[Federal Register Volume 90, Number 117 (Friday, June 20, 2025)]
[Notices]
[Pages 26355-26358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-11300]
[[Page 26355]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103272; File No. SR-NYSEAMER-2025-31]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 915 Regarding the Criteria for Listing Options Exchange-Traded
Fund Shares
June 16, 2025.
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 June 10, 2025, NYSE American LLC (``NYSE American'' or 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 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 Rule 915 regarding the criteria for
listing options Exchange-Traded Fund Shares (``ETFs''). The proposed
rule change is available on the Exchange's website at www.nyse.com, 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 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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 915 (Criteria for Underlying
Securities) to modify the criteria for listing options ETFs (the
``Rule''), as set forth in Commentary .06 to the Rule (``Commentary
.06''). The proposed changes are designed to clarify the listing
criteria for ETF options and to streamline the Rule. This proposal is
competitive as it will align the Rule with the criteria in place on
Nasdaq ISE, LLC (``ISE'').\3\
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\3\ See ISE, Options 4, Section 3(h) (setting forth criteria for
listing options on ETFs). The Exchange notes that this proposal
largely mirrors the changes that ISE made to its listing criteria
for ETF options in 2021. See Securities Exchange Act Release Nos.
92226 (June 22, 2021), 86 FR 34096 (June 28, 2021) (SR-ISE-2021-14)
(modifying, among other things, the criteria for listing options on
ETFs, as set forth in Options 4, Section (h)). As described herein,
certain of the proposed changes align Commentary .06 with the
analogous rule on its affiliated options exchange, NYSE Arca, Inc.
(``NYSE Arca'')--NYSE Arca Rule 5.3-O(g), which is designed to add
consistency across the NYSE Options exchanges to the benefit of
market participants that trade on both exchanges.
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Commentary .06 describes the types of ETFs that may be deemed
appropriate for options trading \4\ and subparagraphs (a) and (b) set
forth the conditions that such ETFs must meet to qualify for options
trading.
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\4\ Commentary .06 permits options trading on ETFs that are
traded on a national securities exchange and defined as an ``NMS
stock'' in Rule 600 of Regulation NMS and that represent interests
in (i) ``Financial Instruments'' and ``Money Market Instruments'';
(ii) ``Funds''; or (iii) ``Commodity Pool ETFs'', or (v) ``Managed
Fund Shares''; provided that each ETF satisfy the conditions listed
in Rules 915 and 916.
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Commentary .06(a) provides that, to qualify for options trading, an
ETF must either (i) meet the criteria and guidelines for underlying
securities set forth in Commentary .01 to Rule 915; \5\ or (ii) be
available for creation and redemption each business day.\6\ The
Exchange proposes to reorganize Commentary .06(a) to make clear that an
ETF must meet one of the conditions set forth in subparagraphs (a)(i)
or (ii) to be eligible for options trading.\7\ In this regard, the
Exchange proposes to remove ``; and'' from the end of Commentary
.06(a)(i) and to replace it with a period so that subparagraphs (1) and
(2) are not linked, but rather read independently.\8\
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\5\ Commentary .01 to Rule 915 provides that, among other
requirements, an ETF be widely-held and actively traded with at
least 7,000,000 shares outstanding, at least 2,000 beneficial
owners, and trading volume of at least 2,400,000 shares in the
preceding twelve months.
\6\ Commentary .06(a)(ii) requires that ETFs be available for
creation or redemption each business day from or through the issuer
in cash or in kind at a price related to net asset value, and the
issuer must be obligated to issue ETFs in a specified aggregate
number even if some or all of the investment assets required to be
deposited have not been received by the issuer, subject to the
condition that the person obligated to deposit the investments has
undertaken to deliver the investment assets as soon as possible and
such undertaking is secured by the delivery and maintenance of
collateral consisting of cash or cash equivalents satisfactory to
the issuer, as provided in the respective prospectus.
\7\ See proposed Commentary .06(a) and (a)(i) providing that
``(a) The Exchange-Traded Fund Shares either: (i) meet the criteria
and guidelines for underlying securities set forth in Commentary .01
to this Rule 915; or'' satisfy Commentary .06(a)(ii).
\8\ See proposed Commentary .06(a)(ii). See also ISE, Options 4,
Section 3(h)(1).
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The Exchange proposes to make several clarifying changes to
Commentary .06(a)(ii), regarding the requirement that an ETF be
available for creation or redemption, to align with the substantially
similar wording used by its affiliate, NYSE Arca. Proposed Commentary
.06(a)(ii) would be revised as follows (with to-be-deleted text in
brackets and new text italicized).
(ii) the Exchange-Traded Fund Shares must be available for creation
or redemption each business day in cash or in kind from or through the
issuing trust, investment company, [issuing trust,] commodity pool or
other [entity]issuer at a price related to the net asset value. In
addition, the issuing trust, investment company, [issuing trust,]
commodity pool or other issuer is obligated to issue Fund Shares in a
specified aggregate number even though some or all of the investment
assets needed to be deposited have not been received by the issuing
trust, investment company, commodity pool, or other issuer[entity shall
provide that fund shares may be created even though some or all of the
securities and/or cash needed to be deposited have not been received by
the unit investment trust or the management investment company],
provided the authorized creation participant has undertaken to deliver
the investment assets [shares and/or cash] as soon as possible and such
undertaking has been secured by the delivery and maintenance of
collateral consisting of cash or cash equivalents satisfactory to the
issuer of [f]Fund Shares which underlie[s] the option as described in
the [f]Fund Shares' [or unit trust] prospectus.[; and] \9\
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\9\ See proposed Commentary .06(a)(ii). See also ISE, Options 4,
Section 3(h)(1)(ii) (which contains substantially similar language).
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The Exchange believes that these proposed changes add consistency
across the NYSE options exchanges, which benefit market participants
that trade on both exchanges.
While Commentary .06(a) applies to all ETFs, the Exchange proposes
to clarify that Commentary .06(b) applies to only international or
global ETFs.\10\ Specifically, the Exchange proposes to
[[Page 26356]]
amend Commentary .06(b) to provide, ``Exchange-Traded Fund Shares based
on international or global indexes, or portfolios that include non-U.S.
securities, must meet the following criteria:''.\11\ This proposed rule
text makes clear that Commentary .06(b) applies to the extent that an
ETF is based on international or global indexes, or portfolios that
include non-U.S. securities. In addition, the proposed text is intended
to serve as a guidepost and clarify that (1) Commentary .06(b) does not
apply to an ETF based on a U.S. domestic index or portfolio, and (2)
Commentary .06(b) includes ETFs that track a portfolio of non-U.S.
securities rather than an index.
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\10\ Current Commentary .06(b) lacks specificity and provides
that ``[t]he Exchange-Traded Fund Shares meet the following
criteria:'', but the information that follows relates to
international or global ETFs. See Commentary .06(b).
\11\ See proposed Commentary .06(b). See also ISE, Options 4,
Section 3(h)(2).
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Currently, Commentary .06(b)(i) refers to ETFs that are listed
pursuant to generic listing standards for series of portfolio
depositary receipts or index fund shares based on international or
global indexes under which a comprehensive surveillance agreement is
not required. The Exchange proposes to remove the phrase ``for series
of portfolio depositary receipts and index fund shares based on
international or global indexes,''.\12\ The Exchange notes that
Commentary .06(i) \13\ and (v) \14\ currently permit the Exchange to
list options on ETFs based on generic listing standards for portfolio
depositary receipts and index fund shares without applying component-
based requirements in Commentary .06(b)(ii)(A)-(C). Thus, the proposed
change would streamline the Rule and, in so doing, make clear that
Commentary .06(b)(i) applies to ETFs based on international or global
indexes, or portfolios that include non-U.S. securities, that are
listed pursuant to generic listing standards and comply with Commentary
.06(a).
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\12\ See proposed Commentary .06(b)(i). See also ISE, Options 4,
Section 3(h)(2).
\13\ Commentary .06(i) concerns passive ETFs, i.e., shares or
other securities that represent ``an interest in a registered
investment company organized as an open-end management investment
company, a unit investment trust or a similar entity which holds
securities and/or financial instruments, including, but not limited
to, stock index futures contracts, options on futures, options on
securities and indices, equity caps, collars and floors, swap
agreements, forward contracts, repurchase agreements and reverse
repurchase agreements (the `Financial Instruments'), and money
market instruments, including, but not limited to, U.S. government
securities and repurchase agreements (the `Money Market
Instruments') constituting or otherwise based on or representing an
investment in an index or portfolio of securities and/or Financial
Instruments and Money Market Instruments . . . .''
\14\ Commentary .06(v) concerns active ETFs, i.e., shares or
other securities that that represents ``an interest in a registered
investment company (`Investment Company') organized as an open-end
management investment company or similar entity, that invests in a
portfolio of securities selected by the Investment Company's
investment adviser consistent with the Investment Company's
investment objectives and policies, which is issued in a specified
aggregate minimum number in return for a deposit of a specified
portfolio of securities and/or a cash amount with a value equal to
the next determined net asset value (`NAV'), and when aggregated in
the same specified minimum number, may be redeemed at a holder's
request, which holder will be paid a specified portfolio of
securities and/or cash with a value equal to the next determined NAV
(`Managed Fund Share')''.
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The Exchange also proposes to amend the term ``comprehensive
surveillance agreement'' within Commentary .06(b)(i) and (ii)(A)-(C) to
instead provide ``comprehensive surveillance sharing agreement''
(emphasis added), which will bring greater clarity to the term.\15\
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\15\ See proposed Commentary .06(b)(i) and (ii)(A)-(C). See also
ISE, Options 4, Section 3(h)(2)(A)-(D).
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In addition, the Exchange proposes to make several clarifying
changes to Commentary .06(b)(ii), which refers to ETFs based on
international or global indexes, or portfolios that include non-U.S.
securities, that are not listed pursuant to generic listing standards
and for which a comprehensive surveillance sharing agreement is
required. Specifically, the Exchange proposes to add the phrase ``, if
not available or applicable, the Exchange-Traded Fund's'' within
Commentary .06(b)(ii)(A), (B), and (C) to clarify that when component
securities are not available, the portfolio of securities upon which
the ETF is based can be used instead.\16\ The Exchange notes that ``not
available'' is intended for cases where the Exchange does not have
access to the index components, in which cases the Exchange would look
to the portfolio components. The term ``not applicable'' is intended if
the ETF is active and does not track an index and only the portfolio is
available.
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\16\ See proposed Commentary .06(b)(ii)(A)-(C). See also ISE,
Options 4, Section 3(h)(2)(B)-(D).
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The Exchange also proposes to wordsmith Commentary .06(b)(ii)(A) to
amend the phrase to provide, ``any non-U.S. component securities of an
index on which the Exchange-Traded Fund Shares are based or if not
available or applicable, the Exchange-Traded Fund's portfolio of
securities that are not subject to comprehensive surveillance sharing
agreements do not in the aggregate represent more than 50% of the
weight of the index or portfolio;''.\17\ The Exchange believes that the
revised wording will bring greater clarity to the rule text.
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\17\ See proposed Commentary .06(b)(ii)(A). See also ISE,
Options 4, Section 3(h)(2)(B).
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Similarly, the Exchange proposes to wordsmith Commentary
.06(b)(ii)(B) and (C) to relocate the phrase ``on which the Exchange-
Traded Fund Shares are based'' and add ``or portfolio'' to bring
greater clarity to the rule text by conforming the rule text of (B) and
(C) to the language within (A). This proposed change also adds
transparency and promotes internal consistency in Exchange rules.
The Exchange proposes to modify the description of ``Financial
Instruments'' in Commentary .06(i) to align with other options
exchanges by adding the following parenthetical: ``(or that hold
securities in one or more other registered investment companies that
themselves hold such portfolios of securities and/or Financial
Instruments and Money Market Instruments)'',\18\ which will promote
consistency across exchanges to the benefit of investors.
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\18\ See, e.g., ISE, Options 4, Section 3(h)(ii). See also
proposed Commentary .06 (ii).
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Technical Changes
First, the Exchange proposes a stylistic change to Commentary .06,
such that it ends with ``provided that:'' (instead of ``provided:'')
and directs market participants to subparagraphs (a) and (b) of Rule
915.\19\ Next, the Exchange proposes to correct the (mis)numbering of
Commentary .06(v), which refers to ``Managed Fund Shares,'' to
Commentary .06(iv), which improves the accuracy of the Rule.\20\
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\19\ See proposed Commentary .06. See also ISE, Options 4,
Section 3(h).
\20\ See proposed Commentary .06(iv).
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Further, the Exchange proposes to modify Commentary .06(ii) by
replacing the non-descript defined term of ``Funds'' for the interests
described therein with the more accurate ``Currency Trust Shares.''
\21\ Consistent with this change, the Exchange also proposes to modify
Commentary .06(b)(ii)(D) to replace reference to ``Funds that hold
specified non-U.S. currency or currencies deposited with the trust''
and ``Funds'' with ``Currency Trust Shares,'' which adds clarity,
transparency, and internal consistency to Exchange rules.\22\
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\21\ See proposed Commentary .06(ii). See also ISE, Options 4,
Section 3(h)(ii).
\22\ See proposed Commentary .06(b)(ii)(D). See also ISE,
Options 4, Section 3(h)(2)(E).
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Finally, the Exchange proposes to modify Commentary .06(b)(ii)(E),
which refers to the already-defined Commodity Pool ETFs, to remove
unnecessary and repetitive rule text that describes the characteristics
of such ETF.\23\
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\23\ See Commentary .06(ii) (defining Commodity Pool ETFs). See
also proposed Commentary .06(b)(ii)(E). This proposed change also
aligns with NYSE Arca Rule 5.3-O(g)(2)(B)(v). The Exchange notes
that ISE's analogous rule contains the repetitive description of
Commodity Pool Trust ETFs which (like Commentary .06) defines this
instrument the rule. Compare Options 4, Section 3(h)(iii) with
Options 4, Section 3(h)(2)(F). The Exchange believes that deviating
from the ISE rule in favor of the NYSE Arca Rule yields a clearer
more concise rule and adds consistency across NYSE Options exchanges
to the benefit of market participants that trade on those exchanges.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\24\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\25\ in particular, because 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 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,
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that this proposal will remove
impediments to and perfect the mechanism of a free and open market and
a national market system because it is designed to bring greater
clarity to the qualification standards for listing options on ETFs,
including by conforming such standards with those in place on ISE.\26\
The Exchange believes the proposed changes to Commentary .06(a) make
clear that all ETFs must satisfy one of its two conditions and that
such conditions are independent of those that follow (i.e., those in
Commentary .06(b)), which added clarity benefits all market
participants. Further, the proposed change to make clear that
Commentary .06(b) applies to only international or global ETFs will
bring greater clarity to the qualification standards for listing
options on such ETFs to the benefit of all market participants. The
Exchange believes proposed Commentary .06(b) will serve as a guidepost
and clarify that it does not apply to ETFs based on a U.S. domestic
index or portfolio but does apply to ETFs that track a portfolio of
non-U.S. securities rather than an index. Additionally, the Exchange
believes its proposed change to in Commentary .06(i) to align the
description of ``Money Market Instruments'' with other options
exchanges will promote consistency across exchanges to the benefit of
investors.
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\26\ See ISE, Options 4, Section 3(h).
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Further, the Exchange believes that the proposed changes that align
Commentary .06 with NYSE Arca Rule 5.3-O(g) will remove impediments to
and perfect the mechanism of a free and open market and a national
market system because such changes will add consistency across NYSE
Options exchanges to the benefit of market participants that trade on
those exchanges.
The proposed technical and stylistic changes proposed herein are
consistent with the Act and will benefit all market participants
because such changes are designed to streamline the Rule, which adds
clarity, transparency, and internal consistency to Exchange rules
making them easier to navigate and comprehend.
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. The proposed rule change is
designed to improve the clarity, transparency, and accuracy of the
Exchange's listing criteria for ETF options, which criteria will apply
uniformly to all ETFs in determining eligibility for options trading on
the Exchange. Further, as noted herein, the proposed rule change will
align with ISE Options 4, Section 3(h), and, in certain instances, NYSE
Arca Rule 5.3-O(g), thus promoting consistency across exchanges and
across NYSE Options regarding the criteria for listing ETF options.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
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 \27\ and Rule 19b-4(f)(6) thereunder.\28\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \29\ and Rule 19b-
4(f)(6)(iii) \30\ thereunder.
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\27\ 15 U.S.C. 78s(b)(3)(A)(iii).
\28\ 17 CFR 240.19b-4(f)(6).
\29\ 15 U.S.C. 78s(b)(3)(A)(iii).
\30\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange 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) \31\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\32\ 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 proposal
may become operative immediately upon filing. The Commission believes
that waving the 30-day operative delay is consistent with the
protection of investors and the public interest because it will allow
the Exchange to immediately clarify and improve the accuracy of its
Rule in a manner that conforms with ISE Options 4, Section 3(h) and
does not introduce any novel regulatory issues. Accordingly, the
Commission designates the proposed rule change to be operative upon
filing.\33\
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\31\ 17 CFR 240.19b-4(f)(6).
\32\ 17 CFR 240.19b-4(f)(6)(iii).
\33\ For purposes only of waiving the 30-day operative delay,
the Commission also 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 such 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.
[[Page 26358]]
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-NYSEAMER-2025-31 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-NYSEAMER-2025-31. 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-NYSEAMER-2025-31 and should
be submitted on or before July 11, 2025.
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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-11300 Filed 6-18-25; 8:45 am]
BILLING CODE 8011-01-P