[Federal Register Volume 91, Number 157 (Monday, August 17, 2026)]
[Notices]
[Pages 53286-53290]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-16695]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106100; File No. SR-ISE-2026-34]


Self-Regulatory Organizations; Nasdaq ISE, LLC; Order Approving a 
Proposed Rule Change To Amend the Short Term Option Series Program 
Related to Qualifying Securities

August 12, 2026.

I. Introduction

    On June 15, 2026, 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 the 
Exchange's Short Term Option Series Program to (1) permit the listing 
of up to two Tuesday and Thursday expirations for options on Exchange-
Traded Fund Shares \3\ that meet the existing ``Qualifying Securities'' 
criteria in Supplementary Material .03 to Options 4, Section 5; and

[[Page 53287]]

(2) permit the listing of up to two Monday and Wednesday expirations 
for options on Exchange-Traded Fund Shares that meet new ``Qualifying 
Securities'' criteria. The proposed rule change was published for 
comment in the Federal Register on July 2, 2026.\4\ 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 Options 4, Section 3(h) (defining ``Exchange-Traded Fund 
Shares'').
    \4\ See Securities Exchange Act Release No. 105801 (June 29, 
2026), 91 FR 40603 (``Notice''). Comments on the proposed rule 
change are available at: https://www.sec.gov/rules-regulations/public-comments/sr-ise-2026-34.
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II. Description of the Proposal

    Currently, the Exchange's Short Term Option Series Program \5\ 
permits the listing of up to two Monday and Wednesday expirations 
beyond the current week for options on certain individual stocks or 
Exchange-Traded Fund Shares (collectively, ``Qualifying 
Securities'').\6\ To be eligible to be a Qualifying Security, an 
individual stock or Exchange-Traded Fund Share must meet the following 
criteria on a quarterly basis: (1) an underlying security, as measured 
on the last day of the prior calendar quarter, must have: (A) a market 
capitalization of greater than $700 billion for an individual stock 
based on the closing price,\7\ or (B) assets under management (``AUM'') 
greater than $50 billion for an Exchange-Traded Fund Share based on net 
asset value (``NAV''); (2) monthly options volume, as measured by sides 
traded in the last month preceding the quarter end, of greater than 10 
million options; (3) a position limit of at least 250,000 contracts; 
and (4) participate in the Penny Interval Program \8\ (collectively, 
``Qualifying Securities Criteria'').\9\
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    \5\ See Supplementary Material .03 to Options 4, Section 5. 
Under the Exchange's Short Term Option Series Program, the Exchange 
may open for trading series of options on certain symbols that 
expire at the close of business of 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 series, Monthly Option Series, or Quarterly 
Options Series expire (``Short Term Option Daily Expirations'').
    \6\ See Securities Exchange Act Release No. 104624 (January 16, 
2026), 91 FR 2806 (January 22, 2026) (SR-ISE-2025-15) (Order 
Approving a Proposed Rule Change, as Modified by Amendment No. 1, to 
Amend the Short Term Option Series Program to List Qualifying 
Securities); Supplementary Material .03 to Options 4, Section 5.
    \7\ The Exchange states that the closing price and the opening 
price shall be that of the primary exchange where the security is 
listed. See Notice, supra note 4, 91 FR at 40604, n.5.
    \8\ See Supplementary Material .01 to Options 3, Section 3.
    \9\ The Exchange has noted the expirations in Table 2 of 
Supplementary Material .03 to Options 4, Section 5, along with the 
Qualifying Securities Criteria.
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    Each calendar quarter, the Exchange applies the Qualifying 
Securities Criteria to individual stocks and Exchange-Traded Fund 
Shares to determine eligibility for the following quarter.\10\ The 
Exchange makes the list of Qualifying Securities available by the close 
of business on the first trading day of the quarter.\11\
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    \10\ See Notice, supra note 4, 91 FR at 40604.
    \11\ See id. at 40605.
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    The Exchange may list two Short Term Option Daily Expirations for 
Qualifying Securities beyond the current week for each Monday and 
Wednesday expiration at one time.\12\ The Exchange does not list an 
expiry on a day when there will be an earnings announcement that takes 
place after market close.\13\ Qualifying Securities that do not 
continue to meet the Qualifying Securities Criteria are no longer 
permitted to be listed as Monday and Wednesday expirations beginning on 
the second day of the following quarter.\14\
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    \12\ See id. at 40604.
    \13\ See id. at 40605, n.8.
    \14\ See id. at 40605.
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    The Exchange proposes to amend rules related to Qualifying 
Securities expirations to: (1) add the listing of up to two Tuesday and 
Thursday expirations for options on Exchange-Traded Fund Shares that 
meet the current Qualifying Securities Criteria; \15\ and (2) amend the 
Qualifying Securities Criteria to permit the listing of up to two 
Monday and Wednesday expirations for options on Exchange-Traded Fund 
Shares that meet new criteria.\16\
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    \15\ The Exchange also proposes to designate such Exchange-
Traded Fund Shares as ``Tier 1 Qualifying Securities.''
    \16\ The Exchange also proposes to designate such Exchange-
Traded Fund Shares as ``Tier 2 Qualifying Securities.''
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Tier 1 Qualifying Securities

    The Exchange proposes to designate Exchange-Traded Fund Shares that 
meet the current Qualifying Securities Criteria as ``Tier 1 Qualifying 
Securities.'' Each calendar quarter, as it currently does for 
Qualifying Securities, the Exchange would apply the Qualifying 
Securities Criteria to Exchange-Traded Fund Shares to determine their 
eligibility for the following quarter as Tier 1 Qualifying 
Securities.\17\ As noted above, the Exchange currently may list Monday 
and Wednesday Qualifying Securities Expirations on such Exchange-Traded 
Fund Shares. The Exchange proposes to list Tuesday and Thursday 
expirations in Tier 1 Qualifying Securities (``Tuesday and Thursday 
Tier 1 Qualifying Securities Expirations''), in addition to the 
existing Monday and Wednesday Qualifying Securities expirations.
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    \17\ See Notice, supra note 4, 91 FR at 40604, 40606. Therefore, 
in order to qualify as a Tier 1 Qualifying Security, an Exchange-
Traded Fund Share must meet the following criteria on a quarterly 
basis: (1) an underlying security, as measured on the last day of 
the prior calendar quarter, must have AUM greater than $50 billion 
based on NAV; (2) monthly options volume, as measured by sides 
traded in the last month preceding the quarter end, of greater than 
10 million options; (3) a position limit of at least 250,000 
contracts; and (4) participate in the Penny Interval Program. See 
Supplementary Material .03 to Options 4, Section 5.
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    The Exchange states that the proposed Tuesday Qualifying Securities 
expirations on Exchange-Traded Fund Shares for Tier 1 Qualifying 
Securities (``Tuesday Tier 1 Qualifying Securities Expirations'') would 
be similar to the current Tuesday expirations in SPDR S&P 500 ETF Trust 
(``SPY''), Invesco QQQ Trust (``QQQ''), and iShares Russell 2000 ETF 
(``IWM'') in Short Term Option Daily Expirations \18\ because the 
Exchange may open for trading on any Monday or Tuesday that is a 
business day (beyond the current week) series of options on Qualifying 
Securities that expire at the close of business on each of the next two 
Tuesdays that are business days and are not business days in which 
standard expiration options series, Monthly Options Series, or 
Quarterly Options Series expire.\19\ In the event a Tuesday Tier 1 
Qualifying Securities Expirations series expires on a Tuesday that is 
the same day that a standard expiration options series, Monthly Options 
Series, or Quarterly Options Series expires, the Exchange would skip 
that week's listing and instead list the following week; the two weeks 
therefore would not be consecutive.\20\
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    \18\ See supra note 5.
    \19\ See Notice, supra note 4, 91 FR at 40605.
    \20\ Today, Tuesday expirations in SPY, QQQ, and IWM similarly 
skip the weekly listing in the event the weekly listing expires on 
the same day in the same class as a standard expiration options 
series, Monthly Options Series, or Quarterly Options Series. See id. 
at 40605.
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    The Exchange also states that the proposed Thursday Qualifying 
Securities expirations on Exchange-Traded Fund Shares for Tier 1 
Qualifying Securities (``Thursday Tier 1 Qualifying Securities 
Expirations'') would be similar to the current Thursday expirations in 
SPY, QQQ, and IWM in Short Term Option Daily Expirations \21\ because 
the Exchange may open for trading on any Wednesday or Thursday that is 
a business day (beyond the current week) series of options on 
Qualifying Securities that expire at the close of business on each of 
the next two Thursdays that are

[[Page 53288]]

business days and are not business days in which standard expiration 
options series, Monthly Options Series, or Quarterly Options Series 
expire.\22\ In the event a Thursday Tier 1 Qualifying Securities 
Expirations series expires on a Thursday that is the same day that a 
standard expiration options series, Monthly Options Series, or 
Quarterly Options Series expires, the Exchange would skip that week's 
listing and instead list the following week; the two weeks therefore 
would not be consecutive.\23\
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    \21\ See supra note 5.
    \22\ See Notice, supra note 4, 91 FR at 40605.
    \23\ Today, Thursday expirations in SPY, QQQ, and IWM similarly 
skip the weekly listing in the event the weekly listing expires on 
the same day in the same class as a standard expiration options 
series, Monthly Options Series, or Quarterly Options Series. See id.
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    The Exchange states that the interval between strike prices for the 
proposed Tuesday and Thursday Tier 1 Qualifying Securities Expirations 
would be the same as those currently applicable to the Short Term 
Option Series Program.\24\ As is the case with other equity options 
series listed pursuant to the Short Term Option Series Program, Tuesday 
and Thursday Tier 1 Qualifying Securities Expirations series would be 
P.M.-settled.\25\
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    \24\ See id. at 40605-06. Specifically, the Tuesday and Thursday 
Tier 1 Qualifying Securities Expirations will have a strike interval 
of (i) $0.50 or greater for strike prices below $100, and $1 or 
greater for strike prices between $100 and $150 for all option 
classes that participate in the Short Term Option Series Program, 
(ii) $0.50 for option classes that trade in one dollar increments 
and are in the Short Term Option Series Program, or (iii) $2.50 or 
greater for strike prices above $150. See Supplementary Material 
.03(e) to Options 4, Section 5.
    \25\ See Notice, supra note 4, 91 FR at 40606.
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Tier 2 Qualifying Securities

    The Exchange also proposes to expand the Short Term Option Series 
Program to permit the listing of up to two Monday and Wednesday 
expirations for options on Exchange-Traded Fund Shares that meet 
proposed new criteria as Qualifying Securities (``Monday and Wednesday 
Tier 2 Qualifying Securities Expirations'').\26\ The Exchange proposes 
to amend the Qualifying Securities Criteria in Supplementary Material 
.03 to Options 4, Section 5 to include separate criteria for the 
proposed Tier 2 Qualifying Securities. For eligibility as a Tier 2 
Qualifying Security, an underlying Exchange-Traded Fund Share would be 
required to have (1) AUM greater than $25 billion based on NAV, as 
measured on the last day of the prior calendar quarter; \27\ (2) 
monthly options volume, as measured by sides traded in the last month 
preceding the quarter end, of greater than 5 million options; \28\ (3) 
a position limit of at least 250,000 contracts; and (4) participate in 
the Penny Interval Program (``Tier 2 Qualifying Securities 
Criteria'').\29\
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    \26\ See id.
    \27\ Currently, Exchange-Traded Fund Shares that are Qualifying 
Securities must have an AUM greater than $50 billion based on NAV. 
See Supplementary Material .03 to Options 4, Section 5.
    \28\ Currently, Exchange-Traded Fund Shares that are Qualifying 
Securities must have a monthly options volume, as measured by sides 
traded in the last month preceding the quarter end, of greater than 
10 million options. See Supplementary Material .03 to Options 4, 
Section 5.
    \29\ See Notice, supra note 4, 91 FR at 40606.
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    Each calendar quarter, the Exchange would apply the proposed 
criteria to Exchange-Traded Fund Shares to determine eligibility for 
the following quarter as Tier 2 Qualifying Securities.\30\ Beginning on 
the second trading day in the first month of each calendar quarter, the 
AUM for Tier 2 Qualifying Securities shall be calculated based on the 
NAV established on the primary exchange on the last trading day of the 
prior calendar quarter.\31\ The data establishing the volume thresholds 
would be established by using data from the last month of the prior 
calendar quarter from The Options Clearing Corporation (``OCC'').\32\ 
For options listed on the first trading day of a given calendar 
quarter, the volume shall be calculated using the last month of the 
quarter prior to that calendar quarter.\33\ The Exchange would make the 
list of Qualifying Securities, including the Tier 2 Qualifying 
Securities, available by the close of business on the first trading day 
of the quarter.\34\
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    \30\ See id.
    \31\ See id.
    \32\ See id.
    \33\ The Exchange states that OCC data becomes available for the 
end of a quarter on the first trading day of a new quarter. See id. 
at 40606, n.24.
    \34\ See id. at 40406-07. The Exchange will continue to make 
this information available on its website. See id. at 40607, n.25.
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    For the proposed Tier 2 Qualifying Securities, the Exchange would 
be permitted to list two Short Term Option Daily Expirations beyond the 
current week for each Monday and Wednesday Tier 2 Qualifying Securities 
Expiration at one time.\35\ Tier 2 Qualifying Securities that do not 
continue to meet the Tier 2 Qualifying Securities Criteria would no 
longer be permitted to list Monday and Wednesday Tier 2 Qualifying 
Securities Expirations beginning on the second day of the following 
quarter.\36\
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    \35\ See id. at 40607. The Exchange has noted the additional 
expirations in Table 2 of Supplementary Material .03 to Options 4, 
Section 5 along with the proposed criteria for the proposed Tier 2 
Qualifying Securities.
    \36\ See id.
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    The Exchange states that the proposed Monday Tier 2 Qualifying 
Securities Expirations would be similar to the Monday expirations for 
existing Qualifying Securities (including the Tier 1 Qualifying 
Securities), among other symbols that may list a Monday expiration in 
Short Term Option Daily Expirations \37\ because the Exchange may open 
for trading on any Friday or Monday that is a business day (beyond the 
current week) series of options on Tier 2 Qualifying Securities to 
expire on any Monday of the month that is a business day and is not a 
Monday in which standard expiration options series, Monthly Options 
Series, or Quarterly Options Series expire.\38\
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    \37\ See supra note 5.
    \38\ Monday expirations that are listed on a Friday must be 
listed at least one business week and one business day prior to the 
expiration. Pursuant to Options 1, Section 1(a)(50), with respect to 
the Short Term Option Series Program, if a Monday is not a business 
day, the series shall expire on the first business day immediately 
following that Monday.
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    The Exchange states that the proposed Wednesday Tier 2 Qualifying 
Securities Expirations would also be similar to the current Wednesday 
expirations for existing Qualifying Securities (among other symbols 
that may list a Wednesday expiration) in Short Term Option Daily 
Expirations \39\ because the Exchange may open for trading on any 
Tuesday or Wednesday that is a business day (beyond the current week) 
series of options on Tier 2 Qualifying Securities to expire on any 
Wednesday of the month that is a business day and is not a Wednesday in 
which standard expiration options series, Monthly Options Series, or 
Quarterly Options Series expire.\40\
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    \39\ See supra note 5.
    \40\ See Notice, supra note 4, 91 FR at 40607.
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    In the event a Monday or Wednesday Tier 2 Qualifying Securities 
Expirations series expires on the same day that a standard expiration 
options series, Monthly Options Series, or Quarterly Options Series 
expires, the Exchange would skip that week's listing and instead list 
the following week; the two weeks therefore would not be 
consecutive.\41\
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    \41\ See id. Pursuant to Options 1, Section 1(a)(50), with 
respect to the Short Term Option Series Program, a Wednesday 
expiration series shall expire on the first business day immediately 
prior to that Wednesday (e.g., Tuesday of that week if the Wednesday 
is not a business day).
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    The Exchange states that the interval between strike prices for the 
proposed Monday and Wednesday Tier 2 Qualifying Securities Expirations 
would be the same as those currently applicable to Monday and Wednesday 
expirations in existing Qualifying Securities (among other symbols that

[[Page 53289]]

may list a Monday or Wednesday expiration) in the Short Term Option 
Series Program.\42\ As is the case with other equity options series 
listed pursuant to the Short Term Option Series Program, the Monday and 
Wednesday Tier 2 Qualifying Securities Expirations series would be 
P.M.-settled.\43\
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    \42\ See id.; Supplementary Material .03(e) to Options 4, 
Section 5.
    \43\ See Notice, supra note 4, 91 FR at 40607.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\44\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\45\ 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.
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    \44\ 15 U.S.C. 78s.
    \45\ 15 U.S.C. 78s(b)(5).
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    The Commission received one supportive comment letter on the 
proposal.\46\ The commenter states that the current short term option 
daily expirations on exchange-traded funds are highly liquid products, 
and they do not cause market disruption and may be used to hedge 
narrowly defined risks.\47\ The commenter observes that these short-
term option products are the subject of substantial retail interest, 
with significant trading volume on the day of expiration.\48\ The 
commenter expects that the proposed new expirations would ``yield the 
same results'' as the proposal would permit additional expirations for 
only the most liquid exchange-traded funds and would provide investors 
with expanded and more effective hedging tools.\49\
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    \46\ See letter from Caitlin Farrell-Starbuck, Global Head of 
Compliance, Susquehanna International Group, LLP, dated July 22, 
2026, supra note 4.
    \47\ See id. at 1.
    \48\ See id.
    \49\ See id.
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    In support of its proposal, the Exchange states that it does not 
believe that any market disruptions would be encountered with the 
introduction of Tuesday and Thursday Tier 1 Qualifying Securities 
Expirations and Monday and Wednesday Tier 2 Qualifying Securities 
Expirations.\50\ The Exchange states that it currently trades P.M.-
settled Short Term Option Series that expire Monday, Tuesday, Wednesday 
and Thursday on several symbols \51\ and has not experienced any market 
disruptions or issues with capacity.\52\ In addition, the Exchange 
states that it has surveillance programs in place to detect 
manipulative trading in the proposed option expirations, in the same 
way that it monitors trading in the current Short Term Option Series 
Expirations.\53\ The Exchange states it has the necessary capacity and 
surveillance programs in place to support and properly monitor trading 
in the proposed Tuesday and Thursday Tier 1 Qualifying Securities 
Expirations and the proposed Monday and Wednesday Tier 2 Qualifying 
Securities Expirations.\54\
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    \50\ See Notice, supra note 4, at 40606, 40608.
    \51\ See id. at 40606, 40608; see also id. at 40604, n.4 
(``[t]he Exchange currently permits expirations in SPY, IWM, QQQ on 
Mondays, Tuesdays, Wednesdays and Thursdays. Also, the Exchange 
permits expirations in GLD, SLV and TLT on Mondays and Wednesdays. 
Finally, the Exchange permits expirations in USO and UNG on 
Wednesdays.'').
    \52\ See id. at 40606, 40608.
    \53\ See id. at 40621.
    \54\ See id. at 40606, 40608.
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    The Exchange's proposal, which is limited to Exchange-Traded Fund 
Shares that meet either the existing Qualifying Securities Criteria or 
the new Tier 2 Qualifying Securities Criteria, is reasonably designed 
as a limited expansion of the Short Term Options Series Program. The 
proposal would add a small overall number of weekly expirations because 
the Exchange will limit the number of Tuesday and Thursday Tier 1 
Qualifying Securities Expirations to two Tuesday expirations and two 
Thursday expirations beyond the current week and the number of Monday 
and Wednesday Tier 2 Qualifying Securities Expirations to two Monday 
and two Wednesday expirations beyond the current week.\55\ Furthermore, 
the Qualifying Securities Criteria (including the Tier 2 Qualifying 
Securities Criteria) will limit the number of eligible Qualifying 
Securities, and the associated Qualifying Securities Expirations, so 
that any potential impact on the options market will accordingly be 
limited. However, the Commission expects the Exchange to monitor the 
trading of the options listed as a result of the proposal to evaluate 
whether any issues develop.
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    \55\ See id. at 40615. The Exchange analyzed Exchange-Traded 
Fund Shares that would have qualified as either Tier 1 Qualifying 
Securities (iShares Bitcoin Trust ETF (IBIT) and Financial Select 
Sector SPDR Fund (XLF)) or as Tier 2 Qualifying Securities (VanEck 
Semiconductor ETF (SMH), Energy Select Sector SPDR (XLE), iShares 
MSCI Emerging Markets ETF (EEM)) as of April 2026. According to the 
Exchange, expanding the Short Term Option Series Program to include 
IBIT, XLF, SMH, XLE and EEM would increase the amount of strikes by 
approximately 0.16%. See id. at 40608.
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    The existing Qualifying Securities Criteria applicable to Exchange-
Traded Fund Shares--which require (1) an AUM greater than $50 billion 
based on NAV; (2) monthly options volume greater than 10 million 
options; (3) a position limit of at least 250,000 contracts; and (4) 
participation in the Penny Interval Program--should help to ensure that 
Tier 1 Qualifying Securities, as well as the options on such 
securities, are highly liquid and actively traded.\56\
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    \56\ See supra notes 6-9 and accompanying text.
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    Further, as discussed above, the Tier 2 Qualifying Securities 
Criteria require Exchange-Traded Fund Shares to have (1) AUM greater 
than $25 billion based on NAV; (2) monthly options volume, as measured 
by sides traded in the last month preceding the quarter end, greater 
than 5 million options; (3) a position limit of at least 250,000 
contracts; and (4) participate in the Penny Interval Program.\57\ 
Although the Tier 2 Qualifying Securities Criteria would have lower AUM 
and monthly options volume eligibility requirements than the existing 
Qualifying Securities Criteria, they would include the same 250,000-
contract position limit and Penny Interval Program participation 
requirements. Therefore, the proposed criteria would help to ensure 
that Tier 2 Qualifying Securities, as well as the options on such 
securities, are highly liquid and actively traded.\58\
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    \57\ See supra notes 26-29 and accompanying text.
    \58\ According to the Exchange, substantially less than 1% of 
Exchange-Traded Fund Shares would meet the Tier 2 Qualifying 
Securities Criteria. See Notice, supra note 4, at 40619.
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    If the Exchange chooses to modify the Qualifying Securities 
Criteria, the proposed Tier 2 Qualifying Securities Criteria, or any 
other aspect of the proposal, it will be required to file a proposed 
rule change with the Commission, which will subject the proposed rule 
change to the notice and comment process.
    Based on the foregoing, the Commission believes the proposal 
reasonably balances the Exchange's desire to accommodate investor 
demand by offering a wider array of investment opportunities with the 
need to avoid unnecessary proliferation of options series. 
Additionally, and as noted above, this limited expansion of Qualifying 
Securities expirations may provide the investing public and other 
market participants more flexibility to closely

[[Page 53290]]

tailor their investment and hedging decisions in these options, thus 
allowing them to better manage their risk exposure. For these reasons, 
the Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act \59\ and the rules and regulations 
thereunder applicable to a national securities exchange.
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    \59\ 15 U.S.C. 78s(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\60\ that the proposed rule change (SR-ISE-2026-34) be, and hereby 
is, approved.
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    \60\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\61\
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    \61\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-16695 Filed 8-14-26; 8:45 am]
BILLING CODE 8011-01-P