[Federal Register Volume 87, Number 233 (Tuesday, December 6, 2022)]
[Notices]
[Pages 74685-74688]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-26442]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96412; File No. SR-NASDAQ-2022-066]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Definition of Short Term Option Series

November 30, 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 November 18, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' 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 certain rule text within General 2, 
Organization and Administration. Additionally, the Exchange proposes to 
amend The Nasdaq Options Market LLC (``NOM'') rules at Options 1, 
General Provisions; Options 4A, Options Index Rules; and Options 10, 
Doing Business with the Public.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/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
    The Exchange proposes to amend the description of the term ``Short 
Term Option Series'' within NOM Options 1, Section 1, Definitions, to 
conform the term to Nasdaq ISE, LLC's (``ISE'') term of Short Term 
Option Series which was recently amended.\3\ The Exchange also proposes 
to amend certain rule text within NOM Options 4A, Section 12, Terms of 
Index Options Contracts, related to the Short Term Option Series 
Program. Finally, the Exchange propose certain other non-substantive 
amendments. Each change is described below.
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    \3\ See Securities Exchange Act Release No. 96281 (November 9, 
2022), 87 FR 68769 (November 16, 2022) (SR-ISE-2022-18) (Order 
Granting Approval of a Proposed Rule Change to Amend the Short Term 
Option Series Program).
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Short Term Option Series
    Options 1, Section 1(a)(57) describes the term ``Short Term Option 
Series'' as follows:

    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, 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.

    ISE's Options 4 rules were recently amended to expand the Short 
Term Option Series program to permit the listing and trading of options 
series with Tuesday and Thursday expirations for options on SPY and QQQ 
listed pursuant to the Short Term Option Series Program.\4\ In 
conjunction with that change, ISE amended its definition of Short Term 
Option Series, within Options 1, Section 1(a)(49), to accommodate the 
listing of options series that expire on Tuesdays and Thursdays.\5\ 
Specifically, the Exchange added Tuesday and Thursday to the permitted 
expiration days, which currently include Monday, Wednesday, and Friday, 
that it may open for trading.
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    \4\ See note 3 above. NOM's Options 4 Rules are incorporated by 
reference to ISE's Options 4 Rules.
    \5\ See note 3 above.
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    At this time, the Exchange proposes to amend the term ``Short Term 
Option Series'' at Options 1, Section 1(a)(57) to provide,

    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.

    Today, NOM's listing rules permit the listing and trading of 
options series with Tuesday and Thursday expirations for options on SPY 
and QQQ listed

[[Page 74686]]

pursuant to the Short Term Option Series Program.\6\
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    \6\ NOM's Options 4 Rules are incorporated by reference to ISE's 
Options 4 Rules and therefore the approval of ISE's Options 4 rules 
permit the listing and trading of options series with Tuesday and 
Thursday expirations for options on SPY and QQQ on NOM.
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Options 4A, Section 12
    In 2014, NOM amended the Short Term Option Series Program for 
equity options within Chapter IV, Section 6 (currently Options 4, 
Section 5) to change the number of currently listed option classes on 
which Short Term Option Series may be opened on any Short Term Option 
Opening Date from thirty to fifty options classes.\7\ Further, NOM also 
amended the number of Short Term Option Series that the Exchange may 
open for each expiration date in that class from twenty to thirty.\8\ 
At that time, the Exchange neglected to update the index options rules 
to make similar changes to the Short Term Option Series Program given 
that the amount of options classes that may participate in the Short 
Term Option Series Program is aggregated between equity options and 
index options and is not apportioned between equity and index options.
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    \7\ See Securities Exchange Act Release Nos. 72699 (July 29, 
2014), 79 FR 45506 (August 5, 2014) (SR-NASDAQ-2014-074) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to Short Term Option Series).
    \8\ Id.
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    Today, Options 4A, Section 12(h)(1)(A) provides,

    The Exchange may select up to thirty (30) currently listed 
option classes on which Short Term Option Series may be opened on 
any Short Term Option Opening Date. In addition to the 30 option 
class restriction, the Exchange may also list Short Term Option 
Series on any option classes that are selected by other securities 
exchanges that employ a similar program under their respective 
rules. For each index option class eligible for participation in the 
Short Term Option Series Program, the Exchange may open up to 30 
Short Term Option Series on index options for each expiration date 
in that class. The Exchange may also open Short Term Option Series 
that are opened by other securities exchanges in option classes 
selected by such exchanges under their respective short term option 
rules.

    At this time, the Exchange proposes to amend Options 4A, Section 
12(h)(1)(A) to increase the number of currently listed options classes 
on which Short Term Option Series may be opened on any Short Term 
Option Opening Date from thirty to fifty options classes for index 
options. Additionally, the Exchange proposes to amend the number of 
Short Term Option Series the Exchange may open on index options for 
each expiration date in that class from twenty to thirty. These 
amendments would align the limitations within Options 4A, Section 
12(h)(1)(A) with those currently within Supplementary .03 to Options 4, 
Section 5. The Exchange also proposes to add certain titles before 
Options 4A, Section 12(h)(1)(A)-(E) to indicate the subject matter of 
the paragraphs. Those non-substantive amendments are intended to bring 
clarity to the rule text.
    As noted above, this amendment will not result in a greater number 
of listings in the Short Term Option Series Program because the amount 
of options classes that may participate in the Short Term Option Series 
Program is aggregated between equity options and index options and is 
not apportioned between equity and index options. Amending Options 4A, 
Section 12(h)(1)(A) to conform to the limitations provided within 
Supplementary .03 to Options 4, Section 5 will avoid confusion by 
making clear the aggregate limitations within equity and index options 
for listing Short Term Option Series. Today, ISE, Nasdaq Phlx LLC 
(``Phlx'') and Cboe Exchange, Inc. (``Cboe'') have similar limitations 
within their equity and index Short Term Option Series Program.\9\
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    \9\ See ISE and Phlx Options 4A, Section 12(b)(4) and Cboe 
Exchange, Inc. Rules 4.5 and 4.13. See also Securities Exchange Act 
Release No. 95077 (June 9, 2022), 87 FR 36188 (June 15, 2022) 
(Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Amend Options 4A, Section 12, Terms of Index Options 
Contracts).
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Other Non-Substantive Amendments
    The Exchange proposes to make other amendments to reserve certain 
sections of the Rulebook. These sections contain content in other 
Nasdaq affiliated rulebooks. To harmonize the section numbers across 
the Nasdaq affiliated markets, the Exchange proposes to reserve General 
2, Sections 23 and 24 as well as Options 10, Sections 26 and 27. These 
amendments are non-substantive.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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Short Term Option Series
    The Exchange's proposal to amend the term ``Short Term Option 
Series'' at Options 1, Section 1(a)(57) to reflect the recent change 
\12\ to NOM's listing rules to permit the listing and trading of 
options series with Tuesday and Thursday expirations for options on SPY 
and QQQ listed pursuant to the Short Term Option Series Program is 
consistent with the Exchange Act. This proposal will align the 
description of Short Term Option Series within Options 1, Section 
1(a)(57) to the expirations permitted within the Short Term Option 
Series Program within Supplementary .03 to Options 4, Section 5.
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    \12\ See note 3 above.
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Options 4A, Section 12
    In 2014, NOM amended the Short Term Option Series Program for 
equity options within Chapter IV, Section 6 (currently Options 4, 
Section 5) to change the number of currently listed option classes on 
which Short Term Option Series may be opened on any Short Term Option 
Opening Date from thirty to fifty options classes.\13\ Further, NOM 
also amended the number of Short Term Option Series that the Exchange 
may open for each expiration date in that class from twenty to 
thirty.\14\ At that time, the Exchange neglected to update the index 
options rules to make similar changes to the Short Term Option Series 
Program given that the amount of options classes that may participate 
in the Short Term Option Series Program is aggregated between equity 
options and index options and is not apportioned between equity and 
index options. Amending Options 4A, Section 12(h)(1)(A) to conform to 
the limitations provided within Supplementary .03 to Options 4, Section 
5 will avoid confusion by making clear the aggregate limitations within 
equity and index options for listing Short Term Option Series. Also, 
aligning the limitations within Options 4A, Section 12(h)(1)(A) with 
those currently within Supplementary .03 to Options 4, Section 5 will 
not result in a greater number of listings in the Short Term Option 
Series Program because the amount of options classes that may 
participate in the Short Term Option Series Program is aggregated 
between equity options and index options and is not apportioned between 
equity and index options. Today, ISE, Phlx and Cboe have similar 
limitations within their equity and

[[Page 74687]]

index Short Term Option Series Program.\15\
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    \13\ See note 6 above.
    \14\ See note 6 above.
    \15\ See note 8 above.
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Other Non-Substantive Amendments
    The Exchange's proposal to make other amendments to reserve certain 
sections of the Rulebook, namely General 2, Sections 23 and 24 as well 
as Options 10, Sections 26 and 27, to harmonize section numbers across 
the Nasdaq affiliated markets are non-substantive.

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

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.
Short Term Option Series
    The Exchange's proposal to amend the term ``Short Term Option 
Series'' at Options 1, Section 1(a)(57) to reflect the recent change 
\16\ to NOM's listing rules to permit the listing and trading of 
options series with Tuesday and Thursday expirations for options on SPY 
and QQQ listed pursuant to the Short Term Option Series Program does 
not impose an undue burden on competition, rather this proposal will 
align the description of Short Term Option Series within Options 1, 
Section 1(a)(57) to the expirations permitted within the Short Term 
Option Series Program within Supplementary .03 to Options 4, Section 5.
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    \16\ See note 3 above.
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Options 4A, Section 12
    Amending Options 4A, Section 12(h)(1)(A) to conform to the 
limitations provided within Supplementary .03 to Options 4, Section 5 
will avoid confusion by making clear the aggregate limitations within 
equity and index options for listing Short Term Option Series. Also, 
aligning the limitations within Options 4A, Section 12(h)(1)(A) with 
those currently within Supplementary .03 to Options 4, Section 5 will 
not result in a greater number of listings in the Short Term Option 
Series Program because the amount of options classes that may 
participate in the Short Term Option Series Program is aggregated 
between equity options and index options and is not apportioned between 
equity and index options. Today, ISE, Phlx and Cboe has similar 
limitations within its equity and index Short Term Option Series 
Program.\17\
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    \17\ See note 8 above.
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Other Non-Substantive Amendments
    The Exchange's proposal to make other amendments to reserve certain 
sections of the Rulebook, namely General 2, Sections 23 and 24 as well 
as Options 10, Sections 26 and 27, to harmonize section numbers across 
the Nasdaq affiliated markets are non-substantive.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\ 
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 \20\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\21\ The Exchange has stated that the Options 4 
listing rules were recently amended to expand the Short Term Option 
Series program to permit the listing and trading of options series with 
Tuesday and Thursday expirations for options on SPY and QQQ listed 
pursuant to the Short Term Option Series Program,\22\ and that waiver 
of the 30-day operative delay will allow the Exchange to conform the 
definition of a Short Term Option Series to the Options 4 listing 
rules. The Commission believes that waiver of the 30-day operative 
delay is consistent with the protection of investors and the public 
interest because the proposed rule change does not raise any new or 
novel issues. Accordingly, the Commission hereby waives the operative 
delay and designates the proposed rule change operative upon 
filing.\23\
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    \18\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \21\ 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 Exchange has satisfied this requirement.
    \22\ See supra note 4.
    \23\ 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-NASDAQ-2022-066 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-NASDAQ-2022-066. 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

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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-NASDAQ-2022-066, and should be submitted 
on or before December 27, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-26442 Filed 12-5-22; 8:45 am]
BILLING CODE 8011-01-P