[Federal Register Volume 87, Number 212 (Thursday, November 3, 2022)]
[Notices]
[Pages 66335-66337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-23871]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96177; File No. SR-ISE-2022-23]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Standard 
Monthly Expirations for NQX

October 28, 2022.
    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 October 17, 2022, 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 Exchange has designated the 
proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. 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.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to permit ISE to list up to 12 standard 
monthly expirations for options based on \1/5\ the value of the Nasdaq-
100 Index[supreg] (``NQX'').
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/ise/rules, 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 proposes to amend its index listing rules at Options 4A, 
Section 12(a)(3) to allow it to list up to 12 standard monthly 
expirations for options based on \1/5\ the value of the Nasdaq-100 
Index (``NQX'').
    Currently, Options 4A, Section 12(a)(3) provides that the Exchange 
may list: (i) up to six (6) standard monthly expirations at any one 
time in a class, but will not list index options that expire more than 
twelve (12) months out; (ii) up to 12 standard monthly expirations at 
any one time for any class that the Exchange (as the Reporting 
Authority) uses to calculate a volatility index; and (iii) up to 12 
standard (monthly) expirations in NDX options.\4\ Today, the maximum 
number of monthly expirations permitted by Options 4A, Section 12(a)(3) 
for NQX options is six (6) standard monthly expirations.
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    \4\ Options 4A, Section 12(a)(3) states, ``Expiration Months and 
Weeks. Index options contracts may expire at three (3)-month 
intervals or in consecutive weeks or months. The Exchange may list: 
(i) up to six (6) standard monthly expirations at any one time in a 
class, but will not list index options that expire more than twelve 
(12) months out; (ii) up to 12 standard monthly expirations at any 
one time for any class that the Exchange (as the Reporting 
Authority) uses to calculate a volatility index; and (iii) up to 12 
standard (monthly) expirations in NDX options.''
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    At this time, like Nasdaq-100 Index options (``NDX''), the Exchange 
proposes to permit up to 12 standard (monthly) expirations in NQX 
options. This would permit the Exchange to list the same number of 
monthly expirations (up to 12) for NQX options as currently permitted 
for options on the corresponding full-value index, Nasdaq-100 Index.
    Today, NQX options trade independently of and in addition to NDX 
options, and the NQX options are subject to the same rules that 
presently govern the trading of NDX options, including sales practice 
rules, margin requirements, trading rules, and position and exercise 
limits. Like NDX, NQX options are European-style and cash-settled, and 
have a contract multiplier of 100. The contract specifications for NQX 
options mirror in all respects those of the NDX options contract listed 
on the Exchange, except that NQX options are based on \1/5\ of the 
value of the Nasdaq-100 Index, and are P.M.-settled pursuant to Options 
4A, Section 12(a)(6).\5\
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    \5\ The Exchange notes that NDX options are both a.m.-settled 
and p.m.-settled while NQX options are only p.m.-settled.
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    Market participants may use NQX options as a hedging vehicle to 
meet their investment needs in connection with the Nasdaq-100 Index. 
Since both products are used to hedge exposure to the Nasdaq-100 Index, 
the Exchange believes it is appropriate to permit the Exchange to be 
able to list the same number of monthly expirations for NQX options as 
it does today for NDX options.
    The Exchange notes that Cboe Exchange, Inc.'s (``Cboe'') rules 
permit it to list up to 12 standard monthly expirations for Mini-
Russell 2000 Index (``Mini-RUT'' or ``MRUT'') and Mini S&P 500 Index 
(``Mini-SPX'' or ``XSP'').\6\ Mini-SPX is p.m.-settled and subject to a 
pilot program similar to NQX.
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    \6\ See Cboe Rule 4.13(a)(2).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\8\ 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    Allowing ISE to list up to 12 standard monthly expirations for NQX 
options will remove impediments to and perfect the mechanism of a free 
and open market and a national market system, and, in general, protect 
investors, because it will allow the Exchange to be able to list the 
same number of expirations for options on a reduced-value index (NQX) 
as it currently lists for NDX options, which are options on the 
corresponding full-value index. The Exchange notes that because the 
same components comprise NQX as the Nasdaq-100 Index, market 
participants may use NQX options as a hedging vehicle to meet their 
investment needs in connection with the corresponding full-value index-
related product. Therefore, by allowing the Exchange to be able to list 
a consistent number of expirations between options on the full-value 
and reduced-value index, the proposed rule change will benefit 
investors by assisting them in more effectively using options that 
track the same index to meet their investment needs.

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    The Exchange notes that today, Cboe rules permit it to list up to 
12 standard monthly expirations for Mini-Russell 2000 Index (``Mini-
RUT'' or ``MRUT'') and Mini S&P 500 Index (``Mini-SPX'' or ``XSP'').\9\
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    \9\ See Cboe Rule 4.13(a)(2).
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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.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intra-market competition that is not necessary or 
appropriate in furtherance of the purposes of the Act as all monthly 
expirations listed for NQX options will be equally available, or 
continue to be equally available, to all market participants who trade 
such options. Also, the proposed number of expirations will apply, or 
continue to apply, in the same manner to all NQX options. The proposed 
rule change makes it possible for the same expirations to be listed for 
options on the reduced-value index (NQX) that are currently available 
for NDX options, which are options on the full-value index, Nasdaq-100 
Index.
    The Exchange does not believe that the proposed rule change 
regarding the number of standard monthly expirations permissible for 
NQX options will impose any burden on intermarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act 
because NQX is a proprietary Exchange product. To the extent that 
allowing up to 12 standard monthly expirations for NQX options trading 
on the Exchange may make the Exchange a more attractive marketplace to 
market participants at other exchanges, such market participants are 
free to elect to become market participants on ISE. As noted above, the 
Exchange believes that being able to list a consistent number of 
monthly expirations of options on both the full-value and reduced-value 
index may permit investors to more effectively use options that track 
the same index to meet their investment needs.
    This proposal enhances intermarket competition because it permits 
ISE's proprietary product, NQX, the same flexibility to trade, and 
hedge, with 12 standard monthly expirations as certain Cboe proprietary 
products.

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 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) of the Act \10\ and Rule 19b-
4(f)(6) \11\ thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ 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 
waiver of the operative delay will protect investors because it will 
allow the Exchange to be able to list expirations for NQX options that 
are consistent with the expirations for related NDX options, and assist 
market participants in more effectively utilizing both the full-value 
index and reduced-value option as hedging vehicles to meet their 
investment needs in connection with the Nasdaq-100 Index product as 
soon as feasible. Further, the Exchange states that there is investor 
demand to be able to transact in the same number of expirations for NQX 
options as the Exchange currently lists for NDX options (that is, 12 
standard monthly expirations). For these reasons, and because the 
proposed rule change does not raise any novel regulatory issues, the 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission hereby waives the operative delay and 
designates the proposal operative upon filing.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has 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-2022-23 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-ISE-2022-23. 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

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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 such 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-2022-23 and should be 
submitted on or before November 25, 2022.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-23871 Filed 11-2-22; 8:45 am]
BILLING CODE 8011-01-P