[Federal Register Volume 86, Number 193 (Friday, October 8, 2021)]
[Notices]
[Pages 56318-56321]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-21989]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93247; File No. SR-BOX-2021-23]


Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Permit Monday 
and Wednesday Expirations for Options Listed Pursuant to the Short Term 
Option Series Program on the iShares Russell 2000 ETF

October 4, 2021.
    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 September 29, 2021, BOX Exchange LLC (the ``Exchange'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
prepared by the self-regulatory organization. The Commission is 
publishing this notice to solicit comments on the proposed rule 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 BOX Rule IM-5050-6 (Short Term 
Option Series Program) to permit Monday and Wednesday expirations for 
options listed pursuant to the Short Term Option Series Program on the 
iShares Russell 2000 ETF. The text of the proposed rule change is 
available from the principal office of the Exchange, at the 
Commission's Public Reference Room and also on the Exchange's internet 
website at http://boxoptions.com.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

[[Page 56319]]

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

1. Purpose
    The Exchange proposes to amend IM-5050-6 to permit Monday and 
Wednesday expirations for options listed pursuant to the Short Term 
Option Series Program (``Program'') on the iShares Russell 2000 ETF 
(``IWM''). This is a competitive filing that is based on a proposal 
recently submitted by Nasdaq Phlx LLC (``Phlx'') and approved by the 
Securities and Exchange Commission (``Commission'').\3\
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    \3\ See Securities Exchange Act Release No. 91357 (September 28, 
2021) (Approving SR-PHLX-2021-43).
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    A 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, Wednesday 
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.\4\ The Exchange 
proposes to amend IM-5050-6 to permit the listing of options series 
that expire on Mondays and Wednesdays in IWM.
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    \4\ BOX Rule 100(a)(65) defines the term ``Short Term Option 
Series'' as 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, Wednesday 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.
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Monday Expirations
    As proposed, with respect to Monday IWM Expirations within IM-5050-
6(d), the Exchange may open for trading on any Friday or Monday that is 
a business day series of options on IWM to expire on any Monday of the 
month that is a business day and is not a Monday in which Quarterly 
Options Series on the same class expire (``Monday IWM Expirations''), 
provided that Monday IWM Expirations that are listed on a Friday must 
be listed at least one business week and one business day prior to the 
expiration. The Exchange may list up to five consecutive Monday IWM 
Expirations at one time; the Exchange may have no more than a total of 
five Monday IWM Expirations.
Wednesday Expirations
    As proposed, with respect to Wednesday IWM Expirations within IM-
5050-6(c), the Exchange may open for trading on any Tuesday or 
Wednesday that is a business day series of options on IWM to expire on 
any Wednesday of the month that is a business day and is not a 
Wednesday in which Quarterly Options Series on the same class expire 
(``Wednesday IWM Expirations''). The Exchange may list up to five 
consecutive Wednesday IWM Expirations at one time; the Exchange may 
have no more than a total of five Wednesday IWM Expirations and a total 
of five Wednesday IWM Expirations.
Monday and Wednesday Expirations
    The interval between strike prices for the proposed Monday and 
Wednesday IWM Expirations will be the same as those for the current 
Short Term Option Series for Wednesday and Friday expirations 
applicable to the Program.\5\ Specifically, the Monday and Wednesday 
IWM Expirations will have a $0.50 strike interval minimum.\6\ As is the 
case with other equity options series listed pursuant to the Program, 
the Monday and Wednesday IWM Expiration series will be P.M.-settled.
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    \5\ See IM-5050-6(b)(5).
    \6\ Id.
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    Pursuant to BOX Rule 100(a)(65), with respect to the Program, if 
Monday i not a business day the series shall expire on the first 
business day immediately following that Monday. This procedure differs 
from the expiration date of Wednesday expiration series that are 
scheduled to expire on a holiday. Pursuant to BOX Rule100(a)(65), a 
Wednesday expiration series shall expire on the first business day 
immediately prior to that Wednesday, e.g., Tuesday of that week, if the 
Wednesday is not a business day. For purposes of IWM, however, the 
Exchange believes that it is preferable to require Monday expiration 
series in this scenario to expire on the Tuesday of that week rather 
than the previous business day, e.g., the previous Friday, since the 
Tuesday is closer in time to the scheduled expiration date of the 
series than the previous Friday, and therefore may be more 
representative of anticipated market conditions. Monday SPY and QQQ 
expirations \7\ are treated in this manner today. Cboe Exchange, Inc. 
(``Cboe'') uses the same procedure for options on the S&P 500 index 
(``SPX''), Mini-SPX Index Options (``XSP''), Russell 2000 Index 
(``RUT'') and Mini-Russell 200 Index Options (``MRUT'') and with Monday 
expirations that are listed pursuant to its Nonstandard Expirations 
Pilot Program and that are scheduled to expire on a holiday.\8\ Also, 
Phlx \9\ and Nasdaq ISE, LLC (``ISE'') \10\ use the same procedure for 
options on the Nasdaq-100[supreg] (``NDX'') with Monday expirations 
that are listed pursuant to its Nonstandard Expirations Pilot Programs, 
respectively.
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    \7\ See IM-5050-6(b)(5).
    \8\ See Cboe Rule 4.13(e)(1) ``. . . If the Exchange is not open 
for business on a respective Monday, the normally Monday expiring 
Weekly Expirations will expire on the following business day. If the 
Exchange is not open for business on a respective Wednesday or 
Friday, the normally Wednesday or Friday expiring Weekly Expirations 
will expire on the previous business day.''
    \9\ See Phlx Options 4A, Section 12(b)(5).
    \10\ See ISE Supplementary Material .07 to Options 4A, Section 
12.
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    Currently, for each option class eligible for participation in the 
Program, the Exchange is limited to opening thirty (30) series for each 
expiration date for the specific class.\11\ The thirty (30) series 
restriction does not include series that are open by other securities 
exchanges under their respective short term option rules; the Exchange 
may list these additional series that are listed by other 
exchanges.\12\ This thirty (30) series restriction would apply to 
Monday and Wednesday IWM Expiration series as well. In addition, the 
Exchange will be able to list series that are listed by other 
exchanges, assuming they file similar rules with the Commission to list 
IWM options expiring on Mondays and Wednesdays.
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    \11\ See IM-5050-6(b)(2).
    \12\ Id.
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    Finally, the Exchange is amending IM-5050-6(b)(2), which addresses 
the listing of Short Term Option Series that expire in the same week as 
monthly or quarterly options series. Currently, that rule states that 
no Short Term Option Series may expire in the same week in which 
monthly option series on the same class expire (with the exception of 
Monday and Wednesday SPY and QQQ Expirations) or, in the case of 
Quarterly Options Series, on an expiration that coincides with an 
expiration of Quarterly Option Series on the same class.\13\ As with 
Monday and Wednesday SPY and QQQ Expirations, the Exchange proposes to 
permit Monday and Wednesday IWM Expirations to expire in the same week 
as monthly options series on the same class. The Exchange believes that 
it is reasonable to extend this exemption to Monday and Wednesday IWM

[[Page 56320]]

Expirations because Monday and Wednesday IWM Expirations and standard 
monthly options will not expire on the same trading day, as standard 
monthly options expire on Fridays. Additionally, the Exchange believes 
that not listing Monday and Wednesday IWM Expirations for one week 
every month because there was a monthly IWM expiration on the Friday of 
that week would create investor confusion.
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    \13\ See current IM-5050-6(b)(2).
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    The Exchange does not believe that any market disruptions will be 
encountered with the introduction of P.M.-settled Monday and Wednesday 
IWM expirations. The Exchange has the necessary capacity and 
surveillance programs in place to support and properly monitor trading 
in the proposed Monday and Wednesday IWM Expirations. The Exchange 
currently trades P.M.-settled Short Term Option Series that expire 
Monday and Wednesday for SPY and QQQ and has not experienced any market 
disruptions nor issues with capacity. Today, the Exchange has 
surveillance programs in place to support and properly monitor trading 
in Short Term Option Series that expire Monday and Wednesday for SPY 
and QQQ.
    Similar to SPY and QQQ, the introduction of IWM Monday and 
Wednesday expirations will, among other things, expand hedging tools 
available to market participants and continue the reduction of the 
premium cost of buying protection. The Exchange believes that Monday 
and Wednesday IWM expirations will allow market participants to 
purchase IWM based on their timing as needed and allow them to tailor 
their investment and hedging needs more effectively.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Securities Exchange Act of 1934 
(the ``Act''),\14\ in general, and Section 6(b)(5) of the Act,\15\ in 
particular, 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 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 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.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes the Program has been 
successful to date and that Monday and Wednesday IWM 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 Program has expanded the 
landscape of hedging. Similarly, the Exchange believes Monday and 
Wednesday IWM Expirations should create greater trading and hedging 
opportunities, as well as flexibility that will provide customers with 
the ability to tailor their investment objectives more effectively.
    BOX currently lists Monday and Wednesday SPY and QQQ 
Expirations.\16\ Also, Cboe \17\ currently permits Monday and Wednesday 
expirations for other options with a weekly expiration, such as options 
on the SPX, XSP, RUT and MRUT pursuant to its Nonstandard Expirations 
Pilot Program. Phlx \18\ and ISE \19\ currently permit Monday and 
Wednesday expirations for other options with a weekly expiration on NDX 
pursuant to its Nonstandard Expirations Pilot Programs, respectively.
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    \16\ See IM-5050-6(c) and (d).
    \17\ See supra note 8.
    \18\ See supra note 9.
    \19\ See supra note 10.
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    With the exception of Monday expiration series that are scheduled 
to expire on a holiday, there are no material differences in the 
treatment of Monday and Wednesday IWM expirations for Short Term Option 
Series. The Exchange believes that it is consistent with the Act to 
treat Monday expiration series that expire on a holiday differently 
than Wednesday or Friday expiration series, since the proposed 
treatment for Monday expiration series will result in an expiration 
date that is closer in time to the scheduled expiration date of the 
series, and therefore may be more representative of anticipated market 
conditions. Monday SPY and QQQ expirations are treated in this manner 
today.\20\ Cboe \21\ uses the same procedure for SPX, XSP, RUT and MRUT 
options with Monday expirations that are listed pursuant to its 
Nonstandard Expirations Pilot Program and that are scheduled to expire 
on a holiday, as do Phlx \22\ and ISE \23\ for NDX options with Monday 
expirations that are listed pursuant to their Nonstandard Expirations 
Pilot Programs, respectively.
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    \20\ See IM-5050-6(b)(2).
    \21\ See supra note 8.
    \22\ See supra note 9.
    \23\ See supra note 10.
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    Given the similarities between Monday and Wednesday SPY and QQQ 
Expirations and the proposed Monday and Wednesday IWM Expirations, the 
Exchange believes that applying the provisions in IM-5050-6, which 
currently apply to Monday and Wednesday SPY and QQQ Expirations, to 
Monday and Wednesday IWM Expirations is justified. For example, the 
Exchange believes that allowing Monday and Wednesday IWM Expirations 
and monthly IWM expirations in the same week will benefit investors and 
minimize investor confusion by providing Monday and Wednesday IWM 
Expirations in a continuous and uniform manner. The Exchange also 
believes that is appropriate to amend IM-5050-6(b)(2) to clarify that 
no Short Term Option Series may expire on the same day as an expiration 
of Quarterly Option Series on the same class, same as SPY and QQQ.
    The Exchange represents that it has an adequate surveillance 
program in place to detect manipulative trading in Monday and Wednesday 
expirations, including Monday and Wednesday IWM Expirations, in the 
same way that it monitors trading in the current Short Term Option 
Series and trading in Monday and Wednesday 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 Monday and Wednesday IWM expirations.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. In this regard and as indicated 
above, the Exchange notes that the rule change is being proposed as a 
competitive response to a filing submitted by Phlx.\24\ The 
Exchange also notes that having Monday and Wednesday IWM expirations is 
not a novel proposal, as Monday and Wednesday SPY and QQQ Expirations 
are currently listed on BOX.\25\ Cboe \26\ uses the same procedure for 
SPX, XSP, RUT and MRUT options with Monday expirations that are listed

[[Page 56321]]

pursuant to its Nonstandard Expirations Pilot Program and that are 
scheduled to expire on a holiday, as do Phlx \27\ and ISE \28\ for NDX 
options with Monday expirations that are listed pursuant to their 
Nonstandard Expirations Pilot Programs, respectively.
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    \24\ See supra, note 3.
    \25\ See IM-5050-6(c) and (d).
    \26\ See supra note 8.
    \27\ See supra note 9.
    \28\ See supra note 10.
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    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. Additionally, 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 Short-Term Option Series with 
Monday and Wednesday expirations.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

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) of the Act \29\ and Rule 19b-
4(f)(6) thereunder.\30\
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    \29\ 15 U.S.C. 78s(b)(3)(A).
    \30\ 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 intention to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act normally does not become operative for 30 days after the date of 
its filing. However, Rule 19b-4(f)(6)(iii) \31\ permits the Commission 
to designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The 
Commission notes that it recently approved Phlx's substantially similar 
proposal to list and trade Monday IWM Expirations and Wednesday IWM 
Expirations.\32\ The Exchange has stated that waiver of the operative 
delay will allow the Exchange to list and trade the proposed product 
immediately, allowing the Exchange to compete with the exchanges that 
have this product in place. For these reasons, the Commission believes 
that the proposed rule change presents no novel issues and that waiver 
of the 30-day operative delay is consistent with the protection of 
investors and the public interest, and will allow the Exchange to 
remain competitive with other exchanges. Accordingly, the Commission 
hereby waives the operative delay and designates the proposed rule 
change operative upon filing.\33\
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    \31\ 17 CFR 240.19b-4(f)(6)(iii).
    \32\ See supra note 3.
    \33\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BOX-2021-23 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-BOX-2021-23. 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-BOX-2021-23 and should be submitted on 
or before October 29, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
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    \34\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-21989 Filed 10-7-21; 8:45 am]
BILLING CODE 8011-01-P