[Federal Register Volume 89, Number 141 (Tuesday, July 23, 2024)]
[Notices]
[Pages 59792-59795]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16109]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100549; File No. SR-PEARL-2024-30]


Self-Regulatory Organizations; MIAX PEARL LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 404, Series of Option Contracts Open for Trading To Amend the 
Strike Interval for Options on SPDR[supreg] Gold Shares

July 17, 2024.
    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 July 9,

[[Page 59793]]

2024, MIAX PEARL, LLC (``MIAX Pearl'' 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 is filing a proposal to amend the strike interval for 
options on SPDR[supreg] Gold Shares (``GLD'').
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-equities/pearl-equities/rule-filings, at MIAX Pearl's principal office, 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 paragraph (g) of Rule 404, Series of 
Option Contracts Open for Trading and Interpretation and Policy .10 of 
Rule 404.\3\ Specifically, the Exchange proposes to amend paragraph (g) 
to allow for the interval between strike prices of series of options on 
Exchange-Traded Fund Shares \4\ of SPDR[supreg] Gold Shares or ``GLD'' 
to be $1 or greater where the strike price is greater than $200. 
Additionally, the Exchange proposes to amend Interpretation and Policy 
.10 to include SPDR[supreg] Gold Trust (``GLD'').
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    \3\ The Exchange notes that its affiliate exchange, MIAX 
Options, has submitted a substantively identical proposal.
    \4\ See Exchange Rule 402(i).
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    Currently, Rule 404(g) provides that

    The interval between strike prices of series of options on 
Exchange-Traded Fund Shares approved for options trading pursuant to 
Rule 402(i) shall be fixed at a price per share which is reasonably 
close to the price per share at which the underlying security is 
traded in the primary market at or about the same time such series 
of options is first open for trading on the Exchange, or at such 
intervals as may have been established on another options exchange 
prior to the initiation of trading on the Exchange.

    And Rule 404, Interpretation and Policy .10, provides that

    Notwithstanding any other provision regarding the interval of 
strike prices of series of options on Exchange-Traded Fund Shares in 
this rule, the interval of strike prices on SPDR S&P 500 ETF 
(``SPY''), iShares S&P 500 Index ETF (``IVV''), Invesco QQQ Trust 
(``QQQ''), iShares Russell 2000 Index Fund (``IWM''), and the SPDR 
Dow Jones Industrial Average ETF (``DIA'') options will be $1 or 
greater.

    At this time, the Exchange proposes to amend paragraph (g) of Rule 
404 to add rule text related to the interval between strike prices of 
series of options on Exchange-Traded Fund Shares to provide that the 
interval will be $1 or greater where the strike price is $200 or less 
and $5.00 or greater where the strike price is greater than $200. 
Today, other exchanges, including Cboe Exchange, Inc. (``Cboe'') and 
Nasdaq ISE, LLC (``ISE'') permit the interval between strike prices of 
series of options on Exchange-Traded Fund Shares to be $1 or greater 
where the strike price is $200 or less and $5.00 or greater where the 
strike price is greater than $200.\5\ Today, the Exchange may fix the 
interval between strike prices of series of options on Exchange-Traded 
Fund Shares at such intervals as may have been established on another 
options exchange prior to the initiation of trading on the Exchange. 
The Exchange proposes to adopt the language used by Cboe and ISE to 
provide a strike interval for Exchange-Traded Fund Shares in the event 
a different interval is not elected at a price per share which is 
reasonably close to the price per share at which the underlying 
security is traded in the primary market at or about the same time such 
series of options is first open for trading on the Exchange, or at such 
intervals as may have been established on another options exchange 
prior to the initiation of trading on the Exchange.
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    \5\ See Cboe Rule 4.5 at Interpretation and Policy .07(a); see 
also ISE Options 4, Section 5(d) and 5(e).
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    Further, current Rule 404, Interpretation and Policy .10 allows for 
the interval between strike prices of series of options on Exchange-
Traded Fund Shares of the SPDR S&P 500 ETF (``SPY''), iShares Core S&P 
500 ETF (``IVV''), PowerShares QQQ Trust (``QQQ''), iShares Russell 
2000 Index Fund (``IWM''), and the SPDR Dow Jones Industrial Average 
ETF (``DIA'') to be $1 or greater where the strike price is greater 
than $200.
    At this time, the Exchange proposes to modify the interval setting 
regime to be $1 or greater where the strike price is greater than $200 
for GLD options, similar to SPY, IVV, QQQ, IWM and DIA. The Exchange 
believes that the proposed rule change would make GLD options easier 
for investors and traders to use and more tailored to their investment 
needs.
    GLD is an Exchange-Traded Fund Share designed to closely track the 
price and performance of the price of gold bullion. GLD is widely 
quoted as an indicator of gold stock prices and is a significant 
indicator of overall economic health. Investors use GLD to diversify 
their portfolios and benefit from market trends. Additionally, GLD is a 
leading product in its asset class that trades within a ``complex'' 
where, in addition to the underlying security, there are multiple 
instruments available for hedging such as, COMEX Gold Futures; Gold 
Daily Futures; iShares GOLD Trust; SPDR GOLD Minishares Trust; Aberdeen 
Physical Gold Trust; and GraniteShares Gold Shares.
    Accordingly, the Exchange believes that offering a wider base of 
GLD options affords traders and investors important hedging and trading 
opportunities, particularly in the midst of current price trends. The 
Exchange believes that not having the proposed $1 strike price 
intervals above $200 in GLD significantly constricts investors' hedging 
and trading possibilities. The Exchange therefore believes that by 
having smaller strike intervals in GLD, investors would have more 
efficient hedging and trading opportunities due to the lower $1 
interval ascension. The proposed $1 interval above the $200 strike 
price, will result in having at-the-money series based upon the 
underlying ETF moving less than 1%. The Exchange believes that the 
proposed strike setting regime is in line with the slower movements of 
broad-based indices. Considering the fact that $1 intervals already 
exist below the $200 price point and that GLD have consistently 
inclined in price toward the $200 level, the Exchange believes that 
continuing to maintain the current $200 level (above which intervals 
increase 500% to $5), may have a negative effect on investing, trading 
and hedging opportunities, and volume. The Exchange believes that the 
investing, trading, and hedging opportunities available with GLD 
options far outweighs any potential negative impact of allowing GLD 
options to trade in

[[Page 59794]]

more finely tailored intervals above the $200 price point.
    The proposed strike setting regime would permit strikes to be set 
to more closely reflect the increasing value in the underlying and 
allows investors and traders to roll open positions from a lower strike 
to a higher strike in conjunction with the price movements of the 
underlying ETF. Under the current rule, the next higher available 
series would be $5 away above a $200 strike price, the ability to roll 
such positions would be impaired. Accordingly, to move a position from 
a $200 strike to a $205 strike under the current rule, an investor 
would need for the underlying product to move 2.5%, and would not be 
able to execute a roll up until such a large movement occurred. The 
Exchange believes that with the proposed rule change, the investor 
would be in a significantly safer position of being able to roll his 
open options position from a $200 to a $201 strike price, which is only 
a 0.5% move for the underlying. As a result, the proposed rule change 
will allow the Exchange to better respond to customer demand for GLD 
strike price more precisely aligned with the smaller, longer-term 
incremental increases in the underlying ETF. The Exchange believes that 
the proposed rule change, like the other strike price programs 
currently offered by the Exchange, will benefit investors by providing 
investors the flexibility to more closely tailor their investment and 
hedging decisions using GLD options. Moreover, by allowing series of 
GLD options to be listed in $1 intervals between strike prices over 
$200, the proposal will moderately augment the potential total number 
of options series available on the Exchange. However, the Exchange 
believes it and the Options Price Reporting Authority (``OPRA'') have 
the necessary systems capacity to handle any potential additional 
traffic associated with this proposed rule change. The Exchange also 
believes that Members \6\ will not have a capacity issue due to the 
proposed rule change. In addition, the Exchange represents that it does 
not believe that this expansion will cause fragmentation of liquidity, 
but rather, believes that finer strike intervals will serve to increase 
liquidity available as well as price efficiency by providing more 
trading opportunities for all market participants.
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    \6\ The term ``Member'' means an individual or organization that 
is registered with the Exchange pursuant to Chapter II of the 
Exchange's Rules for the purposes of trading on the Exchange as an 
``Electronic Exchange Member'' or ``Market Maker.'' Members are 
deemed ``members'' under the Exchange Act. See Exchange Rule 100.
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    The Exchange notes that the proposed rule change is substantively 
identical to the proposed rule changes recently filed by ISE.\7\
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    \7\ See Securities Exchange Act Release No. 100447 (June 28, 
2024) (SR-ISE-2024-17).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\8\ Specifically, the Exchange believes the proposed rules changes 
are consistent with Section 6(b)(5) \9\ requirements that the rules of 
an exchange be 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 regulating, 
clearing, settling, processing information with respect to, and 
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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    In particular, the proposed rule change will allow investors to 
more easily use GLD options. Moreover, the proposed rule change would 
allow investors to better trade and hedge positions in GLD options 
where the strike price is greater than $200, and ensure that investors 
in both options are not at a disadvantage simply because of the strike 
price.
    The Exchange believes the proposed rule change is consistent with 
Section 6(b)(1) of the Act, which provides that the Exchange be 
organized and have the capacity to be able to carry out the purposes of 
the Act and the rules and regulations thereunder, and the rules of the 
Exchange. The proposal allows the Exchange to respond to customer 
demand to allow GLD options to trade in $1 intervals above a $200 
strike price. The Exchange does not believe that the proposed rule 
would create additional capacity issues or affect market functionality. 
As noted above, ETF options trade in wider $5 intervals above a $200 
strike price, whereby options at or below a $200 strike price trade in 
$1 intervals. This creates a situation where contracts on the same 
option class effectively may not be able to execute certain strategies 
such as, for example, rolling to a higher strike price, simply because 
of the $200 strike price above which options intervals increase by 
500%. This proposal remedies the situation by establishing an exception 
to the current ETF interval regime for GLD options to allow such 
options to trade in $1 or greater intervals at all strike prices.
    The Exchange believes that the proposed rule change, like other 
strike price programs currently offered by the Exchange, will benefit 
investors by giving them increased flexibility to more closely tailor 
their investment and hedging decisions. By way of example, GLD is a 
leading product in its asset class and it trades within a ``complex'' 
where, in addition to the underlying security, there are multiple 
instruments available for hedging such as, COMEX Gold Futures; Gold 
Daily Futures; iShares GOLD Trust; SPDR GOLD Minishares Trust; Aberdeen 
Physical Gold Trust; and GraniteShares Gold Shares.
    With regard to the impact of this proposal on system capacity, the 
Exchange believes it and OPRA have the necessary systems capacity to 
handle any potential additional traffic associated with this proposed 
rule change. The Exchange believes that its Members will not have a 
capacity issue as a result of this proposal.
    Finally, the Exchange notes the proposed rule change is 
substantively the same as a rule change proposed by ISE which the 
Securities and Exchange Commission (the ``Commission'') recently 
approved.\10\
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    \10\ See supra note 7.
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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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. Rather, the Exchange 
believes that the proposed rule change will result in additional 
investment options and opportunities to achieve the investment and 
trading objectives of market participants seeking efficient trading and 
hedging vehicles, to the benefit of investors, market participants, and 
the marketplace in general. Specifically, the Exchange believes that 
GLD options investors and traders will significantly benefit from the 
availability of finer strike price intervals above a $200 price point. 
In addition, the interval setting regime the Exchange proposes to apply 
to GLD options is currently applied to SPY, IVV, QQQ, IWM and DIA 
options, which are similarly popular and widely traded ETF products and 
track indexes at similarly high price levels. Thus, the

[[Page 59795]]

proposed strike setting regime for GLD options will allow options on 
this an actively traded ETF with index levels at corresponding price 
levels to trade pursuant to the same strike setting regime. This will 
permit investors to employ similar investment and hedging strategies 
for each of these options.
    The Exchange does not believe the proposal will impose any burden 
on intermarket competition, as nothing prevents other options exchanges 
from proposing similar rules to make a finer strike price intervals 
above a $200 price point available for GLD options. The Exchange notes 
that the proposed rule change is not a novel proposal, as the 
Commission recently approved a substantively identical proposal of 
another exchange.\11\
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    \11\ Id.
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    Further, the Exchange does not believe the proposal will impose any 
burden on intramarket competition, as all market participants will be 
treated in the same manner under this proposal.

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

    Written comments were neither solicited nor 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 \12\ and Rule 19b-4(f)(6) thereunder.\13\ 
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 \14\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\15\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission 
may 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. According to 
the Exchange, the proposed rule change is a competitive response to a 
filing submitted by ISE that recently was approved by the 
Commission.\18\ The Exchange has stated that waiver of the 30-day 
operative delay would permit the Exchange to implement the proposal in 
close time proximity to competitor exchanges. 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. Accordingly, the Commission hereby 
waives the 30-day operative delay and designates the proposed rule 
change as operative upon filing.\19\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ See supra note 7.
    \19\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-PEARL-2024-30 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-PEARL-2024-30. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-PEARL-2024-30 and should be 
submitted on or before August 13, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12), (59).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-16109 Filed 7-22-24; 8:45 am]
BILLING CODE 8011-01-P