[Federal Register Volume 84, Number 26 (Thursday, February 7, 2019)]
[Notices]
[Pages 2633-2634]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-01385]
[[Page 2633]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85030; File No. SR-ISE-2019-01]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Extend the
Nonstandard Expirations Pilot Program
February 1, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 28, 2019, Nasdaq ISE, LLC (``ISE'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the pilot period for the Exchange's
nonstandard expirations pilot program, currently set to expire on
February 1, 2019.
The text of the proposed rule change is available on the Exchange's
website at http://ise.cchwallstreet.com/, at the principal office of
the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
ISE filed a proposed rule change for the listing and trading on the
Exchange, on a twelve month pilot basis, of p.m.-settled options on
broad-based indexes with nonstandard expirations dates.\3\ The pilot
program permits both Weekly Expirations and End of Month (``EOM'')
expirations similar to those of the a.m.-settled broad-based index
options, except that the exercise settlement value of the options
subject to the pilot are based on the index value derived from the
closing prices of component stocks.
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\3\ See Securities Exchange Act Release No. 82458 (January 8,
2018), 83 FR 1636 (January 12, 2018) (approving SR-ISE-2017-111)
(Notice of Filing of Proposed Rule Change To Establish a Nonstandard
Expirations Pilot Program).
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Exchange Rule 2209 [sic] at Supplementary Material .07(a), Weekly
Expirations, to Rule 1101A [sic], the Exchange may open for trading
Weekly Expirations on any broad-based index eligible for standard
options trading to expire on any Monday, Wednesday, or Friday (other
than the third Friday-of- the-month or days that coincide with an EOM
expiration). Weekly Expirations are be subject to all provisions of
Exchange Rule 2209 [sic] and are treated the same as options on the
same underlying index that expire on the third Friday of the expiration
month. Unlike the standard monthly options, however, Weekly Expirations
are p.m.- settled.
Pursuant to Exchange Rule 2209 [sic] at Supplementary Material
.07(b), End of Month (``EOM'') Expirations, the Exchange may open for
trading EOMs on any broad-based index eligible for standard options
trading to expire on the last trading day of the month. EOMs are
subject to all provisions of Rule 2209 [sic] and treated the same as
options on the same underlying index that expire on the third Friday of
the expiration month. However, the EOMs are p.m.-settled.
The Exchange now proposes to amend Exchange Rule 2209 [sic] at
Supplementary Material .07(c) so that the duration of the pilot program
for these nonstandard expirations will be through May 6, 2019. The
Exchange continues to have sufficient systems capacity to handle p.m.-
settled options on broad-based indexes with nonstandard expirations
dates and has not encountered any issues or adverse market effects as a
result of listing them. Additionally, there is continued investor
interest in these products. The Exchange will make public on its
website any data and analysis it submits to the Commission under the
pilot program.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\4\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\5\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
The Exchange believes the proposed rule change will protect investors
and the public interest by providing the Exchange, the Commission and
investors the benefit of additional time to analyze nonstandard
expiration options. By extending the pilot program, investors may
continue to benefit from a wider array of investment opportunities.
Additionally, both the Exchange and the Commission may continue to
monitor the potential for adverse market effects of p.m.-settlement on
the market, including the underlying cash equities market, at the
expiration of these options.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. Options with nonstandard
expirations would be available for trading to all market participants.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \6\ and
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subparagraph (f)(6) of Rule 19b-4 thereunder.\7\
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\6\ 15 U.S.C. 78s(b)(3)(A)(iii).
\7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Commission has waived this requirement in this case.
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A proposed rule change filed under Rule 19b-4(f)(6) \8\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\9\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest as it will allow the
pilot program to continue uninterrupted, thereby avoiding investor
confusion that could result from a temporary interruption in the pilot
program. For this reason, the Commission designates the proposed rule
change to be operative upon filing.\10\
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\8\ Id.
\9\ 17 CFR 240.19b-4(f)(6)(iii).
\10\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-ISE-2019-01 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-ISE-2019-01. 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 (http://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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-ISE-2019-01 and should be submitted on
or before February 28, 2019.
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\11\ 17 CFR 200.30-3(a)(12) and (59).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-01385 Filed 2-6-19; 8:45 am]
BILLING CODE 8011-01-P