[Federal Register Volume 89, Number 75 (Wednesday, April 17, 2024)]
[Notices]
[Pages 27471-27472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08092]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99946; File No. SR-ISE-2024-06]
Self-Regulatory Organizations; Nasdaq ISE, LLC; Order Approving a
Proposed Rule Change To Amend the Short Term Option Series Program
April 11, 2024.
I. Introduction
On February 15, 2024, Nasdaq ISE, LLC (``ISE'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
amend Supplementary Material .03 of Options 4, Section 5, ``Series of
Options Contracts Open for Trading'' to allow Tuesday and Thursday
expirations for options listed pursuant to the Exchange's short term
option series program (``Short Term Option Series Program'') on the
iShares Russell 2000 ETF (``IWM''). The proposed rule change was
published for comment in the Federal Register on March 1, 2024.\3\ The
Commission did not receive any comments on the proposal. This order
approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Release No. 99604 (February 26,
2024), 89 FR 15235 (``Notice'').
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II. Description of the Proposal 4
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\4\ For a full description of the proposal, refer to the Notice,
supra note 3.
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Currently, 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'').\5\ Table 1 in Supplementary Material .03 to Options 4,
Section 5 specifies each symbol that qualifies as a Short Term Option
Daily Expiration as well as the permitted expiration days.\6\ Today,
the Exchange may list no more than a total of two Monday and Wednesday
expirations on IWM and no more than a total of two Monday, Tuesday,
Wednesday, and Thursday expirations on the SPDR S&P 500 ETF Trust
(``SPY'') and the Invesco QQQ Trust (``QQQ'').\7\
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\5\ See Supplementary .03 to Options 4, Section 5.
\6\ See Table 1, Supplementary .03 to Options 4, Section 5.
\7\ See id.
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The Exchange proposes to expand the Short Term Option Series
Program to permit the Exchange to open for trading on any Monday or
Tuesday that is a business day series of options on IWM that expire at
the close of business on each of the next two Tuesdays beyond the
current week that are business days and are not business days in which
standard expiration options series, Monthly Options Series, or
Quarterly Options Series expire (``Tuesday Expirations''). If the
Tuesday Expiration falls on a Tuesday that is not a business day, the
series shall expire on the first business day immediately prior to that
Tuesday.\8\ Similarly, the proposal would permit the Exchange to open
for trading on any Wednesday or Thursday that is a business day series
of options on IWM that expire at the close of business on each of the
next two Thursdays beyond the current week that are business days and
are not business days in which standard expiration options series,
Monthly Options Series, or Quarterly Options Series expire (``Thursday
Expirations''). If the Thursday Expiration falls on a Thursday that is
not a business day, the series shall expire on the first business day
immediately prior to that Thursday. The listing and trading of Tuesday
and Thursday Expirations would be subject to Supplementary Material .03
of Options 4, Section 5.\9\
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\8\ The Exchange proposes to amend the Tuesday and Thursday
expirations for IWM in Table 1 in Supplementary Material .03 to
Options 4, Section 5 from ``0'' to ``2'' to permit Tuesday and
Thursday expirations for options on IWM listed pursuant to the Short
Term Option Series.
\9\ See Notice, supra note 3 at 15236.
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The Exchange does not believe that any market disruptions would be
encountered with the introduction of Tuesday and Thursday
Expirations.\10\ The Exchange states 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
Expirations.\11\ The Exchange believes that it has the necessary
capacity and surveillance programs in place to support and properly
monitor trading in the proposed Tuesday and Thursday Expirations.\12\
The Exchange currently trades Short Term Option Series that expire
Monday and Wednesday for SPY, QQQ, and IWM and stated that it has not
experienced any market disruptions nor issues with capacity.\13\
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\10\ See Notice, supra note 3 at 15237.
\11\ See Notice, supra note 3 at 15239. In addition, the
Exchange states Cboe Exchange, Inc. began listing Tuesday and
Thursday expirations in the Russell 2000 Index Weeklys and Mini-
Russell 2000 Index Weeklys on January 8, 2024. See Notice, supra
note 3 at 15236.
\12\ See Notice, supra note 3 at 15237.
\13\ See id.
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III. Discussion and Commission's Findings
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange and, in particular, the requirements of Section 6(b) of the
Act.\14\ In particular, the Commission finds that the proposed rule
change is consistent with Section 6(b)(5) of the Act,\15\ which
requires, among other things, that the Exchange's rules be designed to
prevent fraudulent and manipulative acts and practices, 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
Commission believes that the proposed rule change is reasonably
designed as a limited expansion of the Short Term Options Series
Program and may provide 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 addition, the Exchange has similar rules
permitting the listing and trading of Tuesday and Thursday expirations
on SPY and QQQ.\16\
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\14\ 15 U.S.C. 78f. In approving this proposed rule change, the
Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\15\ 15 U.S.C. 78f(b)(5).
\16\ See Supplementary .03 to Options 4, Section 5. See also
Securities Exchange Release No. 96281 (November 9, 2022), 87 FR
68769 (November 16, 2022) (order approving Tuesday and Thursday
expirations on SPY and QQQ).
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In approving the proposal, the Commission notes that the Exchange
[[Page 27472]]
has represented that it has an adequate surveillance program in place
to detect manipulative trading in Tuesday IWM Expirations and Thursday
IWM Expirations.\17\ The Exchange further states that it has the
necessary systems capacity to support the new options series.\18\ The
Exchange also states that it has not experienced any market disruptions
nor issues with capacity with trading Short Term Option Series that
expire on Tuesdays and Thursdays for SPY and QQQ.\19\
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\17\ See Notice, supra note 3 at 15239.
\18\ See id.
\19\ See Notice, supra note 3 at 15237.
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Accordingly, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act \20\ and the rules and
regulations thereunder applicable to a national securities exchange.
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\20\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\21\ that the proposed rule change (SR-ISE-2024-06) be, and hereby
is, approved.
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\21\ 15 U.S.C. 78s(b)(2).
\22\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-08092 Filed 4-16-24; 8:45 am]
BILLING CODE 8011-01-P