84376 Federal Register / Vol. 88, No. 232 / Tuesday, December 5, 2023 / Notices 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A Standard quote is a quote submitted by a 

Market Maker that cancels and replaces the Market 

Maker’s previous Standard quote, if any. See 

Exchange Rule 517(a)(1). 

4The term ‘‘Market Makers’’ refers to ‘‘Lead 

Market Makers’’, ‘‘Primary Lead Market Makers’’ 

and ‘‘Registered Market Makers’’ collectively. See 

Exchange Rule 100. 

5The term ‘‘bid’’ means a limit order or quote to 

buy one or more option contracts. See Exchange 

Rule 100. 

6The term ‘‘offer’’ means a limit order or quote 

to sell one or more option contracts. See Exchange 

Rule 100. 

7See Exchange Rule 603(a). 

8See Exchange Rule 604(a). 

9See Exchange Rule 604(b). 

10See Exchange Rule 604(c). 

11See supra note 4. 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

MIAX–2023–47 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–MIAX–2023–47. 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–MIAX–2023–47 and should be 

submitted on or before December 26, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–26595 Filed 12–4–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99041; File No. SR–MIAX– 

2023–45] 

Self-Regulatory Organizations; Miami 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Rule 517, Quote 

Types Defined 

November 29, 2023. 

Pursuant to the provisions of 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 November 16, 2023, Miami 

International Securities Exchange, LLC 

(‘‘MIAX’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) a 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 517, Quote Types 

Defined. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-options/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 

Rule 517, Quote Types Defined. 

Specifically, the Exchange proposes to 

adopt new Interpretations and Policies 

.02 to Rule 517 to adopt new risk 

protection behavior for replacement 

Standard quotes 3 that are rejected. 

Background 

Market Makers 4 on the Exchange 

have heightened obligations separate 

from other market participants. 

Transactions of a Market Maker should 

constitute a course of dealings 

reasonably calculated to contribute to 

the maintenance of a fair and orderly 

market, and Market Makers should not 

make bids 5 or offers 6 or enter into 

transactions that are inconsistent with 

such a course of dealings.7 A quotation 

may only be entered by a Market Maker, 

and only in the options classes to which 

the Market Maker is appointed under 

Rule 602.8 A Market Maker’s bid and 

offer for a series of option contracts 

shall state a price accompanied by the 

number of contracts at that price the 

Market Maker is willing to buy or sell 

upon receipt of an order or upon 

interaction with a quotation entered by 

another Market Maker on the 

Exchange.9 Additionally, a Market 

Maker that enters a bid (offer) on the 

Exchange must enter an offer (bid) 

within the spread allowable under Rule 

603(b)(4).10

The Exchange has three classes of 

Market Makers; Primary Lead Market 

Makers, Lead Market Makers, and 

Registered Market Makers.11 Further, 

each class of Market Maker has its own 


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12A Day eQuote is a quote submitted by a Market 

Maker that does not automatically cancel or replace 

the Market Maker’s previous Standard quote or 

eQuote. Day eQuotes will expire at the close of 

trading each trading day. See Exchange Rule 

517(a)(2)(i). An eQuote is a quote with a specific 

time in force that does not automatically cancel and 

replace a previous Standard quote or eQuote. An 

eQuote can be cancelled by the Market Maker at any 

time, or can be replaced by another eQuote that 

contains specific instructions to cancel an existing 

eQuote. See Exchange Rule 517(a)(2). 

13See Exchange Rule 604(e)(1)(i). 

14See Exchange Rule 604(e)(1)(ii). 

15See Exchange Rule 604(e)(2)(i). 

16See Exchange Rule 604(e)(2)(ii). 

17See Exchange Rule 604(e)(3)(i). 

18The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 

19See Exchange Rule 612. 

20See Exchange Rule 612(b)(1). 

21See Exchange Rule 532(b)(8). 

22See MIAX Express Interface for Quoting and 

Trading Options, MEI Interface Specification, 

version 2.9c (8/1/2022), available at: https://

www.miaxglobal.com/markets/us-options/miaxoptions/interface-specifications. 

23The price of Market Maker quotes shall be in 

the minimum trading increments applicable to the 

security under Rule 510; provided that, with respect 

to any security designated by the Exchange as 

available for non-displayed penny orders under 

Rule 516(b)(2), Market Maker quotes may be in onecent increments. In such designated securities, 

quotes entered in one-cent increments will be firm 

as provided in paragraph (d) of Rule 604, but shall 

only be displayed to Members and the public at the 

Minimum Price Variation (MPV) for the security. 

The displayed price of such quotes will be the 

closest MPV that is higher for offers and the closest 

MPV that is lower for bids. See Exchange Rule 

604(b)(1). 

24The terms ‘‘class of options’’ or ‘‘option class’’ 

mean all option contracts covering the same 

underlying security. See Exchange Rule 100. 

25Exchange Rule 604(b)(2) provides that, the 

initial size of a Market Maker incoming Standard 

Quote, Day eQuote and all other types of eQuotes 

must be for the minimum number of contracts, 

which minimum number shall be at least one (1) 

contract. The minimum number of contracts, which 

can vary according to type of quote or eQuote, shall 

be at least one (1) contract, will be determined by 

the Exchange on a class-by-class basis and 

announced to the Members through a Regulatory 

Circular. 

separate and distinct quoting 

obligations. A Primary Lead Market 

Maker must provide continuous twosided Standard quotes and/or Day 

eQuotes,12 which for the purpose of 

paragraph (e)(1)(i) of Rule 604 shall 

mean 90% of the time, for the options 

classes to which it is appointed.13 A 

Primary Lead Market Maker must 

provide continuous two-sided Standard 

quotes and/or Day eQuotes in at least 

the lesser of 99% of the non-adjusted 

option series, or 100% of the nonadjusted option series minus one putcall pair, in each class in which the 

Primary Lead Market Maker is 

assigned.14 A Lead Market Maker must 

provide continuous two-sided Standard 

quotes and/or Day eQuotes, which for 

the purpose of paragraph (e)(2)(i) of 

Rule 604 shall mean 90% of the time, 

for the options classes to which it is 

appointed.15 A Lead Market Maker must 

provide continuous two-sided Standard 

quotes and/or Day eQuotes in at least 

90% of the non-adjusted option series in 

each of its appointed classes. Such 

quotations must meet the bid/ask 

differential requirements of Rule 

603(b)(4).16 A Registered Market Maker 

must provide continuous two-sided 

Standard quotes and/or Day eQuotes 

throughout the trading day in 60% of 

the non-adjusted series that have a time 

to expiration of less than nine months 

in each of its appointed classes. For the 

purpose of paragraph (e)(3)(i) of Rule 

604, continuous two-sided quoting shall 

mean 90% of the time, for the options 

classes to which the Registered Market 

Maker is appointed.17

The Exchange offers several features 

to Market Makers designed to mitigate 

potential risks unique to Market Makers 

given their obligations on the Exchange. 

For example, the Exchange offers an 

Aggregate Risk Manager (‘‘ARM’’) 

protection which provides that the 

MIAX System 18 will maintain a 

counting program (‘‘counting program’’) 

for each Market Maker who is required 

to submit continuous two-sided 

quotations pursuant to Rule 604 in each 

of their appointed option classes.19 The 

System will engage the Aggregate Risk 

Manager in a particular option class 

when the counting program has 

determined that a Market Maker has 

traded during the specified time period 

a number of contracts equal to or above 

their Allowable Engagement Percentage. 

The Aggregate Risk Manager will then 

automatically remove the Market 

Maker’s Standard quotations and Day 

eQuotes from the Exchange’s 

disseminated quotation in all series of 

that particular option class until the 

Market Maker sends a notification to the 

System of the intent to reengage quoting 

and submits a new revised quotation.20

Additionally, the Exchange offers 

Market Makers Single Side Protection 

(‘‘SSP’’) functionality which provides 

that, if the full remaining size of a 

Market Maker’s complex Standard quote 

or cIOC eQuote in a strategy is 

exhausted by a trade, the System will 

trigger the SSP for the traded side of the 

strategy. When triggered, the System 

will cancel all complex Standard quotes 

and block all new inbound complex 

Standard quotes and cIOC eQuotes for 

that particular side of that strategy for 

that MPID.21

Proposal 

The Exchange now proposes to cancel 

a Market Maker’s Standard quote in 

certain scenarios when a replacement 

Standard quote submitted by the Market 

Maker is rejected. Specifically, the 

Exchange proposes to adopt new Policy 

.02 to Exchange Rule 517 which will 

provide that a replacement Standard 

quote that is rejected for a technical 

reason (as described below) will still 

cancel the target Standard quote. 

A Standard quote is submitted by the 

Market Maker to the Exchange using the 

MIAX Express Interface (‘‘MEI’’). MEI is 

a messaging interface that MIAX 

members that are approved as Market 

Makers use to submit quotes for trading 

on the MIAX Options market. Market 

Makers are only allowed to submit 

quotes in the products of underlying 

instruments to which they are 

assigned.22 Each message submitted to 

the Exchange via the MEI must pass a 

number of validity checks that are 

performed by the System. These 

include, but are not limited to, price and 

size checks. Specifically, Standard 

quote prices must not (i) be less than 

zero; (ii) exceed the maximum price; 

and (iii) must comply with the 

minimum trade increment 23 for that 

class.24 Additionally, Standard quote 

sizes must not be less than zero and 

must not be less than the minimum 

quote size as defined in Rule 

604(b)(2).25 Collectively, these 

requirements constitute the technical 

reasons for which a replacement 

Standard quote may be rejected, but 

which will still result in the 

cancellation of the target Standard quote 

under the Exchange’s proposal. 

The Exchange believes that removing 

the Standard quote that the Market 

Maker was attempting to alter promotes 

the quality of the Exchange’s market as 

removing a Standard quote that was 

targeted for replacement but was not 

replaced due to a technical reason 

maintains the integrity of quotes 

available in the market by ensuring that 

all available quotes accurately represent 

Market Maker interest. 

When a Market Maker’s replacement 

Standard quote is rejected because of a 

technical reason the existing Standard 

quote will be cancelled by the 

Exchange. In addition to maintaining 

the integrity of the Exchange’s market, 

the Exchange believes this functionality 

also provides an additional level of risk 

protection to Market Makers that are 

attempting to replace an existing 

Standard quote but are unable to as a 

result of a technical reason with the 

replacement Standard quote. 

2. Statutory Basis 

The Exchange believes that its 

proposed rule change is consistent with 


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84378 Federal Register / Vol. 88, No. 232 / Tuesday, December 5, 2023 / Notices 

26 15 U.S.C. 78f(b). 

27 15 U.S.C. 78f(b)(5). 

28See id. 

29 15 U.S.C. 78s(b)(3)(A). 

30 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. 

31 17 CFR 240.19b–4(f)(6). 

32 17 CFR 240.19b–4(f)(6)(iii). 

33For 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). 

the Act and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

section 6(b) of the Act.26 Specifically, 

the Exchange believes that its proposed 

rule change is consistent with section 

6(b)(5) 27 requirements in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in, securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. Additionally, the 

Exchange believes the proposed rule 

change is consistent with the section 

(6)(b)(5) 28 requirement that the rules of 

an exchange not be designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers as 

the proposed rule will be uniformly 

applied to all Standard quote messages 

submitted by Market Makers on the 

Exchange. 

The Exchange believes its proposal 

promotes just and equitable principles 

of trade and removes impediments to 

and perfects the mechanisms of a free 

and open market and a national market 

system as removing a Market Maker’s 

Standard quote that the Market Maker 

has targeted for replacement, but failed 

to replace due to a technical reason with 

the replacement Standard quote 

message, promotes the quality of the 

Exchange’s market by ensuring that all 

available quotes accurately represent 

Market Maker interest. When a Market 

Maker enters a replacement Standard 

quote a Market Maker has an 

expectation that the existing Standard 

quote will be cancelled, currently the 

existing Standard quote that the Market 

Maker intended to cancel may be 

executed if the replacement Standard 

quote is rejected which is contrary to 

the Market Maker’s intent. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

The Exchange does not believe that its 

proposed rule change will impose any 

burden on intra-market competition as 

the Rules of the Exchange apply equally 

to all Market Makers of the Exchange 

and all Market Makers that submit a 

replacement Standard quote that is 

rejected as a result of a technical reason 

will have the existing target Standard 

quote removed by the Exchange. 

The Exchange does not believe that its 

proposed rule change will impose any 

burden on inter-market competition, as 

the Exchange’s proposal is not a 

competitive filing. Rather the Exchange 

believes that its proposal may promote 

inter-market competition, as the 

Exchange’s proposal will improve 

market quality on the Exchange which 

may improve competition for orders 

across all exchanges. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

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 29 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.30

A proposed rule change filed under 

Rule 19b–4(f)(6) 31 normally does not 

become operative prior to 30 days after 

the date of filing. However, pursuant to 

Rule 19b–4(f)(6)(iii),32 the Commission 

may designate a shorter time if such 

action is consistent with the protection 

of investors and the public interest. The 

Exchange has asked the Commission to 

waive the 30-day operative delay so that 

the proposed rule change may become 

operative immediately upon filing. The 

Exchange requested the waiver because 

it would ensure the integrity of quotes 

available in the market. The Exchange 

stated that the Exchange provides risk 

protection functionality specifically for 

Market Makers due to the heightened 

obligations that Market Makers have on 

the Exchange and that the proposed rule 

change would ensure that the quotes 

available in the marketplace accurately 

represent Market Maker interest. For 

these reasons, 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.33

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 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– 

MIAX–2023–45 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–MIAX–2023–45. 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 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 88, No. 232 / Tuesday, December 5, 2023 / Notices 84379 

34 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘option contract’’ means a put or a call 

issued, or subject to issuance, by the Clearing 

Corporation pursuant to the Rules of the Clearing 

Corporation. See Exchange Rule 100. 

4The terms ‘‘class of options’’ or ‘‘option class’’ 

means all option contracts covering the same 

underlying security. See Exchange Rule 100. 

5See Exchange Rule 404(f). 

6The term ‘‘series of options’’ means all option 

contracts of the same class having the same exercise 

price and expiration date. See Exchange Rule 100. 

7See Interpretations and Policies .01(a) of Rule 

404. 

8See Interpretations and Policies .04 of Rule 404. 

9 Id. 

10See Interpretations and Policies .02 of Rule 404. 

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–MIAX–2023–45 and should be 

submitted on or before December 26, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.34

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–26596 Filed 12–4–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99034; File No. SR– 

PEARL–2023–66] 

Self-Regulatory Organizations; MIAX 

PEARL LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Exchange 

Rule 404, Series of Option Contracts 

Open for Trading To Adopt New 

Interpretations and Policies .12 

November 29, 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 November 

24, 2023, MIAX PEARL LLC (‘‘MIAX 

Pearl’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) a 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 adopt new 

Interpretations and Policies .12 to Rule 

404, Series of Option Contracts Open for 

Trading, to adopt a new strike interval 

program. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-options/pearl-options/rule-filings, at 

MIAX Pearl’s principal office, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 404, Series of Option Contracts 

Open for Trading. Specifically, the 

Exchange proposes to adopt new 

Interpretations and Policies .12 to Rule 

404 to implement a new strike interval 

program for stocks that are priced less 

than $2.50 and have an average daily 

trading volume of at least 1,000,000 

shares per day for the three (3) 

preceding calendar months. The 

Exchange also proposes to amend the 

table in Interpretations and Policies .11 

of Rule 404 to harmonize the table to the 

propose change. 

Background 

Currently, Exchange Rule 404, Series 

of Option Contracts Open for Trading, 

describes the process and procedures for 

listing and trading series of options 3 on 

the Exchange. Rule 404 provides for a 

$2.50 Strike Price Program, where the 

Exchange may select up to 60 option 

classes 4 on individual stocks for which 

the interval of strike prices will be $2.50 

where the strike price is greater than 

$25.00 but less than $50.00.5 Rule 404 

also provides for a $1 Strike Price 

Interval Program, where the interval 

between strike prices of series of 

options 6 on individual stocks may be 

$1.00 or greater provided the strike 

price is $50.00 or less, but not less than 

$1.00.7 Additionally, Rule 404 provides 

for a $0.50 Strike Program.8 The interval 

of strike prices of series of options on 

individual stocks may be $0.50 or 

greater beginning at $0.50 where the 

strike price is $5.50 or less, but only for 

options classes whose underlying 

security closed at or below $5.00 in its 

primary market on the previous trading 

day and which have national average 

daily volume that equals or exceeds 

1,000 contracts per day as determined 

by The Options Clearing Corporation 

during the preceding three calendar 

months. The listing of $0.50 strike 

prices is limited to options classes 

overlying no more than 20 individual 

stocks (the ‘‘$0.50 Strike Program’’) as 

specifically designated by the Exchange. 

The Exchange may list $0.50 strike 

prices on any other option classes if 

those classes are specifically designated 

by other securities exchanges that 

employ a similar $0.50 Strike Program 

under their respective rules. A stock 

shall remain in the $0.50 Strike Program 

until otherwise designated by the 

Exchange.9

Proposal 

At this time, the Exchange proposes to 

adopt a new strike interval program for 

underlying stocks that are not in the 

aforementioned $0.50 Strike Program (or 

the Short Term Option Series 

Program) 10 and that close below $2.50 

and have an average daily trading 

volume of at least 1,000,000 shares per 

day for the three (3) preceding calendar 

months. The $0.50 Strike Program 

considers stocks that have a closing 

price at or below $5.00 whereas the 

Exchange’s proposal will consider 

stocks that have a closing price below 

$2.50. Currently, there is a subset of 

stocks that are not included in the $0.50 

Strike Program as a result of the 


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