire on the first business day immediately
following that Monday. See Exchange Rule 100.
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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.42 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.43 This thirty (30)
series restriction would apply to
Tuesday and Thursday IWM Short Term
Option Daily Expiration series as well.
With this proposal, Tuesday and
Thursday IWM Expirations would be
treated the same as Tuesday and
Thursday Expirations in SPY and QQQ.
With respect to standard expiration
option series, Short Term Option Daily
Expirations may expire in the same
week in which standard expiration
option series on the same class expire.
In the case of Monthly Options Series
and Quarterly Options Series, no Short
Term Option Series may expire on the
same day as an expiration of a Monthly
Options Series or Quarterly Options
Series, respectively, in the same class.44
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
42 See Interpretation and Policy .02(c) and (d) of
Exchange Rule 404.
43 See Interpretation and Policy .02 of Exchange
Rule 404.
44 See Interpretation and Policy .02(b) of
Exchange Rule 404.
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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. Additionally, the Exchange notes
that this change is substantively
identical to a proposal adopted by the
Exchange’s affiliate, MIAX Pearl
Options.45
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Low Priced Stock Strike Price Interval
Program
Currently, Exchange Rule 404, Series
of Option Contracts Open for Trading,
describes the process and procedures for
listing and trading series of options on
the Exchange. Rule 404 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 $50.00.46 Rule 404
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 $1.00.47
Additionally, Rule 404 provides for a
$0.50 Strike Program.48 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
shall remain in the $0.50 Strike Program
until otherwise designated by the
Exchange.49
The Exchange proposes to adopt a
new strike interval program for
underlying stocks that are not in the
aforementioned $0.50 Strike Program (or
45 See Securities Exchange Release Act No. 99997
(April 19, 2024), 89 FR 32480 (April 26, 2024) (SR–
PEARL–2024–21).
46 See Exchange Rule 404(f).
47 See Interpretation and Policy .01(a) of Rule 404.
48 See Interpretation and Policy .04 of Rule 404.
49 Id.
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the Short Term Option Series
Program) 50 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. The $0.50 Strike Program
considers stocks that have a closing
price at or below $5.00 whereas the
Exchange’s proposal will consider
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.51 Therefore, the
Exchange is proposing to implement a
new strike interval program termed the
‘‘Low Priced Stock Strike Price Interval
Program.’’
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 $2.00.52 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
404A(b)(1).53 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
50 See
Interpretation and Policy .02 of Rule 404.
Interpretation and Policy .04 of Rule 404.
52 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.
53 The Exchange notes this is the same
methodology used in the $1 Strike Price Interval
Program. See Interpretation and Policy .01(c)(3) of
Rule 404.
51 See
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65951
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
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, 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.54 Rule
402(f) provides the criteria for listing
options on American Depositary
Receipts (‘‘ADRs’’) if they meet certain
criteria and guidelines set forth in
Exchange Rule 402. 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.55 Finally, the Exchange may
trade options on a broad-based index
pursuant to Rule 19b–4(e) of the
Securities Exchange Act of 1934
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
54 See
55 See
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Exchange Rule 402(b)(4).
Exchange Rule 402(f)(3)(ii).
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trading volume of at least 90,000 shares
during the last six month period.56
Additionally, the Exchange proposes
to amend the table in Interpretations
and Policies .11 of Rule 404 to insert a
new column to harmonize the
Exchange’s proposal to the strike
intervals for Short Term Options Series
as described in Interpretations and
Policies .02 of Rule 404. The table in
Interpretations and Policies .11 is
intended to limit the intervals between
strikes for multiply listed equity options
within the Short Term Options Series
program that have an expiration date
more than twenty-one days from the
listing date.57 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.58 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 Short Term Options Series
Program and those described herein
under the Exchange’s proposal.
Additionally, the Exchange notes that
this change is substantively identical to
a proposal adopted by the Exchange’s
affiliate, MIAX Pearl Options.59
The Exchange recognizes that this
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.
This initiative has been spearheaded by
the Nasdaq BX who filed an initial
proposal focused on the removal, and
56 See
Exchange Rule 1802(d)(7).
Securities Exchange Release Act No. 91125
(February 21, 2021), 86 FR 10375 (February 19,
2021) (SR–BX–2020–032) (Order Granting
Accelerated Approval of a Proposed Rule Change,
as Modified by Amendment No. 1, To Amend
Options 4, Section 5, To Limit Short Term Options
Series Intervals Between Strikes That Are Available
for Quoting and Trading on BX).
58 Id.
59 See Securities Exchange Release Act No. 99034
(November 29, 2023), 88 FR 84379 (December 5,
2023) (SR–PEARL–2023–66).
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57 See
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prevention of the listing, of strikes
which are extraneous and do not add
value to the marketplace (the ‘‘Strike
Interval Proposal’’).60 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 twentyone days from the listing date.61 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 where there wasn’t. At
the time of its proposal Nasdaq BX
estimated that the Strike Interval
Proposal would reduce the number of
strikes it listed by 81,000.62 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. 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 63 which will improve market
quality. Under the requirements for the
Low Priced Stock Strike Price Interval
Program as described herein, the
Exchange determined that as of August
9, 2023, 106 symbols met the proposed
criteria. Of those symbols 36 are
currently in the $1 Strike Price Interval
Program with $1.00 and $2.00 strikes
listed. Under the Exchange’s proposal
the Exchange would add the $0.50 and
$1.50 strikes for these symbols for the
current expiration terms. The remaining
70 symbols eligible under the
60 See Securities Exchange Act No. 91225
(February 12, 2021), 86 FR 10375 (February 12,
2021) (SR–BX–2020–032) (BX Strike Approval
Order); see also BX Options Strike Proliferation
Proposal (February 25, 2021) available at: https://
www.nasdaq.com/solutions/bx-options-strikeproliferation-proposal).
61 See Securities Exchange Act No. 91225
(February 12, 2021), 86 FR 10375 (February 12,
2021) (SR–BX–2020–032).
62 See id.
63 See proposed Interpretation and Policy .12(a) of
Rule 404 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. The Exchange continuously
evaluates stocks that may be eligible for inclusion
in the Program.
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Exchange’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 a total of
approximately 3,250 options would be
added. As of August 9, 2023, the
Exchange listed 1,106,550 options,
therefore the additional options that
would be listed under this proposal
would represent a very minor increase
of 0.294% in the number of options
listed on the Exchange.
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.64 The Exchange
also believes that Members 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.
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
64 The Exchange conducts periodic testing with
OPRA to ensure performance and capacity targets
are being met.
65 15 U.S.C. 78f(b).
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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.
Wednesday Expirations
Similar to Wednesday expirations in
SPY, QQQ, and IWM, the proposal to
permit Wednesday ETP Expirations,
subject to the proposed limitation of two
expirations beyond the current week,
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
allowing them to better manage their
risk exposure. Today, the Exchange lists
Wednesday SPY, QQQ, and IWM
Expirations.67
The Exchange believes the Short Term
Option Series 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 Short Term Option
Series 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 Policy .02 of Rule 404 that
currently apply to Wednesday SPY,
QQQ, and IWM expirations is justified.
For example, the Exchange believes that
allowing Wednesday ETP Expirations
and monthly ETP expirations in the
same week will benefit investors and
minimize investor confusion by
providing Wednesday ETP Expirations
in a continuous and uniform manner.
The Exchange notes that this change is
substantively identical to a proposal
adopted by the Exchange’s affiliate,
MIAX Pearl Options.68
67 See
66 15
Interpretation and Policy .02 of Rule 404.
68 See supra note 20.
U.S.C. 78f(b)(5).
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65953
Monthly Options Series
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.69
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 fills 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
69 Compare proposed Interpretation and Policy
.13 of Exchange Rule 404 to Interpretation and
Policy .03 of Exchange Rule 404.
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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 investor confusion and thus
protect investors and the public interest.
Given that Quarterly Options Series the
Exchange currently lists are essentially
Monthly Options Series that can expire
at the end of only certain calendar
months, the Exchange believes it is
reasonable to list Monthly Options
Series in accordance with the same
terms, as it will promote just and
equitable principles of trade. The
Exchange believes limiting Monthly
Options Series to five classes will
ensure the addition of these new series
will have a negligible impact on the
Exchange 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 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. The Exchange
notes that this change is substantively
identical to a proposal adopted by the
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Exchange’s affiliate, MIAX Pearl
Options.70
Tuesday and Thursday IWM Expirations
The Exchange believes that IWM
Tuesday and Thursday Short Term
Daily Expirations will allow market
participants to purchase IWM options
based on their timing as needed and
allow them to tailor their investment
and hedging needs more effectively.
Further, the proposal to permit Tuesday
and Thursday Short Term Daily
Expirations for options on IWM listed
pursuant to the Short Term Option
Series Program, subject to the proposed
limitation of two nearest expirations,
would protect investors and the public
interest by providing the investing
public and other market participants
more flexibility to closely tailor their
investment and hedging decisions in
IWM options, thus allowing them to
better manage their risk exposure.
In particular, the Exchange believes
the Short Term Option Series Program
has been successful to date and that
Tuesday and Thursday IWM Short Term
Daily Expirations should simply expand
the ability of investors to hedge risk
against market movements stemming
from economic releases or market events
that occur throughout the month in the
same way that the Short Term Option
Series Program has expanded the
landscape of hedging. Similarly, the
Exchange believes Tuesday and
Thursday IWM Short Term Daily
Expirations should create greater trading
and hedging opportunities and provide
customers the flexibility to tailor their
investment objectives more effectively.
The Exchange currently lists SPY and
QQQ Tuesday and Thursday Short Term
Daily Expirations.71
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.72 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.73
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
70 See
supra note 33.
Interpretation and Policy .02 of Exchange
Rule 404.
72 See Interpretation and Policy .02(b) of
Exchange Rule 404.
73 See Interpretation and Policy .02 of Exchange
Rule 404.
71 See
PO 00000
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Fmt 4703
Sfmt 4703
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.
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. The Exchange notes that
this change is substantively identical to
a proposal adopted by the Exchange’s
affiliate, MIAX Pearl Options.74
Low Priced Stock Strike Price Interval
Program
The Exchange believes its proposal to
adopt a new Low Priced Stock Strike
Price Interval Program 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.75 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 over
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.76 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-the74 See
supra note 44.
Yahoo! Finance, https://
finance.yahoo.com/quote/SOND/history?p=SOND
(last visited August 10, 2023).
76 See Yahoo! Finance, https://
finance.yahoo.com/quote/CTXR/history?p=CTXR
(last visited August 10, 2023).
75 See
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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.
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 the
efforts undertaken by the industry to
curb strike proliferation as that effort
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
the industry’s efforts to eliminate
repetitive and unnecessary strikes in
any fashion.
The Exchange believes that its 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 its average
daily trading volume requirement is
substantially greater that the average
daily trading requirement currently in
place on the Exchange for options on
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equity underlyings,77 ADRs,78 and
broad-based indexes.79
The Exchange believes that the
proposed rule change is consistent with
Section 6(b)(1) of the Act, which
provides that the Exchange be organized
and have the capacity to be able to carry
out the purposes of the Act and 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 Members
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 and 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
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 Exchange Rule 402, Criteria
for Underlying Securities. Specifically,
Rule 402 requires that underlying
securities for which put or call option
contracts are approved for listing and
trading on the Exchange must meet the
following criteria: (1) the security must
be registered and be an ‘‘NMS stock’’ as
defined in Rule 600 of Regulation NMS
under the Exchange Act; (2) the security
shall be characterized by a substantial
number of outstanding shares that are
widely held and actively traded.80
Additionally, Rule 402 provides that
absent exceptional circumstances, an
underlying security will not be selected
for options transactions unless: (1) there
are a minimum of seven (7) million
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 Exchange
77 See
supra note 53.
supra note 54.
79 See supra note 55.
80 See Exchange Rule 402(a)(1) and (2).
65955
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 Exchange
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
twelve (12) months.81 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 to the
Exchange’s listings rules. As such, the
Exchange believes that the listing
requirements described in Exchange
Rule 402 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. The
Exchange notes that this change is
substantively identical to a proposal
adopted by the Exchange’s affiliate,
MIAX Pearl Options.82
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
Wednesday Expirations
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
78 See
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81 See
82 See
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Exchange Rule 402(b)(1), (2), (3) and (4).
supra note 58.
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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.
Monthly Options Series
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.83 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
83 See Interpretation and Policy .03 to Exchange
Rule 404.
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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.
Consequently, the Exchange does not
believe that the proposed change
implicates competition at all.
Tuesday and Thursday IWM Expirations
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
Similar to SPY and QQQ Tuesday and
Thursday Expirations, the introduction
of IWM Tuesday and Thursday Short
Term Daily Expirations does not impose
an undue burden on competition. The
Exchange believes that it will, among
other things, expand hedging tools
available to market participants and
continue the reduction of the premium
cost of buying protection. The Exchange
believes that IWM Tuesday and
Thursday Short Term Daily Expirations
will allow market participants to
purchase IWM options based on their
timing as needed and allow them to
tailor their investment and hedging
needs more effectively. The Exchange
notes that Cboe began listing Tuesday
and Thursday expirations in RUTW and
MRUT on January 8, 2024.84
84 See Securities Exchange Act Release No. 98621
(September 28, 2023), 88 FR 68896 (October 4,
2023) (SR–CBOE–2023–054) (a Proposed Rule
Change To Amend Rule 4.13); Securities Exchange
Act Release No. 98957 (November 15, 2023), 88 FR
81130 (November 21, 2023) (SR–CBOE–2023–054)
(Order Approving a Proposed Rule Change To
Amend Rule 4.13 To Expand the Nonstandard
Expirations Program To Include P.M.-Settled
Options on Broad-Based Indexes That Expire on
Tuesday or Thursday); See also Cboe Global
Markets, Inc., Cboe To Offer Daily Expiries For
Russell 2000 Index Options Suite, Beginning
January 8, 2024, available at https://ir.cboe.com/
news/news-details/2023/Cboe-TO-OFFER-DAILYEXPIRIES-FOR-RUSSELL-2000-INDEX-OPTIONSSUITE-BEGINNING-JANUARY-8-2024/default.aspx
(last visited April 25, 2024).
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The Exchange does not believe the
proposal will impose any burden on
inter-market competition, as nothing
prevents other options exchanges from
proposing similar rules to list and trade
Short-Term Option Series with Tuesday
and Thursday Short Term Daily
Expirations. The Exchange notes that
having Tuesday and Thursday IWM
expirations is not a novel proposal, as
SPY and QQQ Tuesday and Thursday
Expirations are currently listed on the
Exchange.85
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.
Low Priced Stock Strike Price Interval
Program
The Exchange does not believe that its
proposed rule change will impose any
burden on intra-market competition as
the Rules of the Exchange apply equally
to all Members of the Exchange and all
Members may trade the new proposed
strikes if they so choose. Specifically,
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 does not believe that its
proposed rule change will impose any
burden on inter-market 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.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
85 See Interpretation and Policy .02 of Exchange
Rule 404.
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operative for 30 days after the date of
the filing, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 86 and Rule
19b–4(f)(6) thereunder.87
A proposed rule change filed under
Rule 19b–4(f)(6) 88 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),89 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 so that the proposed
rule change may become operative upon
filing. The Exchange states that the
waiver of the 30-day operative delay
would ensure fair competition among
the exchanges by allowing the Exchange
to permit the listing of two Wednesday
expirations for options on ETPs. The
Exchange also states that waiver of the
operative delay would allow the
Exchange to immediately offer an
additional market to investors to trade
Monthly Options Series and to compete
effectively with at least one other
exchange that currently lists and trades
the same series. The Exchange further
states that waiver of the operative delay
would allow the Exchange to
immediately adopt the strike interval
program and list strikes on the Exchange
in accordance with this proposal, and
thereby provide opportunities for
investors to select the venue on which
to trade these strikes. In addition, the
Exchange states that the changes
contained in the proposal are
substantively identical to changes that
have been adopted by the Exchange’s
affiliate, MIAX Pearl Options.90
For these reasons, and because the
proposal does not raise any new or
novel legal or regulatory issues, the
Commission finds that waiver of the 30day 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
86 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.
88 17 CFR 240.19b–4(f0(6).
89 17 CFR 240.19b–4(f)(6)(iii).
90 See supra note 11 and accompanying text.
lotter on DSK11XQN23PROD with NOTICES1
87 17
VerDate Sep<11>2014
17:55 Aug 12, 2024
Jkt 262001
proposed rule change operative upon
filing.91
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
under Section 19(b)(2)(B) 92 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:
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–
SAPPHIRE–2024–02 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–SAPPHIRE–2024–02. 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
91 For purposes only of waiver 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).
92 15 U.S.C. 78s(b)(2)(B).
PO 00000
Frm 00122
Fmt 4703
Sfmt 4703
65957
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–SAPPHIRE–2024–02 and should be
submitted on or before September 3,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.93
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–17953 Filed 8–12–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100666; File No. SR–
NYSEAMER–2024–45]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing of
Proposed Rule Change To Amend Rule
915 To Permit the Listing and Trading
of Options on the Bitwise Ethereum
ETF, the Grayscale Ethereum Trust,
the Grayscale Ethereum Mini Trust,
and Any Trust That Holds Ether
August 7, 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 July 23,
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, II, and III below, which Items
have been prepared by the selfregulatory 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 915 to permit the listing and
trading of options on the Bitwise
93 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
E:\FR\FM\13AUN1.SGM
13AUN1
]]>Agencies
[Federal Register Volume 89, Number 156 (Tuesday, August 13, 2024)]
[Notices]
[Pages 65946-65957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-17953]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100670; File No. SR-SAPPHIRE-2024-02]
Self-Regulatory Organizations; MIAX Sapphire, LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Exchange Rule 404, Series of Option Contracts Open for Trading
August 7, 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 July 24, 2024, MIAX Sapphire, LLC (``MIAX Sapphire'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 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 Exchange Rule 404, Series of Option
Contracts Open for Trading.
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxglobal.com/markets/us-options/miax-sapphire/rule-filings, at the Exchange's principal office, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Background
In preparation for the launch of the MIAX Sapphire Exchange,\4\ the
Exchange proposes to update Rule 404, Series of Option Contracts \5\
Open for Trading, in order to update the Rule to reflect changes that
have occurred within the industry, and that were made to the Exchange's
affiliate, MIAX Pearl Options, Rule 404, while MIAX Sapphire's Form 1
Application to register as a national securities exchange was pending
approval.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 100539 (July 15,
2024), 89 FR 58848 (July 19, 2024) (File No. 10-240) (order
approving application of MIAX Sapphire, LLC for registration as a
national securities exchange).
\5\ The term ``option contract'' means a put or a call issued,
or subject to issuance, by the Clearing Corporation pursuant to the
Rules of the Clearing Corporation. See Exchange Rule 100.
---------------------------------------------------------------------------
The Exchange proposes to (i) copy a proposal originally submitted
by Nasdaq ISE to adopt two Wednesday expirations for options on certain
Exchange Traded Products (``Wednesday Expirations''); \6\ (ii) copy a
proposal originally submitted by the Cboe Exchange to adopt the listing
of option series \7\ that would expire at the close of business on the
last business day of a calendar month (``Monthly Options Series''); \8\
(iii) copy a proposal originally submitted by Nasdaq ISE to permit the
listing and trading of option series with Tuesday and Thursday
expirations for options on iShares Russell 2000 ETF (IWM) (``Tuesday
and Thursday IWM Expirations''); \9\ and (iv) copy a proposal
[[Page 65947]]
originally submitted by the Exchange's affiliate, MIAX Options, to
adopt a new strike interval program (``Low Priced Stock Strike Price
Interval Program'').\10\ Additionally, the Exchange notes that all the
changes contained in the aforementioned proposals have been adopted by
the Exchange's affiliate, MIAX Pearl Options,\11\ and are currently
operative in MIAX Pearl Options Rule 404.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 98905 (November 13,
2023), 88 FR 80348 (November 17, 2023) (SR-ISE-2023-11) (Order
Approving a Proposed Rule Change to Amend the Short Term Option
Series Program to Permit the Listing of Two Wednesday Expirations
for Options on Certain Exchange Traded Products).
\7\ The term ``series of options'' means all option contracts of
the same class having the same exercise price and expiration date.
See Exchange Rule 100.
\8\ See Securities Exchange Act Release No. 98915 (Nov. 13,
2023), 88 FR 80356 (November 17, 2023) (SR-CBOE-2023-049) (Order
Approving a Proposed Rule Change To Adopt Monthly Options Series).
\9\ See Securities Exchange Act Release No. 99946 (April 11,
2024), 89 FR 27471 (April 17, 2024) (SR-ISE-2024-06) (Order
Approving a Proposed Rule Change to Amend the Short Term Option
Series Program).
\10\ See Securities Exchange Release Act 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).
\11\ See Securities Exchange Release Act Nos. 99180 (December
14, 2023), 88 FR 88148 (December 20, 2023) (SR-PEARL-2023-70); 99251
(December 29, 2023), 89 FR 819 (January 5, 2024) (SR-PEARL-2023-72);
99997 (April 19, 2024), 89 FR 32480 (April 26, 2024) (SR-PEARL-2024-
21); and 99034 (November 29, 2023), 88 FR 84379 (December 5, 2023)
(SR-PEARL-2023-66).
---------------------------------------------------------------------------
Proposal
Wednesday Expirations
The Exchange proposes to amend Interpretations and Policies .02 to
expand the Short Term Option Series 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'').
Currently, as set forth in Policy .02 of Rule 404, after an option
class \12\ 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 in 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 Short Term Option Friday 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.
---------------------------------------------------------------------------
\12\ The terms ``class of options'' or ``option class'' means
all option contracts covering the same underlying security. See
Exchange Rule 100.
---------------------------------------------------------------------------
Additionally, the Exchange may open for trading series of options
on the symbols provided in Table 1 of Policy .02 of Rule 404 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.\13\ In order to effectuate
the proposed changes, the Exchange would add USO, UNG, GLD, SLV, and
TLT to Table 1 of Policy .02 of Rule 404, which specifies each symbol
that qualifies as a Short Term Option Daily Expiration.
---------------------------------------------------------------------------
\13\ Consistent with the current operation of the rule, the
Exchange notes that if it adds a Wednesday expiration on a Tuesday,
it could technically list three outstanding Wednesday expirations at
one time. The Exchange will therefore clarify the rule text in
Policy .02 of Rule 404 to specify that it can list two Short Term
Option Expiration Dates beyond the current week for each Monday,
Tuesday, Wednesday, and Thursday expiration.
---------------------------------------------------------------------------
The proposed Wednesday USO, UNG, GLD, SLV, and TLT expirations will
be similar to the current Wednesday SPY, QQQ, and IWM Short Term Option
Daily Expirations set forth in Policy .02 of Rule 404, 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 Quarterly Options Series
expire (``Wednesday USO Expirations,'' ``Wednesday UNG Expirations,''
``Wednesday GLD Expirations,'' ``Wednesday SLV Expirations,'' and
``Wednesday TLT Expirations'') (collectively, ``Wednesday ETP
Expirations'').\14\ In the event Short Term Option Daily Expirations
expire on a Wednesday and that Wednesday is the same day that a
Quarterly Options Series 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.
---------------------------------------------------------------------------
\14\ While the relevant rule text in Policy .02 of Rule 404 also
indicates that the Exchange will not list such expirations on a
Wednesday that is a business day in which monthly options series
expire, practically speaking this would not occur, as the Exchange
would not list any ``Wednesday Expirations'' that would expire on
the close of business on a Wednesday that is a business day where
standard expiration option series, Monthly Option Series, or
Quarterly Options Series expire.
---------------------------------------------------------------------------
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 monthly options series or
Quarterly Options Series expire (``Friday Short Term Option Expiration
Dates'').
Similar to Wednesday SPY, QQQ, and IWM Short Term Option Daily
Expirations within Policy .02 of Rule 404, 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 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 Short Term Option
Series Program.\15\ 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.\16\ As is the case with other
equity options listed pursuant to the Short Term Option Series Program,
the Wednesday ETP Expirations series will be P.M.-settled.
---------------------------------------------------------------------------
\15\ See Policy .02(e) of Rule 404.
\16\ Id.
---------------------------------------------------------------------------
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 of Interpretations and
Policies .02 of Rule 404, that expire at the close of business on each
of the next two Wednesdays.\17\ If that Wednesday is not a business
day, the series shall expire on the first business day immediately
prior to that
[[Page 65948]]
Wednesday, e.g., Tuesday of that week.\18\
---------------------------------------------------------------------------
\17\ See Interpretation and Policy .02 of Exchange Rule 404.
\18\ See Exchange Rule 100, ``Short Term Option Series.''
---------------------------------------------------------------------------
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.\19\
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.\20\ 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.
---------------------------------------------------------------------------
\19\ See Policy .02(c) of Rule 404.
\20\ Id.
---------------------------------------------------------------------------
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 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 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 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. Additionally, the Exchange notes that this change is
substantively identical to a proposal adopted by the Exchange's
affiliate, MIAX Pearl Options.\21\
---------------------------------------------------------------------------
\21\ See Securities Exchange Release Act No. 99180 (December 14,
2023), 88 FR 88148 (December 20, 2023) (SR-PEARL-2023-70).
---------------------------------------------------------------------------
Monthly Options Series
The Exchange proposes to amend Rule 404 to accommodate the listing
of options series that would expire at the close of business on the
last business day of a calendar month (``Monthly Options Series'').
Pursuant to new proposed Interpretations and Policies .13 to
Exchange Rule 404, 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'').\22\ 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.\23\ The Exchange may list 12
expirations for Monthly Options Series. Monthly Options Series need not
be for consecutive months; however, the expiration date of a
nonconsecutive expiration may not be beyond what would be considered
the last expiration date if the maximum number of expirations were
listed consecutively.\24\ Other expirations in the same class are not
counted as part of the maximum numbers of Monthly Options Series
expirations for a class.\25\ Monthly Options Series will be P.M.-
settled.\26\
---------------------------------------------------------------------------
\22\ The Exchange proposes to amend Exchange Rule 404(a) to
provide that proposed Interpretation and Policy .13 to Exchange Rule
404 will describe how the Exchange will fix a specific expiration
date and exercise price for Monthly Options Series and that proposed
Interpretation and Policy .13 to Exchange Rule 404 will govern the
procedures for opening Monthly Options Series, respectively. This is
consistent with language in current Exchange Rules 404(a) for other
Short Term Options Series and Quarterly Options Series.
\23\ Currently, Cboe Exchange, Inc. has a substantively
identical program. See Securities Exchange Act Release No. 98915
(Nov. 13, 2023) (SR-CBOE-2023-049) (Order Approving a Proposed Rule
Change To Adopt Monthly Options Series). See also Cboe Exchange Rule
4.5(g).
\24\ 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).
\25\ See proposed Interpretation and Policy .13(b) to Exchange
Rule 404.
\26\ See proposed Interpretation and Policy .13(c) to Exchange
Rule 404.
---------------------------------------------------------------------------
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.\27\
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 Member \28\ demand, or when the
market price of the underlying security moves substantially from the
initial exercise price or prices. To the extent that any additional
strike prices are listed by the Exchange, such additional strike prices
will be within 30% above or below the closing price of the underlying
index or security on the preceding day. The Exchange may also open
additional strike prices of Monthly Options Series that are more than
30% above or below the current price of the underlying
[[Page 65949]]
security, provided that demonstrated Member interest exists for such
series, as expressed by institutional, corporate, Members or their
brokers. Market Makers trading for their own account will not be
considered when determining Member 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.\29\ 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.\30\
---------------------------------------------------------------------------
\27\ See proposed Interpretation and Policy .13(d). The Exchange
notes these proposed provisions are consistent with the initial
series provision for the Quarterly Options Series program in
Interpretation and Policy .03 to Exchange Rule 404. While different
than the initial strike listing provision for the Quarterly Options
Series program in current Interpretation and Policy .03 to Exchange
Rule 404, the Exchange believes the proposed provision is
appropriate, as it contemplates classes that may have strike
intervals of $5 or greater.
\28\ The term ``Member'' means an individual or organization
that is registered with the Exchange pursuant to Chapter II of MIAX
Pearl Rules for purposes of trading on the Exchange as an
``Electronic Exchange Member'' or ``Market Maker.'' Members are
deemed ``members'' under the Exchange Act. See Exchange Rule 100.
\29\ See proposed Interpretation and Policy .13(e) to Exchange
Rule 404.
\30\ See proposed Interpretation and Policy .13(f) to Exchange
Rule 404; see also Interpretations and Policies .01 and .04, .06,
.08, .09, .10 to Exchange Rule 404 (permissible strike prices for
ETF classes) and Interpretations and Policies .05, .07, .11 to
Exchange Rule 404 (permissible strike prices for index options).
---------------------------------------------------------------------------
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 Interpretation and Policy .02 to Exchange Rule 404 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.\31\ Similarly, proposed Interpretation and
Policy .13(b) to Exchange Rule 404 provides 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.\32\
---------------------------------------------------------------------------
\31\ The Exchange also proposes to make a non-substantive change
to Interpretation and Policy .02 to Exchange Rule 404 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.
\32\ 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
Interpretation and Policy .13(a)-(f) to Exchange Rule 404, 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. Notwithstanding this delisting policy, Member
requests to add strikes and/or maintain strikes in Monthly Options
Series in series eligible for delisting will be granted. In connection
with this delisting policy, if the Exchange identifies series for
delisting, the Exchange will notify other options exchanges with
similar delisting policies regarding eligible series for delisting and
will work with such other exchanges to develop a uniform list of series
to be delisted, so as to ensure uniform series delisting of multiply
listed Monthly Options Series.
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 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,\33\ 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. Additionally, the
Exchange notes that this change is substantively identical to a
proposal adopted by the Exchange's affiliate, MIAX Pearl Options.\34\
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\33\ The Exchange notes it currently lists quarterly expirations
on certain ETF options pursuant to Interpretation and Policy .03 to
Exchange Rule 404.
\34\ See Securities Exchange Release Act No. 99251 (December 29,
2023), 89 FR 819 (January 5, 2024) (SR-PEARL-2023-72).
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Tuesday and Thursday IWM Expirations
Currently, Table 1 in Interpretations and Policies .02 of Exchange
Rule 404 specifies each symbol that qualifies as a Short Term Option
Daily Expiration.\35\ Today, Table 1 permits the listing and trading of
Monday Short Term Option Daily Expirations and Wednesday Short Term
Option Daily Expirations for IWM. At this time, the Exchange proposes
to expand the Short Term Option Series Program to permit the listing
and trading of no more than a total of two IWM Short Term Option Daily
Expirations beyond the current week for each of Monday, Tuesday,
Wednesday,
[[Page 65950]]
and Thursday expirations at one time.\36\ The listing and trading of
Tuesday and Thursday Short Term Option Daily Expirations would be
subject to Interpretations and Policies .02 of Exchange Rule 404.
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\35\ 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 Interpretations and Policies .02 of Exchange
Rule 404.
\36\ The Exchange would amend the Tuesday and Thursday
expirations for IWM in Table 1 in Interpretations and Policies .02
of Exchange Rule 404 from ``0'' to ``2'' to permit Tuesday and
Thursday expirations for options on IWM listed pursuant to the Short
Term Option Series. The Exchange notes that Cboe Exchange, Inc.
(``Cboe'') began listing Tuesday and Thursday expirations in the
Russell 2000 Index Weeklys[supreg] (``RUTW'') and Mini-Russell 2000
Index Weeklys[supreg] (``MRUT'') on January 8, 2024. See Securities
Exchange Act Release No. 98621 (September 28, 2023), 88 FR 68896
(October 4, 2023) (SR-CBOE-2023-054) (a Proposed Rule Change To
Amend Rule 4.13); Securities Exchange Act Release No. 98957
(November 15, 2023), 88 FR 81130 (November 21, 2023) (SR-CBOE-2023-
054) (Order Approving a Proposed Rule Change To Amend Rule 4.13 To
Expand the Nonstandard Expirations Program To Include P.M.-Settled
Options on Broad-Based Indexes That Expire on Tuesday or Thursday);
See also Cboe Global Markets, Inc., Cboe To Offer Daily Expiries For
Russell 2000 Index Options Suite, Beginning January 8, 2024,
available at https://ir.cboe.com/news/news-details/2023/Cboe-TO-OFFER-DAILY-EXPIRIES-FOR-RUSSELL-2000-INDEX-OPTIONS-SUITE-BEGINNING-JANUARY-8-2024/default.aspx (last visit February 14, 2024).
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Today, Tuesday Short Term Option Daily Expirations in SPDR S&P 500
ETF Trust (``SPY'') and Invesco QQQ Trust\SM\ (``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'').\37\ 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'').
---------------------------------------------------------------------------
\37\ See Interpretation and Policy .02 of Exchange Rule 404.
---------------------------------------------------------------------------
In the event that options on IWM expire on a Tuesday or Thursday
and that Tuesday or Thursday is a business day in which standard
expiration options series, Monthly Options Series, or Quarterly Options
Series expire, the Exchange would skip that week's listing and instead
list the following week; the two weeks would therefore not be
consecutive. With this proposal, the Exchange would be able to open for
trading series of options on IWM that expire at the close of business
on each of the next two Mondays, Tuesdays, Wednesdays, and Thursdays,
respectively, that are business days beyond the current week and are
not business days in which standard expiration options series, Monthly
Options Series, or Quarterly Options Series expire.\38\
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\38\ Today, IWM may trade on Mondays and Wednesdays in addition
to Fridays, as is the case for all options series.
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The interval between strike prices for the proposed Tuesday and
Thursday IWM Short Term Option Daily Expirations will be the same as
those for Tuesday and Thursday Short Term Option Daily Expirations in
SPY and QQQ, applicable to the Short Term Option Series Program.\39\
---------------------------------------------------------------------------
\39\ See Interpretation and Policy .10 of Exchange Rule 404.
---------------------------------------------------------------------------
Interpretations and Policies .10 of Exchange Rule 404 provides
that, notwithstanding any other provision regarding the interval of
strike prices of series of options on Exchange-Traded Fund Shares in
Exchange Rule 404, the interval of strike prices on options on IWM will
be $1 or greater.\40\ Further, Interpretations and Policies .02(e) of
Exchange Rule 404 provides that the strike price interval for Short
Term Option Series may be $0.50 or greater for option classes that
trade in $1 strike price intervals and are in the Short Term Option
Series Program. Therefore, the Tuesday and Thursday IWM Short Term
Option Daily Expirations will have a $0.50 strike interval minimum. As
is the case with other equity options series listed pursuant to the
Short Term Option Series Program, the Tuesday and Thursday IWM Short
Term Option Daily Expiration series will be P.M.-settled.
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\40\ Options on SPY, iShares Core S&P 500 ETF (``IVV''), QQQ,
IWM, and the SPDR Dow Jones Industrial Average ETF (``DIA'') are
also subject to Interpretations and Policies .10 of Exchange Rule
404.
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Pursuant to Exchange Rule 100,\41\ 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.
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\41\ The term ``Short Term Option Series'' means a series in an
option class that is approved for listing and trading on the
Exchange in which the series is opened for trading on any Monday,
Tuesday, Wednesday, Thursday or Friday that is a business day and
that expires on the Monday, Tuesday, Wednesday, Thursday, or Friday
of the next business week, or, in the case of a series that is
listed on a Friday and expires on a Monday, is listed one business
week and one business day prior to that expiration. If a Tuesday,
Wednesday, Thursday or Friday is not a business day, the series may
be opened (or shall expire) on the first business day immediately
prior to that Tuesday, Wednesday, Thursday or Friday, respectively.
For a series listed pursuant to this section for Monday expiration,
if a Monday is not a business day, the series shall expire on the
first business day immediately following that Monday. See Exchange
Rule 100.
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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.\42\
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.\43\ This thirty (30) series restriction would apply
to Tuesday and Thursday IWM Short Term Option Daily Expiration series
as well.
---------------------------------------------------------------------------
\42\ See Interpretation and Policy .02(c) and (d) of Exchange
Rule 404.
\43\ See Interpretation and Policy .02 of Exchange Rule 404.
---------------------------------------------------------------------------
With this proposal, Tuesday and Thursday IWM Expirations would be
treated the same as Tuesday and Thursday Expirations in SPY and QQQ.
With respect to standard expiration option series, Short Term Option
Daily Expirations may expire in the same week in which standard
expiration option series on the same class expire. In the case of
Monthly Options Series and Quarterly Options Series, no Short Term
Option Series may expire on the same day as an expiration of a Monthly
Options Series or Quarterly Options Series, respectively, in the same
class.\44\ 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.
---------------------------------------------------------------------------
\44\ See Interpretation and Policy .02(b) of Exchange Rule 404.
---------------------------------------------------------------------------
The Exchange does not believe that any market disruptions will be
encountered with the introduction of P.M.-settled Tuesday and Thursday
IWM Short Term Option Daily Expirations. The Exchange has the necessary
capacity and surveillance programs in place to support and properly
monitor trading in the proposed Tuesday and Thursday Short Term Option
Daily Expirations. The Exchange currently trades P.M.-settled Short
Term Option Series that expire Tuesday and Thursday for SPY and QQQ and
has not experienced any market disruptions nor issues with
[[Page 65951]]
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. Additionally, the Exchange
notes that this change is substantively identical to a proposal adopted
by the Exchange's affiliate, MIAX Pearl Options.\45\
---------------------------------------------------------------------------
\45\ See Securities Exchange Release Act No. 99997 (April 19,
2024), 89 FR 32480 (April 26, 2024) (SR-PEARL-2024-21).
---------------------------------------------------------------------------
Low Priced Stock Strike Price Interval Program
Currently, Exchange Rule 404, Series of Option Contracts Open for
Trading, describes the process and procedures for listing and trading
series of options on the Exchange. Rule 404 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.\46\
Rule 404 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.\47\ Additionally, Rule 404 provides for
a $0.50 Strike Program.\48\ 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 shall remain in the $0.50 Strike Program
until otherwise designated by the Exchange.\49\
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\46\ See Exchange Rule 404(f).
\47\ See Interpretation and Policy .01(a) of Rule 404.
\48\ See Interpretation and Policy .04 of Rule 404.
\49\ Id.
---------------------------------------------------------------------------
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) \50\ 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.
The $0.50 Strike Program considers stocks that have a closing price at
or below $5.00 whereas the Exchange's proposal will consider 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.\51\ Therefore,
the Exchange is proposing to implement a new strike interval program
termed the ``Low Priced Stock Strike Price Interval Program.''
---------------------------------------------------------------------------
\50\ See Interpretation and Policy .02 of Rule 404.
\51\ See Interpretation and Policy .04 of Rule 404.
---------------------------------------------------------------------------
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.\52\ 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 404A(b)(1).\53\ 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.
---------------------------------------------------------------------------
\52\ 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.
\53\ The Exchange notes this is the same methodology used in the
$1 Strike Price Interval Program. See Interpretation and Policy
.01(c)(3) of Rule 404.
---------------------------------------------------------------------------
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, 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.\54\ Rule 402(f) provides the criteria
for listing options on American Depositary Receipts (``ADRs'') if they
meet certain criteria and guidelines set forth in Exchange Rule 402.
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.\55\ Finally, the Exchange may trade options on a broad-based
index pursuant to Rule 19b-4(e) of the Securities Exchange Act of 1934
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
[[Page 65952]]
trading volume of at least 90,000 shares during the last six month
period.\56\
---------------------------------------------------------------------------
\54\ See Exchange Rule 402(b)(4).
\55\ See Exchange Rule 402(f)(3)(ii).
\56\ See Exchange Rule 1802(d)(7).
---------------------------------------------------------------------------
Additionally, the Exchange proposes to amend the table in
Interpretations and Policies .11 of Rule 404 to insert a new column to
harmonize the Exchange's proposal to the strike intervals for Short
Term Options Series as described in Interpretations and Policies .02 of
Rule 404. The table in Interpretations and Policies .11 is intended to
limit the intervals between strikes for multiply listed equity options
within the Short Term Options Series program that have an expiration
date more than twenty-one days from the listing date.\57\ 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.\58\ 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 Short Term
Options Series Program and those described herein under the Exchange's
proposal. Additionally, the Exchange notes that this change is
substantively identical to a proposal adopted by the Exchange's
affiliate, MIAX Pearl Options.\59\
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\57\ See Securities Exchange Release Act No. 91125 (February 21,
2021), 86 FR 10375 (February 19, 2021) (SR-BX-2020-032) (Order
Granting Accelerated Approval of a Proposed Rule Change, as Modified
by Amendment No. 1, To Amend Options 4, Section 5, To Limit Short
Term Options Series Intervals Between Strikes That Are Available for
Quoting and Trading on BX).
\58\ Id.
\59\ See Securities Exchange Release Act No. 99034 (November 29,
2023), 88 FR 84379 (December 5, 2023) (SR-PEARL-2023-66).
---------------------------------------------------------------------------
The Exchange recognizes that this 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. This initiative has been spearheaded by the Nasdaq BX
who filed an initial 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'').\60\ 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.\61\ 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 where there wasn't. At the time of its proposal Nasdaq BX
estimated that the Strike Interval Proposal would reduce the number of
strikes it listed by 81,000.\62\ 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. The Exchange believes this amendment
will harmonize the Exchange's proposal with the Strike Interval
Proposal described above.
---------------------------------------------------------------------------
\60\ See Securities Exchange Act No. 91225 (February 12, 2021),
86 FR 10375 (February 12, 2021) (SR-BX-2020-032) (BX Strike Approval
Order); see also BX Options Strike Proliferation Proposal (February
25, 2021) available at: https://www.nasdaq.com/solutions/bx-options-strike-proliferation-proposal).
\61\ See Securities Exchange Act No. 91225 (February 12, 2021),
86 FR 10375 (February 12, 2021) (SR-BX-2020-032).
\62\ See id.
---------------------------------------------------------------------------
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 \63\ which will improve market quality. Under the
requirements for the Low Priced Stock Strike Price Interval Program as
described herein, the Exchange determined that as of August 9, 2023,
106 symbols met the proposed criteria. Of those symbols 36 are
currently in the $1 Strike Price Interval Program with $1.00 and $2.00
strikes listed. Under the Exchange's proposal the Exchange would add
the $0.50 and $1.50 strikes for these symbols for the current
expiration terms. The remaining 70 symbols eligible under the
Exchange'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 a total
of approximately 3,250 options would be added. As of August 9, 2023,
the Exchange listed 1,106,550 options, therefore the additional options
that would be listed under this proposal would represent a very minor
increase of 0.294% in the number of options listed on the Exchange.
---------------------------------------------------------------------------
\63\ See proposed Interpretation and Policy .12(a) of Rule 404
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. The Exchange continuously evaluates stocks
that may be eligible for inclusion in the Program.
---------------------------------------------------------------------------
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.\64\ The Exchange also believes that Members 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.
---------------------------------------------------------------------------
\64\ The Exchange conducts periodic testing with OPRA to ensure
performance and capacity targets are being met.
---------------------------------------------------------------------------
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
[[Page 65953]]
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).
---------------------------------------------------------------------------
Wednesday Expirations
Similar to Wednesday expirations in SPY, QQQ, and IWM, the proposal
to permit Wednesday ETP Expirations, subject to the proposed limitation
of two expirations beyond the current week, 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 allowing them to
better manage their risk exposure. Today, the Exchange lists Wednesday
SPY, QQQ, and IWM Expirations.\67\
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\67\ See Interpretation and Policy .02 of Rule 404.
---------------------------------------------------------------------------
The Exchange believes the Short Term Option Series 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 Short Term Option Series 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
Policy .02 of Rule 404 that currently apply to Wednesday SPY, QQQ, and
IWM expirations is justified. For example, the Exchange believes that
allowing Wednesday ETP Expirations and monthly ETP expirations in the
same week will benefit investors and minimize investor confusion by
providing Wednesday ETP Expirations in a continuous and uniform manner.
The Exchange notes that this change is substantively identical to a
proposal adopted by the Exchange's affiliate, MIAX Pearl Options.\68\
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\68\ See supra note 20.
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Monthly Options Series
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.\69\ 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 fills 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
[[Page 65954]]
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
investor confusion and thus protect investors and the public interest.
Given that Quarterly Options Series the Exchange currently lists are
essentially Monthly Options Series that can expire at the end of only
certain calendar months, the Exchange believes it is reasonable to list
Monthly Options Series in accordance with the same terms, as it will
promote just and equitable principles of trade. The Exchange believes
limiting Monthly Options Series to five classes will ensure the
addition of these new series will have a negligible impact on the
Exchange and OPRA's quoting capacity. The Exchange represents it has
the necessary systems capacity to support new options series that will
result from the introduction of Monthly Options Series.
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\69\ Compare proposed Interpretation and Policy .13 of Exchange
Rule 404 to Interpretation and Policy .03 of Exchange Rule 404.
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The Exchange also represents its current surveillance programs will
apply to Monthly Options Series and will properly monitor trading in
the proposed Monthly Options Series. 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. The Exchange notes that this change is substantively
identical to a proposal adopted by the Exchange's affiliate, MIAX Pearl
Options.\70\
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\70\ See supra note 33.
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Tuesday and Thursday IWM Expirations
The Exchange believes that IWM Tuesday and Thursday Short Term
Daily Expirations will allow market participants to purchase IWM
options based on their timing as needed and allow them to tailor their
investment and hedging needs more effectively. Further, the proposal to
permit Tuesday and Thursday Short Term Daily Expirations for options on
IWM listed pursuant to the Short Term Option Series Program, subject to
the proposed limitation of two nearest expirations, would protect
investors and the public interest by providing the investing public and
other market participants more flexibility to closely tailor their
investment and hedging decisions in IWM options, thus allowing them to
better manage their risk exposure.
In particular, the Exchange believes the Short Term Option Series
Program has been successful to date and that Tuesday and Thursday IWM
Short Term Daily Expirations should simply expand the ability of
investors to hedge risk against market movements stemming from economic
releases or market events that occur throughout the month in the same
way that the Short Term Option Series Program has expanded the
landscape of hedging. Similarly, the Exchange believes Tuesday and
Thursday IWM Short Term Daily Expirations should create greater trading
and hedging opportunities and provide customers the flexibility to
tailor their investment objectives more effectively. The Exchange
currently lists SPY and QQQ Tuesday and Thursday Short Term Daily
Expirations.\71\
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\71\ See Interpretation and Policy .02 of Exchange Rule 404.
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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.\72\ 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.\73\
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.
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\72\ See Interpretation and Policy .02(b) of Exchange Rule 404.
\73\ See Interpretation and Policy .02 of Exchange Rule 404.
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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. The Exchange notes that
this change is substantively identical to a proposal adopted by the
Exchange's affiliate, MIAX Pearl Options.\74\
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\74\ See supra note 44.
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Low Priced Stock Strike Price Interval Program
The Exchange believes its proposal to adopt a new Low Priced Stock
Strike Price Interval Program 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.\75\
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 over 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.\76\
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-
[[Page 65955]]
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.
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\75\ See Yahoo! Finance, https://finance.yahoo.com/quote/SOND/history?p=SOND (last visited August 10, 2023).
\76\ See Yahoo! Finance, https://finance.yahoo.com/quote/CTXR/history?p=CTXR (last visited August 10, 2023).
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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 the efforts undertaken by the industry
to curb strike proliferation as that effort 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 the
industry's efforts to eliminate repetitive and unnecessary strikes in
any fashion.
The Exchange believes that its 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 its average daily trading volume
requirement is substantially greater that the average daily trading
requirement currently in place on the Exchange for options on equity
underlyings,\77\ ADRs,\78\ and broad-based indexes.\79\
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\77\ See supra note 53.
\78\ See supra note 54.
\79\ See supra note 55.
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The Exchange believes that the proposed rule change is consistent
with Section 6(b)(1) of the Act, which provides that the Exchange be
organized and have the capacity to be able to carry out the purposes of
the Act and 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 Members 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 and 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
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 Exchange Rule 402, Criteria for Underlying
Securities. Specifically, Rule 402 requires that underlying securities
for which put or call option contracts are approved for listing and
trading on the Exchange must meet the following criteria: (1) the
security must be registered and be an ``NMS stock'' as defined in Rule
600 of Regulation NMS under the Exchange Act; (2) the security shall be
characterized by a substantial number of outstanding shares that are
widely held and actively traded.\80\ Additionally, Rule 402 provides
that absent exceptional circumstances, an underlying security will not
be selected for options transactions unless: (1) there are a minimum of
seven (7) million 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 Exchange 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 Exchange 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 twelve (12) months.\81\
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 to the Exchange's listings rules.
As such, the Exchange believes that the listing requirements described
in Exchange Rule 402 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. The Exchange notes
that this change is substantively identical to a proposal adopted by
the Exchange's affiliate, MIAX Pearl Options.\82\
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\80\ See Exchange Rule 402(a)(1) and (2).
\81\ See Exchange Rule 402(b)(1), (2), (3) and (4).
\82\ See supra note 58.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
Wednesday Expirations
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
[[Page 65956]]
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.
Monthly Options Series
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.\83\ 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.
---------------------------------------------------------------------------
\83\ See Interpretation and Policy .03 to Exchange Rule 404.
---------------------------------------------------------------------------
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.
Consequently, the Exchange does not believe that the proposed
change implicates competition at all.
Tuesday and Thursday IWM Expirations
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
Similar to SPY and QQQ Tuesday and Thursday Expirations, the
introduction of IWM Tuesday and Thursday Short Term Daily Expirations
does not impose an undue burden on competition. The Exchange believes
that it will, among other things, expand hedging tools available to
market participants and continue the reduction of the premium cost of
buying protection. The Exchange believes that IWM Tuesday and Thursday
Short Term Daily Expirations will allow market participants to purchase
IWM options based on their timing as needed and allow them to tailor
their investment and hedging needs more effectively. The Exchange notes
that Cboe began listing Tuesday and Thursday expirations in RUTW and
MRUT on January 8, 2024.\84\
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\84\ See Securities Exchange Act Release No. 98621 (September
28, 2023), 88 FR 68896 (October 4, 2023) (SR-CBOE-2023-054) (a
Proposed Rule Change To Amend Rule 4.13); Securities Exchange Act
Release No. 98957 (November 15, 2023), 88 FR 81130 (November 21,
2023) (SR-CBOE-2023-054) (Order Approving a Proposed Rule Change To
Amend Rule 4.13 To Expand the Nonstandard Expirations Program To
Include P.M.-Settled Options on Broad-Based Indexes That Expire on
Tuesday or Thursday); See also Cboe Global Markets, Inc., Cboe To
Offer Daily Expiries For Russell 2000 Index Options Suite, Beginning
January 8, 2024, available at https://ir.cboe.com/news/news-details/2023/Cboe-TO-OFFER-DAILY-EXPIRIES-FOR-RUSSELL-2000-INDEX-OPTIONS-SUITE-BEGINNING-JANUARY-8-2024/default.aspx (last visited April 25,
2024).
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The Exchange does not believe the proposal will impose any burden
on inter-market competition, as nothing prevents other options
exchanges from proposing similar rules to list and trade Short-Term
Option Series with Tuesday and Thursday Short Term Daily Expirations.
The Exchange notes that having Tuesday and Thursday IWM expirations is
not a novel proposal, as SPY and QQQ Tuesday and Thursday Expirations
are currently listed on the Exchange.\85\
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\85\ See Interpretation and Policy .02 of Exchange Rule 404.
---------------------------------------------------------------------------
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.
Low Priced Stock Strike Price Interval Program
The Exchange does not believe that its proposed rule change will
impose any burden on intra-market competition as the Rules of the
Exchange apply equally to all Members of the Exchange and all Members
may trade the new proposed strikes if they so choose. Specifically, 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 does not believe that its proposed rule change will
impose any burden on inter-market 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 inter-market 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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become
[[Page 65957]]
operative for 30 days after the date of the filing, or such shorter
time as the Commission may designate, if consistent with the protection
of investors and the public interest, it has become effective pursuant
to Section 19(b)(3)(A)(iii) of the Act \86\ and Rule 19b-4(f)(6)
thereunder.\87\
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\86\ 15 U.S.C. 78s(b)(3)(A)(iii).
\87\ 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \88\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\89\ 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 so that the proposed
rule change may become operative upon filing. The Exchange states that
the waiver of the 30-day operative delay would ensure fair competition
among the exchanges by allowing the Exchange to permit the listing of
two Wednesday expirations for options on ETPs. The Exchange also states
that waiver of the operative delay would allow the Exchange to
immediately offer an additional market to investors to trade Monthly
Options Series and to compete effectively with at least one other
exchange that currently lists and trades the same series. The Exchange
further states that waiver of the operative delay would allow the
Exchange to immediately adopt the strike interval program and list
strikes on the Exchange in accordance with this proposal, and thereby
provide opportunities for investors to select the venue on which to
trade these strikes. In addition, the Exchange states that the changes
contained in the proposal are substantively identical to changes that
have been adopted by the Exchange's affiliate, MIAX Pearl Options.\90\
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\88\ 17 CFR 240.19b-4(f0(6).
\89\ 17 CFR 240.19b-4(f)(6)(iii).
\90\ See supra note 11 and accompanying text.
---------------------------------------------------------------------------
For these reasons, and because the proposal does not raise any new
or novel legal or regulatory issues, the Commission finds that waiver
of the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission hereby
waives the 30-day operative delay and designates the proposed rule
change operative upon filing.\91\
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\91\ For purposes only of waiver 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 Commission
takes such action, the Commission will institute proceedings under
Section 19(b)(2)(B) \92\ to determine whether the proposed rule change
should be approved or disapproved.
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\92\ 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-SAPPHIRE-2024-02 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-SAPPHIRE-2024-02. 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-SAPPHIRE-2024-02 and should
be submitted on or before September 3, 2024.
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\93\ 17 CFR 200.30-3(a)(12), (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\93\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-17953 Filed 8-12-24; 8:45 am]
BILLING CODE 8011-01-P
