Federal Register / Vol. 88, No. 171 / Wednesday, September 6, 2023 / Notices 60993 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 95445 

(August 9, 2022), 87 FR 49884 (August 12, 2022) 

(SR–MEMX–2022–010). 

4See Securities Exchange Act Release No. 98013 

(July 27, 2013) (Order Approving SR–NYSEAMER– 

2023–27). 

5 Id. 

6Rule 19.3(a) requires that, for underlying 

securities to be eligible for option transactions, such 

securities must be duly registered and be an ‘‘NMS 

stock’’ as defined in Rule 600 of Regulation NMS 

under the Act and will be characterized by a 

substantial number of outstanding shares which are 

widely held and actively traded. See MEMX Rule 

19.3(a)(1) and (2). 

7See MEMX Rule 19.3(b)(5)(A). The Exchange is 

not proposing to make any changes to the 

guidelines for listing securities that are not a 

‘‘covered security’’. See MEMX Rule 19.3(b)(5)(B). 

Select Contract 14, Filed Under Seal; 

Filing Acceptance Date: August 29, 

2023; Filing Authority: 39 CFR 

3035.105; Public Representative: 

Kenneth R. Moeller; Comments Due: 

September 7, 2023. 

3. Docket No(s).: CP2022–92; Filing 

Title: USPS Notice of Amendment to 

Priority Mail Express, Priority Mail, 

First-Class Package Service & Parcel 

Select Contract 18, Filed Under Seal; 

Filing Acceptance Date: August 29, 

2023; Filing Authority: 39 CFR 

3035.105; Public Representative: 

Kenneth R. Moeller; Comments Due: 

September 7, 2023. 

4. Docket No(s).: MC2023–250 and 

CP2023–253; Filing Title: USPS Request 

to add Priority Mail & USPS Ground 

Advantage Contract 42 to Competitive 

Product List and Notice of Filing Under 

Seal; Filing Acceptance Date: August 29, 

2023; Filing Authority: 39 U.S.C. 3642, 

39 CFR 3040.130 through 3040.135, and 

39 CFR 3035.105; Public Representative: 

Philip T. Abraham; Comments Due: 

September 7, 2023. 

This Notice will be published in the 

Federal Register. 

Erica A. Barker, 

Secretary. 

[FR Doc. 2023–19119 Filed 9–5–23; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98253; File No. SR–MEMX– 

2023–17] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Rule 19.3 (Criteria 

for Underlying Securities) To 

Accelerate the Listing of Options on 

Certain IPOs 

August 30, 2023. 

Pursuant to section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on August 

22, 2023, MEMX LLC (‘‘MEMX’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

MEMX Rule 19.3 (Criteria for 

Underlying Securities) to permit an 

underlying security having a market 

capitalization of at least $3 billion based 

upon the offering price of its initial 

public offering, to be listed and traded 

starting on or after the second business 

day following the initial public offering 

day. The text of the proposed rule 

change is provided in Exhibit 5. 

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 

In August 2022, the Commission 

approved the Exchange’s adoption of 

rules to govern the trading of options on 

the Exchange by MEMX Options,3

which will be a facility of the Exchange. 

The Exchange plans to launch MEMX 

Options in September 2023, and in 

advance of that launch, the Exchange is 

proposing a listings rule change 

applicable to options that is 

substantially similar in all material 

respects to the proposal approved from 

NYSE American LLC (‘‘NYSE 

American’’).4 Specifically, the Exchange 

proposes to amend Rule 19.3 (Criteria 

for Underlying Securities) to permit an 

underlying security having a market 

capitalization of at least $3 billion based 

upon the offering price of its initial 

public offering, to be listed and traded 

starting on or after the second business 

day following the initial public offering 

day. This is a competitive filing that is 

based on a proposal recently submitted 

by NYSE American and approved by the 

Commission.5

The purpose of the proposed rule 

change is to amend Rule 19.3 (Criteria 

for Underlying Securities) (the ‘‘Rule’’) 

as set forth below. Following 

discussions with other exchanges and a 

cross-section of industry participants 

and in coordination with the Listed 

Options Market Structure Working 

Group (‘‘LOMSWG’’) (collectively, the 

‘‘Industry Working Group’’), the 

Exchange proposes to modify the 

standard set forth in the Rule for the 

listing and trading of options on 

‘‘covered securities’’ to reduce the time 

to market. 

Rule 19.3(b)(5)(A) sets forth the 

guidelines to be considered in 

evaluating for option transactions 

underlying securities that are ‘‘covered 

securities,’’ as defined in section 

18(b)(1)(A) of the Securities Act of 1933 

(hereinafter ‘‘covered security’’ or 

‘‘covered securities’’).6 Currently, the 

Exchange permits the listing of an 

option on an underlying covered 

security that, amongst other things, has 

a market price of at least $3.00 per share 

for the previous three consecutive 

business days preceding the date on 

which the Exchange submits a 

certificate to The Options Clearing 

Corporation (‘‘OCC’’) to list and trade 

options on the underlying security (the 

‘‘three-day lookback period’’).7 Under 

the current rule, if an initial public 

offering (‘‘IPO’’) occurs on a Monday, 

the earliest date the Exchange could 

submit its listing certificate to OCC 

would be on Thursday, with the market 

price determined by the closing price 

over the three-day lookback period from 

Monday through Wednesday. The 

option on the IPO’d security would then 

be eligible for trading on the Exchange 

on Friday (i.e., within four business 

days of the IPO inclusive of the day the 

listing certificate is submitted to OCC). 

The Exchange notes that the three-day 

look back period helps ensure that 

options on underlying securities may be 

listed and traded in a timely manner 

while also allowing time for OCC to 

accommodate the certification request. 

However, there are certain large IPOs 

that issue high-priced securities—well 


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60994 Federal Register / Vol. 88, No. 171 / Wednesday, September 6, 2023 / Notices 

8See proposed Rule 19.3(b)(5)(A)(2). The 

Exchange proposes a non-substantive change to 

number the existing and proposed criteria for 

covered securities as (1) and (2) of paragraph (5)(A). 

See proposed Rule 19.3(b)(5)(A). 

9While the Exchange acknowledges that market 

participants may utilize options for speculative 

purposes (in addition to as a hedging tool), the 

Exchange believes (as set forth below) that its 

surveillance technologies and procedures 

adequately address potential violations of Exchange 

rules and federal securities laws applicable to 

trading on the Exchange. 

10The Exchange acknowledges that the Options 

Listing Procedures Plan (or ‘‘OLPP’’) requires that 

the listing certificate be provided to OCC no earlier 

than 12:01 a.m. and no later than 11:00 a.m. 

(Chicago time) on the trading day prior to the day 

on which trading is to begin. See the OLPP, at p. 

3., available here: https://www.theocc.com/ 

getmedia/198bfc93-5d51-443c-9e5bfd575a0a7d0f/ 

options_listing_procedures_plan.pdf. The OLPP is a 

national market system plan that, among other 

things, sets forth procedures governing the listing 

of new options series. 

11FINRA conducts cross-market surveillances on 

behalf of the Exchange pursuant to a Regulatory 

Services Agreement. The Exchange is responsible 

for FINRA’s performance under this Regulatory 

Services Agreement. 

12See supra note 10. 

13The term ‘‘Member’’ shall mean any registered 

broker or dealer that has been admitted to 

membership in the Exchange. See Rule 1.5(p). 

14 15 U.S.C. 78f(b). 

15 15 U.S.C. 78f(b)(5). 

above the $3.00 per share threshold— 

that would obviate the need for the 

three-day lookback period. In this 

regard, the Industry Working Group has 

recently identified proposed changes to 

Rule 19.3(b)(5)(A) that would help 

options on covered securities that have 

a market capitalization of at least $3 

billion based upon the offering price of 

its IPO come to market earlier.8 The 

proposed change, which is intended to 

be harmonized across options 

exchanges, is designed to provide 

investors the opportunity to hedge their 

interest in IPO investments in a shorter 

amount of time than what is currently 

permitted.9 The Exchange believes that 

options serve a valuable tool to the 

trading community and help markets 

function efficiently by mitigating risk. 

To that end, the Exchange believes that 

the absence of options in the early days 

after an IPO may heighten volatility in 

the trading of IPO’d securities. 

Accordingly, the Exchange proposes 

to modify Rule 19.3 to waive the threeday lookback period for covered 

securities that have a market 

capitalization of at least $3 billion based 

upon the offering price of the IPO of 

such securities and to allow options on 

such securities to be listed and traded 

starting on or after the second business 

day following the initial public offering 

day (i.e., not inclusive of the day of the 

IPO).10 NYSE American has reviewed 

trading data for IPO’d securities dating 

back to 2017 and stated that it is 

unaware of any such security that 

achieved a market capitalization of $3 

billion based upon the offering price of 

its IPO that would not have also 

qualified for listing options based on the 

three-day lookback requirement. 

Specifically, NYSE American 

determined that 202 of the 1,179 IPOs 

that took place between January 1, 2017, 

and October 21, 2022, met the $3 billion 

market capitalization/IPO offering price 

threshold. Options on all 202 of those 

IPO shares subsequently satisfied the 

three-day lookback requirement for 

listing and trading, i.e., none of these 

large IPOs closed below the $3.00/share 

threshold during its first three days of 

its trading. As such, the Exchange 

believes the proposed capitalization 

threshold of $3 billion based upon the 

offering price of its IPO is appropriate. 

Under the proposed rule, if an IPO for 

a company with a market capitalization 

of $3 billion based upon the offering 

price of its IPO occurs on a Monday, the 

Exchange could submit its listing 

certificate to OCC (to list and trade 

options on the IPO’d security) as soon 

as all the other requirements for listing 

are satisfied. If, on Tuesday, all 

requirements are deemed satisfied, the 

IPO’d security could then be eligible for 

trading on the Exchange on Wednesday 

(i.e., starting on or after the second 

business day following the IPO day). 

Thus, the proposal could potentially 

accelerate the listing of options on IPO’d 

securities by two days. The Exchange 

believes the proposed change would 

allow options on IPO’d securities to 

come to market sooner without 

sacrificing investor protection. The 

Exchange represents that trading in 

IPO’d securities—like all other 

securities traded on the Exchange—is 

subject to surveillances administered by 

the Exchange and to cross-market 

surveillances administered by FINRA on 

behalf of the Exchange. Those 

surveillances are designed to detect 

violations of Exchange rules and 

applicable federal securities laws.11 The 

Exchange represents that those 

surveillances are adequate to reasonably 

monitor Exchange trading of IPO’d 

securities in all trading sessions and to 

reasonably deter and detect violations of 

Exchange rules and federal securities 

laws applicable to trading on the 

Exchange.12 As such, the Exchange 

believes that its existing surveillance 

technologies and procedures, coupled 

with NYSE American’s findings related 

to the IPOs reviewed as described 

herein, adequately address potential 

concerns regarding possible 

manipulation or price stability. 

Implementation Date 

The Exchange will announce the 

effective date of the proposed change by 

Notice distributed to all Members.13 The 

Exchange will coordinate the effective 

date to coincide with the 

implementation of the proposed change 

on the other options exchanges. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with section 6(b) 

of the Act,14 in general, and furthers the 

objectives of section 6(b)(5) of the Act,15

in particular, in that it is designed to 

prevent fraudulent and manipulative 

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. In 

particular, the Exchange believes the 

proposed change would facilitate 

options transactions and would remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, which 

would, in turn, protect investors and the 

public interest by providing an avenue 

for options on IPO’d securities to come 

to market earlier. The Exchange notes 

that the three-day look back period 

helps ensure that options on underlying 

securities may be listed and traded in a 

timely manner while also allowing time 

for OCC to accommodate the 

certification request. However, there are 

certain large IPOs that issue high-priced 

securities—well above the $3.00 per 

share threshold—that would obviate the 

need for the three-day lookback period. 

As noted above, NYSE American has 

reviewed trading data for IPO’d 

securities dating back to 2017 and it is 

unaware of an IPO’d security with a 

market capitalization of $3 billion or 

more (based upon the offering price of 

its IPO) that subsequently would have 

failed to qualify for listing and trading 

as options under the three-day lookback 

requirement. The Exchange believes that 

the proposed amendment, which would 

be harmonized across options 

exchanges, would remove impediments 

to and perfect the mechanism of a free 

and open market and a national market 

system by providing an avenue for 

investors to hedge their interest in IPO 

investments in a shorter amount of time 

than what is currently permitted. The 


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Federal Register / Vol. 88, No. 171 / Wednesday, September 6, 2023 / Notices 60995 

16See supra note 10. 

17See supra note 11. 

18See supra note 4. 

19BOX Exchange LLC (‘‘BOX’’) recently filed a 

similar proposal. See Securities Exchange Act 

Release No. 98073 (August 7, 2023) (SR–BOX– 

2023–21). 

20 15 U.S.C. 78s(b)(3)(A). 

21 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b–4(f)(6) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file 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 17 CFR 240.19b–4(f)(6). 

23 17 CFR 240.19b–4(f)(6)(iii). 

24For 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). 

Exchange believes that options serve a 

valuable tool to the trading community 

and help markets function efficiently by 

mitigating risk. To that end, the 

Exchange believes that the absence of 

options in the early days after an IPO 

may heighten volatility to IPO’d 

securities.16

Further, as noted herein, the 

Exchange believes the proposed change 

would allow options on IPO’d securities 

to come to market sooner (i.e., at least 

two business days post-IPO not 

inclusive of the day of the IPO) without 

sacrificing investor protection. The 

Exchange represents that trading in 

IPO’d securities—like all other 

securities traded on the Exchange—is 

subject to surveillances administered by 

the Exchange and to cross-market 

surveillances administered by FINRA on 

behalf of the Exchange. Those 

surveillances are designed to detect 

violations of Exchange rules and 

applicable federal securities laws.17 The 

Exchange represents that those 

surveillances are adequate to reasonably 

monitor Exchange trading of IPO’d 

securities in all trading sessions and to 

reasonably deter and detect violations of 

Exchange rules and federal securities 

laws applicable to trading on the 

Exchange, including wrongful efforts to 

manipulate the prices of those securities 

in order to bring them in compliance 

with the $3.00/share threshold for the 

listing of options. As such, the Exchange 

believes that its existing surveillance 

technologies and procedures, coupled 

with NYSE American’s findings related 

to the IPOs reviewed as described 

herein, would adequately address 

potential concerns regarding possible 

manipulation or price stability. 

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. In this regard 

and as indicated above, the Exchange 

notes that the rule change is being 

proposed as a competitive response to a 

filing submitted by NYSE American that 

was recently approved by the 

Commission.18 The Exchange 

anticipates that the other options 

exchanges will adopt substantively 

similar proposals,19 such that there 

would be no burden on intermarket 

competition from the Exchange’s 

proposal. Accordingly, the proposed 

change is not meant to affect 

competition among the options 

exchanges. For these reasons, the 

Exchange believes that the proposed 

rule change reflects this competitive 

environment and does not impose any 

undue burden on intermarket 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

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) of the Act 20 and Rule 19b– 

4(f)(6) thereunder.21

A proposed rule change filed under 

Rule 19b–4(f)(6) 22 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),23 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 proposed 

rule change may become operative upon 

filing. The Exchange requested the 

waiver, stating that it would ensure fair 

competition among the exchanges by 

allowing the Exchange to allow options 

on IPO’d securities to come to market 

sooner (i.e., at least two business days 

post-IPO not inclusive of the day of the 

IPO) without sacrificing investor 

protection. For these reasons, and 

because the proposed rule change does 

not raise any novel legal or regulatory 

issues, the Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Therefore, the Commission hereby 

waives the 30-day operative delay and 

designates the proposal operative upon 

filing.24

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 

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. 

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 rule-comments@

sec.gov. Please include file number SR– 

MEMX–2023–17 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–MEMX–2023–17. 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 


lotter on DSK11XQN23PROD with NOTICES1
60996 Federal Register / Vol. 88, No. 171 / Wednesday, September 6, 2023 / Notices 

25 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 98013 

(July 27, 2023) 88 FR 50927 (August 2, 2023)(SR– 

NYSEAMER–2023–27)(Order Granting Approval of 

a Proposed Rule Change to Amend Rule 915 

(Criteria for Underlying Securities) to Accelerate the 

Listing of Options on Certain IPOs). 

4 Id. 

5Rule 402(a) requires that, for underlying 

securities to be eligible for option transactions, such 

securities must be duly registered and be an ‘‘NMS 

stock’’ as defined in Rule 600 of Regulation NMS 

under the Act and will be characterized by a 

substantial number of outstanding shares which are 

widely held and actively traded. See Rule 402(a)(1) 

and (2). 

6See Rule 402(b)(5)(i). The Exchange is not 

proposing to make any changes to the guidelines for 

listing securities that are not a ‘‘covered security.’’ 

See Rule 402(b)(5)(ii). 

7See proposed Rule 402(b)(5)(i). The Exchange 

proposes a non-substantive change to number the 

existing and proposed criteria for covered securities 

as (A) and (B) of paragraph (5)(i). See proposed Rule 

402(b)(5)(i). 

8While the Exchange acknowledges that market 

participants may utilize options for speculative 

purposes (in addition to as a hedging tool), the 

Exchange believes (as set forth below) that its 

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–MEMX–2023–17 and should be 

submitted on or before September 27, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–19123 Filed 9–5–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98249; File No. SR–MIAX– 

2023–32] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Exchange Rule 402 

(Criteria for Underlying Securities) To 

Accelerate the Listing of Options on 

Certain IPOs 

August 30, 2023. 

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 August 

23, 2023, Miami International Securities 

Exchange LLC (‘‘MIAX’’ 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend Exchange Rule 402. The text of 

the proposed rule change is available on 

the Exchange’s website at https://

www.miaxglobal.com/markets/usoptions/miax-options/rule-filings, at 

MIAX’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 

Exchange Rule 402, Criteria for 

Underlying Securities, to permit an 

underlying security having a market 

capitalization of at least $3 billion based 

upon the offering price of its initial 

public offering, to be listed and traded 

starting on or after the second business 

day following the initial public offering 

day. The Exchange is proposing a listing 

rule change that is substantially similar 

in all material respects to the proposal 

approved for NYSE American LLC 

(‘‘NYSE American’’).3 Following 

discussions with other exchanges and a 

cross-section of industry participants 

and in coordination with the Listed 

Options Market Structure Working 

Group (‘‘LOMSWG’’) (collectively, the 

‘‘Industry Working Group’’), NYSE 

American filed a proposed rule change,4

which was recently approved, to modify 

the standard for the listing and trading 

of options on ‘‘covered securities’’ to 

reduce the time to market. At this time, 

the Exchange proposes to adopt an 

identical rule. 

Rule 402 sets forth the guidelines to 

be considered in evaluating for option 

transactions underlying securities that 

are ‘‘covered securities,’’ as defined in 

section 18(b)(1)(A) of the Securities Act 

of 1933 (hereinafter ‘‘covered security’’ 

or ‘‘covered securities’’).5 Currently, the 

Exchange permits the listing of an 

option on an underlying covered 

security that, amongst other things, has 

a market price of at least $3.00 per share 

for the previous three consecutive 

business days preceding the date on 

which the Exchange submits a 

certificate to The Options Clearing 

Corporation (‘‘OCC’’) to list and trade 

options on the underlying security (the 

‘‘three-day lookback period’’).6 Under 

the current rule, if an initial public 

offering (‘‘IPO’’) occurs on a Monday, 

the earliest date the Exchange could 

submit its listing certificate to OCC 

would be on Thursday, with the market 

price determined by the closing price 

over the three-day lookback period from 

Monday through Wednesday. The 

option on the IPO’d security would then 

be eligible for trading on the Exchange 

on Friday (i.e., within four business 

days of the IPO inclusive of the day the 

listing certificate is submitted to OCC).7

The Exchange notes that the three-day 

look back period helps ensure that 

options on underlying securities may be 

listed and traded in a timely manner 

while also allowing time for OCC to 

accommodate the certification request. 

However, there are certain large IPOs 

that issue high-priced securities—well 

above the $3.00 per share threshold— 

that would obviate the need for the 

three-day lookback period. In this 

regard, the Industry Working Group has 

recently identified proposed changes to 

Rule 402(b)(5)(i) that would help 

options on covered securities that have 

a market capitalization of at least $3 

billion based upon the offering price of 

its IPO come to market earlier. The 

proposed change, which is intended to 

be harmonized across options 

exchanges, is designed to provide 

investors the opportunity to hedge their 

interest in IPO investments in a shorter 

amount of time than what is currently 

permitted.8 The Exchange believes that 


lotter on DSK11XQN23PROD with NOTICES1