Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Notices 78417 

6 15 U.S.C. 78s(b)(3)(A)(iii). 

7 17 CFR 240.19b–4(f)(6). 

8 17 CFR 240.19b–4(f)(6). 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, 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. 

9 15 U.S.C. 78s(b)(2)(B). 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Options 4A, Section 12(a)(5). 

4 In addition to the current Nasdaq-100 Index 

value, Nasdaq will disseminate an Index value for 

XND that is 1/100 of the value of the Nasdaq-100 

Index. 

19(b)(3)(A)(iii) of the Act 6 and Rule 

19b–4(f)(6) thereunder.7 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 and Rule 19b–4(f)(6) 8

thereunder. 

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 

under Section 19(b)(2)(B) 9 of the Act 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– 

NYSECHX–2023–19 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–NYSECHX–2023–19. 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–NYSECHX–2023–19 and should be 

submitted on or before December 6, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–25205 Filed 11–14–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98886; File No. SR–ISE– 

2023–24] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Permit the Listing and 

Trading of XND Options 

November 8, 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 October 

27, 2023, Nasdaq ISE, LLC (‘‘ISE’’ 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 proposes to permit the 

listing and trading of options based on 

1/100 of the value of the Nasdaq-100 

Index® (‘‘Nasdaq-100’’). 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/ise/rules, 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 

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 purpose of the proposed rule 

change is to amend the Exchange’s rules 

to permit the listing and trading of 

index options on Nasdaq 100 Micro 

Index Options (‘‘XND’’). The XND 

options contract will be the same in all 

respects as the current Nasdaq-100 

Index options (‘‘NDX’’) 3 contract listed 

on the Exchange, except that it will be 

based on 1/100 of the value of the 

Nasdaq-100 Index, and will be P.M.- 

Settled with an exercise settlement 

value based on the closing index value 

of the Nasdaq-100 Index on the day of 

expiration.4 The Exchange believes that 

the proposed contract will be valuable 

for retail and other investors that wish 

to trade micro options on the Nasdaq100 Index. Finally, today, Nasdaq Phlx 


ddrumheller on DSK120RN23PROD with NOTICES1
78418 Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Notices 

5See Securities Exchange Act Release No. 98451 

(September 20, 2023), 88 FR 66088 (September 26, 

2023) (SR-Phlx-2023–07) (Order Granting Approval 

of a Proposed Rule Change, as Modified by 

Amendment No. 1, To Make Permanent Certain 

P.M.-Settled Pilots). 

6Nasdaq is an affiliate of the Exchange. 

7The Nasdaq-100 Index is a broad-based index, 

as defined in Options 4A, Section 3. 

8A description of the Nasdaq-100 Index is 

available on Nasdaq’s website at https://

indexes.nasdaqomx.com/docs/methodology_

NDX.pdf. 

9See supra note 5. See also Phlx Options 4A, 

Section 12(a)(6). 

10See ISE Options 4A, Section 12(a)(6). NQX is 

P.M.-settled and a European-style and cash-settled, 

with a contract multiplier of 100. 

11The Exchage also proposes to re-letter the 

internal list in Options 4A, Section 12(a)(5)(ii) as A 

through E. 

12See Securities Exchange Act Release No. 98451 

(September 20, 2023), 88 FR 66088 (September 26, 

2023) (SR-Phlx-2023–07) (Order Granting Approval 

of a Proposed Rule Change, as Modified by 

Amendment No. 1, To Make Permanent Certain 

P.M.-Settled Pilots). 

LLC (‘‘Phlx’’) has approval to list and 

trade XND options. The rules to list and 

trade NDX [sic] options on ISE are 

identical to those of Phlx.5

Nasdaq-100 Index 

The Nasdaq-100 Index is a modified 

market capitalization-weighted index 

that includes 100 of the largest nonfinancial companies listed on The 

Nasdaq Stock Market LLC (‘‘Nasdaq’’),6

based on market capitalization.7 It does 

not contain securities of financial 

companies, including investment 

companies. Security types generally 

eligible for the Nasdaq-100 Index 

include common stocks, ordinary 

shares, American Depository Receipts, 

and tracking stocks. Security or 

company types not included in the 

Nasdaq-100 Index are closed-end funds, 

convertible debentures, exchange traded 

funds, limited liability companies, 

limited partnership interests, preferred 

stocks, rights, shares or units of 

beneficial interest, warrants, units and 

other derivative securities.8

XND Options Contract 

Currently, the Exchange lists and 

trades NDX options that are based on 

the full value of the Nasdaq-100 Index. 

In an effort to attract additional interest 

in index options based on the Nasdaq100 Index, the Exchange now proposes 

to list and trade a new micro option 

contract based on this index. XND 

options will trade independently of and 

in addition to NDX options, and the 

XND options will be subject to the same 

rules that presently govern the trading 

of index options based on the Nasdaq100 Index, including sales practice 

rules, margin requirements, trading 

rules, and position and exercise limits. 

Similar to NDX, XND options will be 

European-style and cash-settled, and 

will have a contract multiplier of 100. 

The contract specifications for XND 

options will mirror in all respects those 

of the NDX options contract already 

listed on the Exchange, except that the 

Exchange proposes that XND options 

will be based on 1/100 of the value of 

the Nasdaq-100 Index, and will be P.M.- 

settled pursuant to proposed Options 

4A, Section 12(a)(6). The ISE XND 

option contracts will trade identically to 

Phlx XND options.9 Also, similar 

features are available with other index 

options contracts listed and/or approved 

for trading on the Exchange such as 

options on NQX (a reduced value index 

based on 1⁄5 of the value of the Nasdaq100 Index).10 The Exchange also 

proposes to amend Options 4A, Section 

12(a)(5)(ii) to permit options on the 

Nasdaq 100 Micro Index to trade a.m.- 

settled.11

The value of the Nasdaq-100 Index 

has increased significantly in recent 

years such that the value of the index 

stood at 14,717.90, as of the opening of 

trading on October 22,023. As a result 

of the increase in the value of the 

underlying Nasdaq-100 Index, the 

premium for NDX options has also 

increased. The Exchange believes that 

this has caused NDX options to trade at 

a level that may be uncomfortably high 

for certain retail and other investors. 

The Exchange believes that listing 

options at a micro value will attract a 

greater source of retail customer 

business. Further, listing options on a 

micro index will provide an opportunity 

for investors to trade and hedge the 

market risk associated with the Nasdaq100 Index. 

With an exercise settlement value 

based on 1/100 of the Nasdaq-100 Index, 

the Exchange believes that retail and 

other investors would be able to use this 

trading vehicle while extending a 

smaller outlay of capital. Furthermore, 

the proposed micro index will have a 

notional value at a level that is 

comparable to similar products that 

have been successful in the market, 

including the S&P 500 Mini SPX 

Options Index (XSP), which had an 

index value of (428.45) as of the opening 

of trading on October 2, 2023. Of note, 

Phlx XND options have traded at this 

level since 2021. The Exchange 

therefore believes that basing the 

proposed XND options contract on 1/ 

100 of the value of the Nasdaq-100 

Index should attract additional 

investors, and, in turn, create a more 

active and liquid trading environment. 

XND options will also be P.M.-settled 

as the Exchange believes that market 

participants, and in particular, retail 

investors, who are the target audience 

for this product, prefer P.M.-settled 

index options. P.M.-settlement is 

preferred by retail investors as it allows 

market participants to hedge their 

exposure for the full week. A.M.-settled 

options by contrast are based on 

opening prices on the day of expiration 

and therefore stop trading on the day 

prior, leaving residual risk on the day of 

expiration. Feedback from Members that 

handle retail order flow has indicated 

that P.M.-settlement is needed to garner 

retail investor support for this product. 

In this regard, the Exchange notes that 

XND options on Phlx are P.M.-settled 

and recently received approval for 

permanency.12

Pursuant to Supplementary Material 

.07 to ISE Options 4A, Section 12, 

Phlx’s proposal to list XND would 

permit XND, as a broad-based index and 

part of the Nonstandard Expirations 

Program, to open for trading Weekly 

Expirations on XND to expire on any 

Monday, Wednesday, or Friday (other 

than the third Friday-of-the-month or 

days that coincide with an EOM 

expiration). Additionally, the Exchange 

proposes to amend Supplementary 

Material .07 to ISE Options 4A, Section 

12 to permit the listing and trading of 

XND options that expire on any 

Tuesday or Thursday similar to Nasdaq100 Index options which today expire 

on each business day of the week. With 

this proposal, XND would be permitted 

to open for trading Weekly Expirations 

to expire on any Monday, Tuesday, 

Wednesday, Thursday or Friday. Today, 

Phlx’s rules permit XND to expire on 

any Monday, Tuesday, Wednesday, 

Thursday or Friday pursuant to Options 

4A, Section 12(b)(5). 

Weekly Expirations in XND would be 

subject to all provisions of this Rule and 

treated the same as options on the same 

underlying index that expire on the 

third Friday of the expiration month; 

provided, however, that Weekly 

Expirations shall be P.M.-settled and 

new series in Weekly Expirations may 

be added up to and including on the 

expiration date for an expiring Weekly 

Expiration. Further, the Exchange may 

open for trading EOMs on any broadbased index eligible for standard 

options trading to expire on last trading 

day of the month. EOMs shall be subject 

to all provisions of this Rule and treated 

the same as options on the same 

underlying index that expire on the 

third Friday of the expiration month; 

provided, however, that EOMs shall be 

P.M.-settled and new series in EOMs 

may be added up to and including on 

the expiration date for an expiring 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Notices 78419 

13 XND is a broad-based index. 

14See Phlx Options 4A, Section 12(b)(5). 

15See supra note 12. 

16See Supplementary Material .07(c) to Options 

4A, Section 12. 

17This is the case as long as QQQ options 

(‘‘QQQ’’) participate in the Penny Interval Program. 

18See Phlx Supplementary Material .03 to 

Options 3, Section 3. 

19Options 4A, Section 12(a)(3) currently provides 

that the Exchange may list: (i) up to six (6) standard 

monthly expirations at any one time in a class, but 

will not list index options that expire more than 

twelve (12) months out; (ii) up to 12 standard 

monthly expirations at any one time for any class 

that the Exchange (as the Reporting Authority) uses 

to calculate a volatility index; and (iii) up to 12 

standard (monthly) expirations in NDX options and 

NQX options. 

20See Options 4A, Section 12(b)(3). 

21The Exchange expects that it will add XND 

options to the Weeklies program. 

22Weekly Expirations would not need to be for 

consecutive Monday, Wednesday, or Friday 

expirations as applicable. However, the expiration 

date of a non-consecutive expiration would not be 

permitted beyond what would be considered the 

last expiration date if the maximum number of 

expirations were listed consecutively. Weekly 

Expirations that are first listed in a given class 

could expire up to four weeks from the actual 

listing date. If the last trading day of a month were 

a Monday, Wednesday, or Friday and the Exchange 

were to list EOMs and Weekly Expirations as 

applicable in a given class, the Exchange would list 

an EOM instead of a Weekly Expiration in the given 

class. Other expirations in the same class would not 

be counted as part of the maximum number of 

Weekly Expirations for a broad-based index class. 

If the Exchange were not open for business on a 

respective Monday, the normally Monday expiring 

Weekly Expirations would expire on the following 

business day. If the Exchange were not open for 

business on a respective Wednesday or Friday, the 

normally Wednesday or Friday expiring Weekly 

Expirations would expire on the previous business 

day. See Supplementary Material .07(a) to Options 

4A, Section 12. 

23The maximum number of expirations that 

could be listed for EOMs in a given class would be 

the same as the maximum number of expirations 

permitted for standard options on the same broadbased index. EOM expirations would not need to 

be for consecutive end of month expirations. 

However, the expiration date of a non-consecutive 

expiration may not be beyond what would be 

considered the last expiration date if the maximum 

number of expirations were listed consecutively. 

EOMs that are first listed in a given class could 

expire up to four weeks from the actual listing date. 

Other expirations would not be counted as part of 

the maximum numbers of EOM expirations for a 

broad-based index class. See Supplementary 

Material .07(a) to Options 4A, Section 12. 

24See Phlx Options 4A, Section 12(b)(5). 

EOM.13 Today, XND options on Phlx are 

part of the Nonstandard Program.14

The Exchange does not believe that 

the introduction of a new P.M.-settled 

Nasdaq-100 Index contract will cause 

any market disruptions, as noted herein, 

Phlx XND options recently received 

approval for permanency.15 The 

Exchange will monitor for any 

disruptions caused by P.M.-settlement 

of the proposed XND options contract or 

the development of any factors that 

could cause such disruptions. P.M.- 

settled options predominate in the overthe-counter (‘‘OTC’’) market, and the 

Exchange is not aware of any adverse 

effects in the OTC market attributable to 

the P.M.-settlement feature. The 

Exchange is merely proposing to offer a 

P.M.-settled product in an exchange 

environment, which offers the 

additional benefits of added 

transparency, price discovery, and 

stability. 

Trading Hours, Minimum Increments, 

Expirations and Strike Prices 

XND options will be available for 

trading during the Exchange’s standard 

trading hours for index options, i.e., 

from 9:30 a.m. to 4:15 p.m. (Eastern 

time), except that that on the last trading 

day, transactions in expiring p.m.- 

settled broad-based index options may 

be effected on the Exchange between the 

hours of 9:30 a.m. (Eastern time) and 

4:00 p.m. (Eastern time).16 The trading 

hours for XND options will be the same 

as the trading hours for options on 

Nasdaq-100 Index. 

XND options will trade with a 

minimum trading increment of $0.01 for 

all options series 17 similar to Phlx XND 

options.18 ISE proposes to adopt a new 

Supplementary Material .04 to Options 

3, Section 3 to state that for so long as 

Invesco QQQ Trust Series 1 (‘‘QQQ’’) 

options participate in the Penny Interval 

Program, the minimum increments for 

XND options shall be the same as QQQ 

for all options series (including LEAPS), 

which shall be $0.01 for options for all 

other series. 

The Exchange proposes that XND 

options will have monthly expiration 

dates on the third Friday of each month 

(i.e., Expiration Friday), and the 

Exchange proposes to list XND options 

in expiration months consistent with 

those of other index option products 

available on the Exchange.19 In 

addition, the Exchange may list long 

term index options series (‘‘LEAPS’’) 

that expire from twelve (12) to sixty (60) 

months from the date of issuance.20

With the addition of XND, the Exchange 

proposes to amend the first sentence of 

Options 4A, Section 12(b)(1)(i) to 

provide that ‘‘Index long term options 

series may be based on either the full 

value, reduced value or micro index 

value of the underlying index.’’ There 

may be up to ten (10) expiration 

months, none further out than sixty (60) 

months. Strike price intervals and 

continuity Rules shall not apply to such 

options series until the time to 

expiration is less than twelve (12) 

months. Bid/ask differentials for longterm options contracts are specified 

within Options 2, Section 4(b)(4)(i)(A). 

Further, the Exchange proposes to add 

rule text at Options 4A, Section 

12(b)(3)(ii) that provides, ‘‘Micro index 

long term options series may expire at 

six-month intervals. When a new 

expiration month is listed, series may be 

near or bracketing the current index 

value. Additional series may be added 

when the value of the underlying index 

increases or decreases by ten (10) to 

fifteen (15) percent.’’ XND options 

would also be eligible to be added to the 

Short Term Option Series Program 

(‘‘Weeklies’’) and/or Quarterly Options 

Series Program (‘‘Quarterlies’’) if 

designated by the Exchange 

Supplementary Material .01 and .02 to 

Options 4A, Section 12, respectively.21

Further, as noted herein, the 

Exchange proposes to permit XND 

options to be listed and traded in 

accordance with the Nonstandard 

Expirations Program, which permits 

broad-based indexes to list standard 

options trading to expire on any 

Monday, Wednesday, or Friday (other 

than the third Friday-of-the-month or 

days that coincide with an End of 

Month (‘‘EOM’’) expiration), and permit 

XND options to separately expire on 

Tuesdays and Thursdays, similar to 

options on the Nasdaq-100 Index. 

Weekly Expirations would be subject to 

all provisions of Options 4A, Section 12 

and would be treated the same as 

options on the same underlying index 

that expire on the third Friday of the 

expiration month. New series in Weekly 

Expirations could be added up to and 

including on the expiration date for an 

expiring Weekly Expiration. The 

maximum number of expirations that 

could be listed for each Weekly 

Expiration (i.e., a Monday expiration, 

Wednesday expiration, or Friday 

expiration, as applicable) in a given 

class would be the same as the 

maximum number of expirations 

permitted for standard options on the 

same broad-based index.22 Further, the 

Exchange could open for trading EOMs 

on any broad-based index eligible for 

standard options trading to expire on 

last trading day of the month. EOMs 

would be subject to all provisions of 

Options 4A, Section 12 and treated the 

same as options on the same underlying 

index that expire on the third Friday of 

the expiration month. However, the 

EOMs would be P.M.-settled and new 

series in EOMs could be added up to 

and including on the expiration date for 

an expiring EOM.23 Today, Phlx XND 

options trade in the Nonstandards 

Program.24

Generally, pursuant to Options 4A, 

Section 12(c)(1), except as provided in 


ddrumheller on DSK120RN23PROD with NOTICES1
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25Proposed Options 4A, Section 12(c)(1) provides 

that the interval between strike prices of series of 

Mini-Nasdaq-100 Index (‘‘MNX’’ or ‘‘Mini-NDX’’), 

Nasdaq 100 Reduced Value Index (‘‘NQX’’) or 

Nasdaq 100 Micro Index Options (‘‘XND’’) options 

will be $1 or greater, subject to certain conditions. 

26See Phlx Options 4A, Section 12(a)(2). 

27See also Phlx Supplementary Material .02 to 

Options 4A, Section 12 describing XND options. 

28The Exchange is amending Options 4A, Section 

6(a) to reflect this proposed change. 

29See Options 4A, Section 10 which provides 

that exercise limits for index options contracts shall 

be equivalent to the position limits described in 

Options 4A, Section 6. 

30See Phlx Options 4A, Section 6, Phlx Options 

4A, Section 10. 

31 15 U.S.C. 78f(b). 

32 15 U.S.C. 78f(b)(5) and compete with similar 

products that are offered on Cboe such as SPXW 

and OEX. 33See Phlx Options 4A, Section 12. 

Options 4A, Section 12(c)(5),25 the 

exercise (strike) price intervals will be 

no less than $5, provided that the 

Exchange may determine to list strike 

prices at no less than $2.50 intervals for 

options on the following indexes (which 

may also be known as sector indexes). 

The Exchange proposes to amend 

Options 4A, Section 12(c)(1) to add 

XND options to the list of classes where 

strike price intervals of no less than 

$2.50 are generally permitted and note, 

‘‘if the strike price is less than $200.’’ 

The Exchange proposes to adopt the 

same strike price intervals for XND 

options as are listed for XND options on 

Phlx 26 and currently approved for 

Reduced Value Nasdaq 100 Options 

within Options 4A, Section 12(c)(5). 

Thus, notwithstanding Options 4A, 

Section 12(c)(1), the interval between 

strike prices of series of XND options 

will be $1 or greater, subject to the 

conditions described in Options 4A, 

Section 12(c)(5).27 The Exchange will 

not list LEAPS on XND options at 

intervals less than $5. If the Exchange 

determines to add XND options to the 

Weeklies or Quarterlies programs such 

options will be listed with expirations 

and strike prices described in Options 

4A, Section 12(c)(5). 

Position and Exercise Limits; Margin 

As with NDX, in determining 

compliance with Options 4A, Section 6, 

Position Limits, there will be no 

position limits for broad-based index 

option contracts in the XND class.28

Although there will be no position 

limits for XND options, the Exchange 

proposes to amend Options 4A, Section 

6 to include XND. Options 4A, Section 

6(c) provides, 

Positions in reduced-value index options 

shall be aggregated with positions in fullvalue indices. For such purposes, reducedvalue contracts will be counted consistent 

with their value (e.g., 5 NQX reduced-value 

contracts equal 1 NDX full-value contract). 

Since the Exchange is proposing to list 

a micro index contract that is based on 

1/100 of the value of the Nasdaq-100 

Index, Options 4A, Section 6(c) would 

apply. In addition, as with NDX, there 

would be no exercise limits for XND.29

The same rules for position and exercise 

limits to XND options on Phlx.30

Finally, the Exchange proposes to apply 

broad-based index margin requirements 

for the purchase and sale of XND 

options that are the same as margin 

requirements currently in place for NDX 

options. 

Surveillance and Capacity 

The Exchange represents that it has 

sufficient capacity to handle additional 

quotations and message traffic 

associated with the proposed listing and 

trading of XND options. Further, the 

Exchange has analyzed its capacity and 

represents that it believes the Exchange 

and the Options Price Reporting 

Authority (‘‘OPRA’’) have the necessary 

systems capacity to handle any 

additional traffic associated with the 

listing of the maximum number 

nonstandard expirations permitted 

pursuant to Supplementary Material .07 

to Options 4A, Section 12. 

Index options are integrated into the 

Exchange’s existing surveillance system 

architecture and are thus subject to the 

relevant surveillance processes. The 

Exchange represents that it has adequate 

surveillance procedures to monitor 

trading in XND options thereby aiding 

in the maintenance of a fair and orderly 

market. 

The Exchange notes that it is 

amending Options 4A, Section 12 to 

include the Nasdaq 100 Micro Index 

Options within the Rule to conform to 

the amendments proposes herein. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

section 6(b) of the Act,31 in general, and 

furthers the objectives of section 6(b)(5) 

of the Act,32 in particular, in that it is 

designed 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. Specifically, the 

Exchange believes that the listing and 

trading of a micro index P.M.-settled 

index option contract based on the 

Nasdaq-100 Index will attract order flow 

to the Exchange, increase the variety of 

listed options, and provide a valuable 

hedge tool to retail and other investors. 

The Exchange believes that the 

proposed rule change will further the 

Exchange’s goal of introducing new and 

innovative products to the marketplace. 

Specifically, the Exchange believes that 

XND options would provide additional 

opportunities for market participants to 

trade and hedge exposure to the Nasdaq100 Index as it does today on Phlx. The 

proposed XND options product is 

identical to XND options on Phlx.33

Additionally, the proposed XND options 

product is similar to NDX options that 

are currently listed and traded on the 

Exchange with two important 

differences: (1) XND options will be 

based on 1/100 the value of the Nasdaq100 Index, and (2) XND options will be 

P.M.-settled. These differences are based 

on the Exchanges experience listing 

NDX options, and are designed to attract 

additional participation from retail and 

other investors. 

Based on the trading of XND options 

on Phlx, the Exchange believes that the 

proposed contract specifications will be 

attractive to market participants, and 

will remove impediments to and perfect 

the mechanism of a free and open 

market and a national market system. 

The nonstandard expirations would 

expand the ability of investors to hedge 

risks against market movements 

stemming from economic releases or 

market events that occur during the 

month and at the end of the month. 

Accordingly, the Exchange believes that 

weekly expirations and EOMs should 

create greater trading and hedging 

opportunities and flexibility, and 

provide customers with the ability to 

tailor their investment objectives more 

closely. 

Currently, the Exchange believes that 

there continues to be unmet market 

demand for exchange-listed index 

options on the Nasdaq-100 Index. This 

unmet demand stems in part from the 

high value of the Nasdaq-100 Index and 

the consequently higher cost of 

purchasing NDX options. The high 

value of the Nasdaq-100 Index has made 

it more difficult for retail and other 

investors to comfortably purchase 

options on the index. The Exchange 

believes that a micro index option 

would allow additional participation 

from these investors. Specifically, the 

Exchange believes that basing the 

contract on a micro value of the Nasdaq100 Index will encourage additional 

participation by retail and other 

investors due to the reduced capital 

outlay needed to trade these options. 

While the NQX product has attracted 

retail trading volume to a certain point 

given that the NQX product represents 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Notices 78421 

34See supra note 12. 

35 15 U.S.C. 78s(b)(3)(A)(iii). 

36 17 CFR 240.19b–4(f)(6). 

37 15 U.S.C. 78s(b)(3)(A)(iii). 

38 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. 

39 17 CFR 240.19b–4(f)(6). 

40 17 CFR 240.19b–4(f)(6)(iii). 

41See Phlx Options 4A, Section 12. 

42For 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). 

1⁄5 the value of the Nasdaq-100 Index, 

the Exchange believes that XND options, 

which represent 1⁄100 of the Nasdaq-100 

Index, may strike a more appropriate 

balance for other retail investors with its 

reduced size. This value is more similar 

to other competitive index option 

products, such as Cboe’s Mini-S&P 500 

Index (‘‘XSP’’). 

Furthermore, based on experience 

with XND options on Phlx, the 

Exchange believes that providing P.M.- 

settlement will make this product more 

attractive to market participants and 

help garner additional support for this 

new index options product. 

Specifically, the Exchange believes that 

P.M.-settlement will be attractive to 

retail and other investors that want to 

use these options to hedge an entire 

week of risk without leaving residual 

risk on the day of expiration, and 

without having to actively manage these 

positions, for example, by rolling their 

hedge into the next expiration. Finally, 

the Exchange proposes to offer such a 

product so that it can compete 

effectively with similar index option 

products offered by options markets 

such as Cboe which offers SPXW and 

OEX. Recently, the Commission 

approved the permanency of XND as a 

P.M.-settled product.34 Additionally, 

the Exchange notes that Nasdaq has an 

automated closing cross that facilitates 

orderly closings by aggregating a large 

pool of liquidity, across a variety of 

order types, in a single venue. The 

Exchange believes that Nasdaq’s closing 

procedures are well-equipped to 

mitigate imbalance pressure at the close. 

Also, the Exchange believes that the 

proposal will provide additional trading 

and hedging opportunities for investors. 

XND options will be subject to the 

same rules that presently govern the 

trading of index options based on the 

Nasdaq-100 Index, including sales 

practice rules, margin requirements, 

trading rules, and position and exercise 

limits. The Exchange therefore believes 

that the rules applicable to trading in 

XND options are consistent with the 

protection of investors and the public 

interest. Furthermore, the Exchange 

represents that it has sufficient systems 

capacity and adequate surveillance 

procedures to handle trading in XND 

options. 

With respect to the Exchange’s 

proposal to adopt new Supplementary 

Material .04 to Options 3, Section 3 to 

provide that minimum increments for 

bids and offers for XND options be the 

same as those for QQQ, regardless of the 

value at which the option series is 

quoted, may promote competition and 

benefit investors. This proposal aligns 

the minimum increments for XND 

options with those for QQQ options in 

order to allow market participants to 

quote in minimum increments of $0.01 

is consistent with the Act because 

allowing participants to quote in smaller 

increments may provide the opportunity 

for reduced spreads, thereby lowering 

costs to investors. In addition, because 

both XND and QQQ are based on the 

Nasdaq-100 Index it would be 

reasonable for the minimum increments 

of bids and offers to be the same for both 

types of options. 

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. XND options 

would be available for trading to all 

market participants. The proposed rule 

change will facilitate the listing and 

trading of a new option product that 

will enhance competition among market 

participants, to the benefit of investors 

and the marketplace. The listing of XND 

will enhance competition by providing 

investors with an additional investment 

vehicle, in a fully-electronic trading 

environment, through which investors 

can gain and hedge exposure to the 

Nasdaq-100 Index. Furthermore, this 

product could offer a competitive 

alternative to other existing investment 

products that seek to allow investors to 

gain broad market exposure. Finally, it 

is possible for other exchanges to 

develop or license the use of a new or 

different index to compete with the 

Nasdaq-100 Index and seek Commission 

approval to list and trade options on 

such an index. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or 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 35 and Rule 

19b–4(f)(6) thereunder.36 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 37 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.38

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 39 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 40

permits the Commission to 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 it may 

immediately list and trade XND options 

on the Exchange, which are currently 

listed on Phlx. Further, according to the 

Exchange, the rules to list and trade 

XND options on ISE are identical to 

those of Phlx.41 The Exchange has stated 

that waiver of the operative delay would 

deepen the liquidity pool for XND 

options and allow ISE to compete with 

similar products that are offered on 

other 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 operative delay and 

designates the proposed rule change 

operative upon filing.42

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. 


ddrumheller on DSK120RN23PROD with NOTICES1
78422 Federal Register / Vol. 88, No. 219 / Wednesday, November 15, 2023 / Notices 

43 17 CFR 200.30–3(a)(12), (59). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

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– 

ISE–2023–24 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–ISE–2023–24. 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–ISE–2023–24 and should be 

submitted on or before December 6, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.43

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–25108 Filed 11–14–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98901; File No. SR– 

NYSECHX–2023–21] 

Self-Regulatory Organizations; NYSE 

Chicago, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Rule 7.31 

November 9, 2023. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on October 

31, 2023, the NYSE Chicago, Inc. 

(‘‘NYSE Chicago’’ or the ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. 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 

Rule 7.31 to provide for the use of ALO 

Reserve Orders. 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 7.31 to provide for the use of ALO 

Reserve Orders. 

ALO Orders 

Rule 7.31(e)(2) defines an ALO Order 

as a Non-Routable Limit Order that, 

unless it receives price improvement, 

will not remove liquidity from the 

Exchange Book. An ALO Order can be 

designated to be cancelled if it would be 

displayed at a price other than its limit 

price for any reason. An ALO Order can 

be designated as non-displayed. 

As described in Rule 7.31(e)(2)(A), an 

Aggressing ALO Order to buy (sell) will 

trade if its limit price crosses the 

working price of any displayed or nondisplayed orders to sell (buy) on the 

Exchange Book priced equal to or below 

(above) the PBO (PBB) of an Away 

Market, in which case it will trade as 

the liquidity taker with such orders. 

As noted above, Rule 7.31(e)(2) 

provides that an ALO Order may be 

designated to cancel if it would be 

displayed at a price other than its limit 

price. If an ALO Order is not so 

designated, any untraded quantity of 

such order to buy (sell) is processed as 

follows (Rules 7.31(e)(2)(B)(i) and (ii)): 

• If the limit price of the ALO Order 

locks the display price of any order to 

sell (buy) ranked Priority 2—Display 

Orders on the Exchange Book, it will 

have a working price and display price 

(if designated to display) one MPV 

below (above) the price of the displayed 

order on the Exchange Book. 

• If the limit price of the ALO Order 

locks or crosses the PBO (PBB) of an 

Away Market, it will have a working 

price equal to the PBO (PBB) of the 

Away Market and a display price (if 

designated to display) one MPV below 

(above) the PBO (PBB) of the Away 

Market. 

Rule 7.31(e)(2)(C) provides that any 

untraded quantity of an ALO Order to 

buy (sell) will have a working price and 

display price (if designated to display) 

equal to its limit price if it locks nondisplayed orders to sell (buy) on the 

Exchange Book. Rule 7.31(e)(2)(D) 

provides that an ALO Order to buy (sell) 

will not be assigned a working price or 

display price above (below) the limit 

price of such order. 

Once resting on the Exchange Book, 

ALO Orders may be re-priced or trade, 

or both, as described in Rule 

7.31(e)(2)(E): 


ddrumheller on DSK120RN23PROD with NOTICES1