Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 86393 

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

2 17 CFR 240.19b–4. 

3The Exchange proposes to define a ‘‘Monthly 

Options Series’’ in Options 4A, Section 2(a)(14) to 

mean, for the purposes of Options 4A, a series in 

an options class that is approved for listing and 

trading on the Exchange in which the series is 

opened for trading on any business day and that 

expires at the close of business on the last business 

day of a calendar month. The Exchange proposes 

to renumber the subsequent definitions in Options 

4A, Section 2. 

4As provided in proposed Options 4A, Section 

12(b)(5)(a), the Exchange may list Monthly Options 

Series for up to five currently listed option classes 

that are either index options or options on ETFs; the 

five Monthly Options Series include both index 

options and options on ETFs. 

5See Securities Exchange Act Release No. 98915 

(November 13, 2023), 88 FR 80356 (November 17, 

2023) (SR–Cboe–2023–049) (Order Approving a 

Proposed Rule Change To Adopt Monthly Options 

Series) (‘‘Cboe Monthly Approval Order’’). 

6The Exchange notes this provision considers 

consecutive monthly listings. In other words, as 

other expirations (such as Quarterly Options Series) 

are not counted as part of the maximum, those 

expirations would not be considered when 

considering when the last expiration date would be 

if the maximum number were listed consecutively. 

For example, if it is January 2024 and the Exchange 

lists Quarterly Options Series in class ABC with 

expirations in March, June, September, December, 

and the following March, the Exchange could also 

list Monthly Options Series in class ABC with 

expirations in January, February, April, May, July, 

August, October, and November 2024 and January 

and February of 2025. This is because, if Quarterly 

Options Series, for example, were counted, the 

Exchange would otherwise never be able to list the 

maximum number of Monthly Options Series. This 

is consistent with the listing provisions for 

Quarterly Options Series, which permit calendar 

quarter expirations. The need to list series with the 

same expiration in the current calendar year and 

the following calendar year (whether Monthly or 

Quarterly expiration) is to allow market participants 

to execute one-year strategies pursuant to which 

they may roll their exposures in the longer-dated 

options (e.g., January 2025) prior to the expiration 

of the nearer-dated option (e.g., January 2024). 

7See proposed Options 4A, Section 12(b)(5)(b). 

8See proposed Options 4A, Section 12(b)(5)(c). 

9See proposed Options 4A, Section 12(b)(5)(d). 

The Exchange notes this proposed provision is 

consistent with the initial series provision for the 

Quarterly Options Series program in Options 4A, 

Section 12(b)(3)(C). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99106; File No. SR–PHLX– 

2023–54] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Monthly 

Options Series and the Nonstandard 

Expirations Program 

December 7, 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 December 

4, 2023, Nasdaq PHLX LLC (‘‘Phlx’’ 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 (i) adopt a 

Monthly Options Series and (ii) amend 

its Nonstandard Expirations Program. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/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 Exchange proposes to (i) adopt 

Monthly Options Series and (ii) amend 

its Nonstandard Expirations Program in 

Options 4A, Options Index Rules. Each 

change is discussed in detail below. 

Monthly Options Series 

The Exchange proposes to amend its 

Rules to accommodate the listing of 

option series that would expire at the 

close of business on the last business 

day of a calendar month (‘‘Monthly 

Options Series’’).3 Of note, Nasdaq ISE, 

LLC (‘‘ISE’’) will separately file a rule 

change to adopt a Monthly Options 

Series for ETFs. Phlx’s Options 4 rules, 

which govern the ability to transact 

options on ETFs, incorporate by 

reference ISE’s Options 4 rules. This 

rule change proposes to amend Phlx’s 

index options rules to adopt a Monthly 

Options Series program. Pursuant to 

proposed Options 4A, Section 12(b)(5), 

the Exchange may list Monthly Options 

Series for up to five currently listed 

option classes that are either index 

options or options on ETFs.4 In 

addition, the Exchange may also list 

Monthly Options Series on any options 

classes that are selected by other 

securities exchanges that employ a 

similar program under their respective 

rules.5 The Exchange may list 12 

expirations for Monthly Options Series. 

Monthly Options Series need not be for 

consecutive months; however, the 

expiration date of a nonconsecutive 

expiration may not be beyond what 

would be considered the last expiration 

date if the maximum number of 

expirations were listed consecutively.6

Other expirations in the same class are 

not counted as part of the maximum 

numbers of Monthly Options Series 

expirations for a class.7 Monthly 

Options Series will be P.M.-settled.8

The strike price of each Monthly 

Options Series will be fixed at a price 

per share, with at least two, but no more 

than five, strike prices above and at least 

two, but no more than five, strike prices 

below the value of the underlying index 

or price of the underlying security at 

about the time that a Monthly Options 

Series is opened for trading on the 

Exchange. The Exchange will list strike 

prices for Monthly Options Series that 

are reasonably related to the current 

price of the underlying security or 

current index value of the underlying 

index to which such series relates at 

about the time such series of options is 

first opened for trading on the 

Exchange. The term ‘‘reasonably related 

to the current price of the underlying 

security or index value of the 

underlying index’’ means that the 

exercise price is within 30% of the 

current underlying security price or 

index value.9 Additional Monthly 

Options Series of the same class may be 

open for trading on the Exchange when 

the Exchange deems it necessary to 

maintain an orderly market, to meet 

customer demand, or when the market 

price of the underlying security moves 

substantially from the initial exercise 

price or prices. To the extent that any 

additional strike prices are listed by the 

Exchange, such additional strike prices 

will be within 30% above or below the 

closing price of the underlying index or 

security on the preceding day. The 

Exchange may also open additional 

strike prices of Monthly Options Series 

that are more than 30% above or below 

the current price of the underlying 

security, provided that demonstrated 

customer interest exists for such series, 

as expressed by institutional, corporate, 

or individual customers or their brokers. 

Market-Makers trading for their own 

account will not be considered when 


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86394 Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 

10See proposed Options 4A, Section 12(b)(5)(e). 

11See proposed Options 4A, Section 12(b)(5)(f) 

(permissible strike prices for index options). 

12Today, Options 4A, Section 12(a)(4) provides 

that index options may have expiration months and 

weeks, which expirations may occur in consecutive 

weeks. The Exchange proposes to add ‘‘as specified 

below’’ to this rule text. 

13The Exchange also proposes to make nonsubstantive changes to Options 4A, Section 12(b)(4) 

and Options 4A, Section 12(b)(4)(B) to reference 

standard options series and change current 

references to ‘‘monthly options series’’ to ‘‘standard 

expiration options series’’ (i.e., series that expire on 

the third Friday of a month), to eliminate potential 

confusion. The current references to ‘‘monthly 

options series’’ are intended to refer to those series 

that expire on the third Friday of a month, which 

are generally referred to in the industry as standard 

expirations. 

14The Exchange notes this would not prevent the 

Exchange from listing a P.M.-settled Monthly 

Options Series on an index with the same 

expiration date as an A.M.-settled Short Term 

Option Series on the same index, both of which 

may expire on a Friday. In other words, the 

Exchange may list a P.M-settled Monthly Options 

Series on an index concurrent with an A.M.-settled 

Short Term Option Series on that index and both 

of which expire on a Friday. The Exchange believes 

this concurrent listing would provide investors 

with yet another hedging mechanism and is 

reasonable given these series would not be identical 

(unlike if they were both P.M-settled). 

15See Options 4A, Section 12(b)(5)(g)(3). 

16Pursuant to Options 4A, Section 10, exercise 

limits for index option contracts shall be equivalent 

to the position limits described in Options 4A, 

Section 6. 

17The Exchange proposes to renumber current 

Options 4A, Section 12(b)(5), titled Nonstandard 

Expiration Pilot Program, Options 4A, Section 

12(b)(6). Additionally, the Exchange proposes to 

remove the word ‘‘Pilot’’ as the program is no 

longer a pilot. See 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). 

18The Exchange’s proposal is based on a recently 

approved rule change by Cboe Options. See 

Securities Exchange Act Release No. 98957 

(November 15, 2023), 88 FR 81130 (November 21, 

2023) (SR–CBOE–2023–054) (order Approving a 

Proposed Rule Change To Amend Rule 4.13 To 

determining customer interest under 

this provision. The opening of the new 

Monthly Options Series will not affect 

the series of options of the same class 

previously opened.10 The interval 

between strike prices on Monthly 

Options Series will be the same as the 

interval for strike prices for series in 

that same options class that expire in 

accordance with the normal monthly 

expiration cycle.11

By definition, Monthly Options Series 

can never expire in the same week as a 

standard expiration series (which expire 

on the third Friday of a month) in the 

same class expires. The same, however, 

is not the case with regards to Short 

Term Option Series 12 or Quarterly 

Options Series. Therefore, to avoid any 

confusion in the marketplace, the 

Exchange proposes to amend Options 

4A Section 12(b)(5)(b) to provide the 

Exchange will not list a Short Term 

Option Series in a class on a date on 

which a Monthly Options Series or 

Quarterly Options Series expires.13

Similarly, proposed Options 4A, Section 

12(b)(5)(b) provide that no Monthly 

Options Series may expire on a date that 

coincides with an expiration date of a 

Quarterly Options Series in the same 

index. In other words, the Exchange will 

not list a Short Term Option Series on 

an index if a Monthly Options Series on 

that index were to expire on the same 

date, nor will the Exchange list a 

Monthly Options Series on an index if 

a Quarterly Options Series on that index 

were to expire on the same date to 

prevent the listing of series with 

concurrent expirations.14

With respect to Monthly Options 

Series added pursuant to proposed 

Options 4A, Section 12(b)(5)(a) through 

(f), the Exchange will, on a monthly 

basis, review series that are outside a 

range of five strikes above and five 

strikes below the current price of the 

underlying index or security, and delist 

series with no open interest in both the 

put and the call series having a: (i) strike 

higher than the highest strike price with 

open interest in the put and/or call 

series for a given expiration month; and 

(ii) strike lower than the lowest strike 

price with open interest in the put and/ 

or call series for a given expiration 

month pursuant to Options 4A, Section 

12(b)(5)(g)(1). Notwithstanding this 

delisting policy, customer requests to 

add strikes and/or maintain strikes in 

Monthly Options Series in series 

eligible for delisting will be granted. In 

connection with this delisting policy, if 

the Exchange identifies series for 

delisting, the Exchange will notify other 

options exchanges with similar delisting 

policies regarding eligible series for 

delisting and will work with such other 

exchanges to develop a uniform list of 

series to be delisted, so as to ensure 

uniform series delisting of multiply 

listed Monthly Options Series.15

The Exchange believes that Monthly 

Options Series will provide investors 

with another flexible and valuable tool 

to manage risk exposure, minimize 

capital outlays, and be more responsive 

to the timing of events affecting the 

securities that underlie option contracts. 

The Exchange believes limiting Monthly 

Options Series to five classes will 

ensure the addition of these new series 

will have a negligible impact on the 

Exchange’s and the Options Price 

Reporting Authority’s (‘‘OPRA’s’’) 

quoting capacity. The Exchange 

represents it has the necessary systems 

capacity to support new options series 

that will result from the introduction of 

Monthly Options Series. 

The Exchange notes that Options 4A, 

Section 6, Position Limits for BroadBased Index Options, will apply to 

Monthly Options Series. In Options 4A, 

Section 6(e), Monthly Options Series 

will be aggregated with positions in 

options contracts on the same 

underlying security or index.16 This is 

consistent with how position (and 

exercise) limits are currently imposed 

on series with other expirations (Short 

Term Option Series and Quarterly 

Options Series). Therefore, positions in 

options within class of index, regardless 

of their expirations, would continue to 

be subject to existing position (and 

exercise) limits. The Exchange believes 

this will address potential manipulative 

schemes and adverse market impacts 

surrounding the use of options. 

The Exchange also represents its 

current surveillance programs will 

apply to Monthly Options Series and 

will properly monitor trading in the 

proposed Monthly Options Series. The 

Exchange currently lists Quarterly 

Options Series in certain ETF classes 

pursuant to Options 4, Section 5, which 

expire at the close of business at the end 

of four calendar months (i.e., the end of 

each calendar quarter), and has not 

experienced any market disruptions nor 

issues with capacity. The Exchange’s 

surveillance programs currently in place 

to support and properly monitor trading 

in these Quarterly Options Series, as 

well as Short Term Option Series and 

standard expiration series, will apply to 

the proposed Monthly Options Series. 

The Exchange believes its surveillances 

continue to be designed to deter and 

detect violations of its Rules, including 

position and exercise limits and 

possible manipulative behavior, and 

these surveillances will apply to 

Monthly Options Series that the 

Exchange determines to list for trading. 

Ultimately, the Exchange does not 

believe the proposed rule change raises 

any unique regulatory concerns because 

existing safeguards—such as position 

and exercise limits (and the aggregation 

of options overlying the same index) 

and reporting requirements—would 

continue to apply. 

Nonstandard Expirations Program 

The Exchange proposes to amend 

Options 4A, Section 12(b)(6), as 

renumbered in this proposal,17 which 

governs its Nonstandard Expirations 

Program (‘‘Program’’), to permit P.M.- 

settled options on any broad-based 

index eligible for standard options 

trading that expire on Tuesday or 

Thursday.18 Currently under the 


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Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 86395 

Expand the Nonstandard Expirations Program To 

Include P.M.-Settled Options on Broad-Based 

Indexes That Expire on Tuesday or Thursday) 

(‘‘Cboe Nonstandard Approval Order’’). 19See Supplementary Material .07 to Options 4A, 

Section 12. 

20The Exchange currently lists Tuesday and 

Thursday expirations in NDX and XND options 

pursuant to the Program. The Exchange also already 

allows options on broad-based indexes to expire on 

Tuesdays for normally Monday or Wednesday 

expiring options when the Exchange is not open for 

business on a respective Monday or Wednesday (as 

applicable), and already allows options on broadbased indexes to expire on Thursdays for normally 

Friday expiring options when the Exchange is not 

open for business on a respective Friday. Also, 

EOM options in any broad-based indexes may 

currently be listed to expire on a Tuesday or 

Thursday. 

21 15 U.S.C. 78f(b). 

22 15 U.S.C. 78f(b)(5). 

Program, the Exchange is permitted to 

list P.M.-settled options on any broadbased index eligible for standard trading 

that expire on: (1) any Monday, 

Wednesday, or Friday (other than the 

third Friday-of-the-month or days that 

coincide with an EOM expiration (as 

defined below) and, with respect to 

options on the Nasdaq–100 Index 

(‘‘NDX options’’) and the Nasdaq 100 

Micro Index (‘‘XND options’’) any 

Tuesday or Thursday (‘‘Weekly 

Expirations’’) and (2) the last trading 

day of the month (‘‘End of Month 

Expirations’’ or ‘‘EOMs’’).19 The 

Exchange notes that permitting Tuesday 

and Thursday expirations for all broadbased indexes, as proposed, would be in 

addition to the options with Monday, 

Wednesday and Friday expirations that 

the Exchange may (and does) already 

list on those indexes, as they are 

permissible Weekly Expirations for 

options on a broad-based index 

pursuant to Options 4A, Section 

12(b)(6). The proposal merely expands 

the availability of Tuesday and 

Thursday Weekly Expirations, and thus 

all Weekly Expirations available under 

the Program, to all broad-based indexes 

eligible for standard options trading, on 

which the Exchange may currently list 

Monday, Wednesday, and Friday 

Weekly expirations under the Program. 

The Program for Weekly Expirations 

will apply to any broad-based index 

option with Tuesday and Thursday 

expirations in the same manner as it 

currently applies to all other P.M.- 

settled broad-based index options with 

Monday, Wednesday, and Friday 

expirations and to NDX and XND 

options with Tuesday and Thursday 

expirations. Specifically, as set forth in 

Options 4A, Section 12(b)(6), Weekly 

Expirations, including the proposed 

Tuesday and Thursday expirations, are 

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; provided, however, 

that Weekly Expirations are 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. 

The maximum number of expirations 

that may be listed for each Weekly 

Expiration (i.e., a Monday expiration, 

Tuesday expiration, Wednesday 

expiration, Thursday expiration, or 

Friday expiration, as applicable) in a 

given class is the same as the maximum 

number of expirations permitted in 

Options 4A, Section 12(a)(3) for 

standard options on the same broadbased index. Weekly Expirations need 

not be for consecutive Monday, 

Tuesday, Wednesday, Thursday, or 

Friday expirations as applicable; 

however, the expiration date of a 

nonconsecutive expiration may not be 

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 may 

expire up to four weeks from the actual 

listing date. If the Exchange lists EOMs 

and Weekly Expirations as applicable in 

a given class, the Exchange will list an 

EOM instead of a Weekly Expiration 

that expires on the same day in the 

given class. Other expirations in the 

same class are not counted as part of the 

maximum number of Weekly 

Expirations for an applicable broadbased index class. If the Exchange is not 

open for business on a respective 

Monday, the normally Monday expiring 

Weekly Expirations will expire on the 

following business day. If the Exchange 

is not open for business on a respective 

Tuesday, Wednesday, Thursday, or 

Friday, the normally Tuesday, 

Wednesday, Thursday, or Friday 

expiring Weekly Expirations will expire 

on the previous business day. If two 

different Weekly Expirations on a broadbased index would expire on the same 

day because the Exchange is not open 

for business on a certain weekday, the 

Exchange will list only one of such 

Weekly Expirations. In addition, like all 

Weekly Expirations, Options 4A, 

Section 12(b)(6), transactions in 

expiring broad-based index options with 

Tuesday and Thursday expirations may 

be effected on the Exchange between the 

hours of 9:30 a.m. and 4:00 p.m. on their 

last trading day (Eastern Time). 

The Exchange believes that that the 

introduction of Tuesday and Thursday 

expirations for all broad-based index 

options (rather than offering those 

expirations for just two indexes) will 

expand hedging tools available to 

market participants while also 

providing greater trading opportunities, 

regardless of in which index option 

market they participate. By offering 

expanded Tuesday and Thursday 

expirations along with the current 

Monday, Wednesday and Friday 

expirations, the proposed rule change 

will allow market participants to 

purchase options on all broad-based 

index options available for trading on 

the Exchange in a manner more aligned 

with specific timing needs and more 

effectively tailor their investment and 

hedging strategies and manage their 

portfolios. In particular, the proposed 

rule change will allow market 

participants to roll their positions on 

more trading days, thus with more 

precision, spread risk across more 

trading days and incorporate daily 

changes in the markets, which may 

reduce the premium cost of buying 

protection. 

The Exchange believes there is 

sufficient investor interest and demand 

in Tuesday and Thursday expirations 

for broad-based index options beyond 

NDX and XND to warrant inclusion in 

the Program and that the Program, as 

amended, will continue to provide 

investors with additional means of 

managing their risk exposures and 

carrying out their investment 

objectives.20 With regard to the impact 

of this proposal on system capacity, the 

Exchange has analyzed its capacity and 

represents that it believes that the 

Exchange and OPRA have the necessary 

systems capacity to handle any potential 

additional traffic associated with trading 

of broad-based index options with 

Tuesday and Thursday expirations. The 

Exchange does not believe that its 

Members will experience any capacity 

issues as a result of this proposal and 

represents that it will monitor the 

trading volume associated with any 

possible additional options series listed 

as a result of this proposal and the effect 

(if any) of these additional series on 

market fragmentation and on the 

capacity of the Exchange’s automated 

systems. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

section 6(b) of the Act.21 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the section 

6(b)(5) 22 requirements that the rules of 

an exchange be designed to prevent 

fraudulent and manipulative acts and 


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23 Id. 

24See Options 4, Section 5. As noted herein, ISE 

will file a rule change to amend Options 4, Section 

5 and Phlx’s Options 4 rules are incorporated by 

reference to ISE’s Options 4 rules. 

25The Exchange notes the proposed maximum 

number of expirations is consistent with the 

maximum number of expirations permitted for endof-month series in index classes. See Options 4A, 

Section 12(a)(4) which permits 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, 

Nasdaq-100 ESG Index Options, and XND options). 

26See Cboe Monthly Approval Order; see also 

Options 4A, Section 6 regarding position limits for 

broad-based index options). Pursuant to Options 

4A, Section 10, exercise limits for index option 

contracts shall be equivalent to the position limits 

described in Options 4A, Section 6. 

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) 23 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

Monthly Options Series 

In particular, the Exchange believes 

the introduction of Monthly Options 

Series will remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system by expanding hedging tools 

available to market participants. The 

Exchange believes the proposed 

monthly expirations will allow market 

participants to transact in the index 

options listed pursuant to the proposed 

rule change based on their timing as 

needed and allow them to tailor their 

investment and hedging needs more 

effectively. Further, the Exchange 

believes the availability of Monthly 

Options Series would protect investors 

and the public interest by providing 

investors with more flexibility to closely 

tailor their investment and hedging 

decisions in these options, thus 

allowing them to better manage their 

risk exposure. 

The Exchange believes the Quarterly 

Options Series Program has been 

successful to date and the proposed 

Monthly Options Series program simply 

expands the ability of investors to hedge 

risk against market movements 

stemming from economic releases or 

market events that occur at months’ 

ends in the same way the Quarterly 

Options Series Program has expanded 

the landscape of hedging for quarter-end 

news. Monthly Options Series will also 

complement Short Term Option Series, 

which allow investors to hedge risk 

against events that occur throughout a 

month. The Exchange believes the 

availability of additional expirations 

should create greater trading and 

hedging opportunities for investors, as 

well as provide investors with the 

ability to tailor their investment 

objectives more effectively. 

The Exchange notes the proposed 

terms of Monthly Options Series, 

including the limitation to list up to five 

options classes that are either index 

options or options on ETFs, are 

substantively the same as the current 

terms of Quarterly Options Series for 

ETF classes.24 Quarterly Options Series 

expire on the last business day of a 

calendar quarter, which is the last 

business day of every third month. The 

proposed Monthly Options Series 

would fill the gaps between Quarterly 

Options Series expirations by permitting 

series to expire on the last business day 

of every month, rather than every third 

month. The proposed Monthly Options 

Series may be listed in accordance with 

the same terms as Quarterly Options 

Series, including permissible strikes.25

As is the case with Quarterly Options 

Series, no Short Term Option Series 

may expire on the same day as a 

Monthly Options Series. Similarly, as 

proposed, no Monthly Options Series 

may expire on the same day as a 

Quarterly Options Series. The Exchange 

believes preventing listing series with 

concurrent expirations in a class will 

eliminate potential investors confusion 

and thus protect investors and the 

public interest. Given that the Exchange 

currently lists Quarterly Options Series 

in certain ETF classes pursuant to 

Options 4, Section 5, which expire at 

the close of business at the end of four 

calendar months (i.e., the end of each 

calendar quarter), the Exchange believes 

it is reasonable to list Monthly Options 

Series in accordance with the same 

terms, as it will promote just and 

equitable principles of trade. The 

Exchange believes limiting Monthly 

Options Series to five classes will 

ensure the addition of these new series 

will have a negligible impact on the 

Exchange’s and OPRA’s quoting 

capacity. The Exchange represents it has 

the necessary systems capacity to 

support new options series that will 

result from the introduction of Monthly 

Options Series. 

The Exchange further believes the 

proposed rule change regarding the 

treatment of Monthly Options Series 

with respect to determining compliance 

with position and exercise limits is 

designed to prevent fraudulent and 

manipulative acts and practices and 

promote just and equitable principles of 

trade. Monthly Options Series will be 

aggregated with options overlying the 

same index for purposes of compliance 

with position (and exercise) limits, 

which is consistent with how position 

(and exercise) limits are currently 

imposed on series with other 

expirations (Short Term Option Series, 

and Quarterly Options Series).26

Therefore, options positions within 

index option classes for which Monthly 

Options Series are listed, regardless of 

their expirations, would continue to be 

subject to existing position (and 

exercise) limits. The Exchange believes 

this will address potential manipulative 

schemes and adverse market impacts 

surrounding the use of options. The 

Exchange also represents its current 

surveillance programs will apply to 

Monthly Options Series and will 

properly monitor trading in the 

proposed Monthly Options Series. The 

Exchange currently trades Quarterly 

Options Series in certain index classes, 

which expire at the close of business at 

the end of four calendar months (i.e., the 

end of each calendar quarter), and has 

not experienced any market disruptions 

nor issues with capacity. The 

Exchange’s surveillance programs 

currently in place to support and 

properly monitor trading in these 

Quarterly Options Series, as well as 

Short Term Option Series and standard 

expiration series, will apply to the 

proposed Monthly Options Series. The 

Exchange believes its surveillances 

continue to be designed to deter and 

detect violations of its Rules, including 

position and exercise limits and 

possible manipulative behavior, and 

these surveillances will apply to 

Monthly Options Series that the 

Exchange determines to list for trading. 

Ultimately, the Exchange does not 

believe the proposed rule change raises 

any unique regulatory concerns because 

existing safeguards—such as position 

and exercise limits (and the aggregation 

of options overlying the same index) 

and reporting requirements—would 

continue to apply. 

Nonstandard Expirations Program 

The Exchange believes that the 

proposed rule change will 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. The Exchange believes 


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Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 86397 

27See Securities Exchange Act Release Nos. 

96411 (November 30, 2022), 87 FR 74688 

(December 6, 2022) (SR–Phlx–2022–38) (‘‘XND 

Options Rule Change’’); and 95391 (July 29, 2022), 

87 FR 47797 (August 4, 2022) (SR–Phlx–2022–22) 

(‘‘NDX Rule Change’’). 

28See XND Options Rule Change at 74689; and 

NDX Options Rule Change at 47798. 

29See supra note 17. 

30See supra note 17. 

31See id. 

32See proposed Options 4A, Section 12(b)(5)(a). 

33See supra note 25. 

34See Cboe Monthly Approval Order. 

that the introduction of Tuesday and 

Thursday expirations for all broad-based 

index options (rather than offering those 

expirations for just two indexes) will 

provide investors with expanded 

hedging tools and greater trading 

opportunities and flexibility, regardless 

of in which index option market they 

participate. As a result, investors will 

have additional means to manage their 

risk exposures and carry out their 

investment objectives. By offering 

expanded Tuesday and Thursday 

expirations along with the current 

Monday, Wednesday and Friday 

expirations, the proposed rule change 

will allow market participants to 

purchase options on all broad-based 

index options available for trading on 

the Exchange in a manner more aligned 

with specific timing needs and more 

effectively tailor their investment and 

hedging strategies and manage their 

portfolios. For example, the proposed 

rule change will allow market 

participants to roll their positions on 

more trading days, thus with more 

precision, spread risk across more 

trading days and incorporate daily 

changes in the markets, which may 

reduce the premium cost of buying 

protection. The Exchange represents 

that it believes that it has the necessary 

systems capacity to support any 

additional traffic associated with trading 

of options on all broad-based index 

options with Tuesday and Thursday 

expirations and does not believe that its 

Members will experience any capacity 

issues as a result of this proposal. 

The Commission previously 

recognized that listing Tuesday and 

Thursday expirations for NDX and XND 

options was consistent with the Act.27

The Exchange noted that Tuesday and 

Thursday expirations in these index 

options would offer additional 

investment options to investors and may 

be useful for their investment or 

hedging objectives.28 The Exchange also 

notes it previously listed P.M.-settled 

broad-based index options with weekly 

expirations pursuant to a pilot program, 

so the Commission could monitor the 

impact of P.M. settlement of cash-settled 

index derivatives on the underlying 

cash markets (while recognizing that 

these risks may have been mitigated 

given enhanced closing procedures in 

use in the primary equity markets); 

however, the Commission recently 

approved a proposed rule change to 

make that pilot program permanent.29

The Commission noted that the data it 

reviewed in connection with the pilot 

demonstrated that these options 

(including SPX and XSP options with 

Tuesday and Thursday expirations) 

‘‘benefitted investors and other market 

participants by providing more flexible 

trading and hedging opportunities while 

also having no disruptive impact on the 

market’’ and were thus consistent with 

the Act.30 The proposed rule change is 

consistent with these findings, as it will 

benefit investors and other market 

participants that participate in the 

markets for broad-based index options 

other than NDX and XND options in the 

same manner by providing them with 

more flexible trading and hedging 

opportunities. Additionally, the 

Exchange does not believe the listing of 

additional P.M.-settled options on other 

broad-based indexes will have any 

significant economic impact on the 

underlying component securities 

surrounding the close as a result of 

expiring p.m.-settled options or impact 

market quality, based on the data 

provided to and reviewed by the 

Commission (and the Commission’s 

own conclusions based on that review, 

as noted above) and due to the 

significant changes in closing 

procedures in the decades since index 

options moved to a.m.-settlement.31

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 not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Monthly Options Series 

The Exchange does not believe the 

proposed rule change to list Monthly 

Options Series will impose any burden 

on intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as any 

Monthly Options Series the Exchange 

lists for trading will be available in the 

same manner for all market participants 

who wish to trade such options. The 

Exchange notes the proposed terms of 

Monthly Options Series, including the 

limitation to list up to five options 

classes that are either index options or 

options on ETFs, are substantively the 

same as the current terms of Quarterly 

Options Series.32 Quarterly Options 

Series expire on the last business day of 

a calendar quarter, which is the last 

business day of every third month, 

making the concept of Monthly Options 

Series in a limited number of index 

options not novel. The proposed 

Monthly Options Series will fill the 

gaps between Quarterly Options Series 

expirations by permitting series to 

expire on the last business day of every 

month, rather than every third month. 

The proposed Monthly Options Series 

may be listed in accordance with the 

same terms as Quarterly Options Series, 

including permissible strikes.33

Monthly Options Series will trade on 

the Exchange in the same manner as 

other options in the same class. 

The Exchange does not believe the 

proposed rule change to list Monthly 

Options Series will impose any burden 

on intermarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as nothing 

prevents other options exchanges from 

proposing similar rules.34 As discussed 

above, the proposed rule change would 

permit listing Monthly Options Series in 

up to five options classes that are either 

index options or options on ETFs, as 

well as any other classes that other 

exchanges may list under similar 

programs. To the extent that the 

availability of Monthly Options Series 

makes the Exchange a more attractive 

marketplace to market participants at 

other exchanges, market participants are 

free to elect to become market 

participants on the Exchange. 

The Exchange believes that the 

proposed rule change may relieve any 

burden on, or otherwise promote, 

competition. Similar to Short Term 

Option Series and Quarterly Options 

Series, the Exchange believes the 

introduction of Monthly Options Series 

will not impose an undue burden on 

competition. The Exchange believes that 

it will, among other things, expand 

hedging tools available to market 

participants. The Exchange believes 

Monthly Options Series will allow 

market participants to purchase options 

based on their timing as needed and 

allow them to tailor their investment 

and hedging needs more effectively. 

The Exchange does not believe the 

proposed rule change regarding 

aggregation of positions for purposes of 

determining compliance with position 

(and exercise) limits will impose any 

burden on intramarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act, 

because it will apply in the same 

manner to all market participants. The 

Exchange proposes to apply position 


khammond on DSKJM1Z7X2PROD with NOTICES
86398 Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 

35See, e.g., ISE Options 4A, Section 12 

(permitting nonstandard expirations, including 

expirations on Tuesdays and Thursdays, for NDX 

and XND options). See also Cboe Nonstandard 

Approval Order (permitting nonstandard 

expirations, including expirations on Tuesdays and 

Thursdays, for SPX and XSP options). 

36 15 U.S.C. 78s(b)(3)(A)(iii). 

37 17 CFR 240.19b–4(f)(6). 

38 15 U.S.C. 78s(b)(3)(A)(iii). 

39 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. 

40 17 CFR 240.19b–4(f)(6). 

41 17 CFR 240.19b–4(f)(6)(iii). 

42See Cboe Monthly Approval Order, supra note 

5. 

43See Cboe Nonstandard Approval Order, supra 

note 18. 

44For 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). 

(and exercise) limits to Monthly Options 

Series in the same manner it applies 

position limits to series with other 

expirations (Short Term Option Series 

and Quarterly Options Series). 

Therefore, positions in options in a class 

of index options, regardless of their 

expirations, would continue to be 

subject to existing position (and 

exercise) limits. Additionally, the 

Exchange does not believe this proposed 

rule change will impose any burden on 

intermarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, because it 

will address potential manipulative 

schemes and adverse market impacts 

surrounding the use of options. 

Nonstandard Expirations Program 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on intra-market competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act 

because options on broad-based indexes 

with Tuesday and Thursday expirations 

will be available to all market 

participants. By listing options on all 

available broad-based indexes that 

expire on Tuesdays and Thursdays, the 

proposed rule change will provide all 

investors that participate in the markets 

for options on all broad-based indexes 

available for trading on the Exchange 

with greater trading and hedging 

opportunities and flexibility to meet 

their investment and hedging needs, 

which are already available for NDX and 

XND options. Additionally, Tuesday 

and Thursday expiring broad-based 

index options will trade in the same 

manner as Weekly Expirations currently 

trade, including Tuesday and Thursday 

expiring NDX and XND options. 

The Exchange does not believe that 

the proposal to list options on all broadbased indexes with Tuesday and 

Thursday expirations will impose any 

burden on intermarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

because these options are proprietary 

Exchange products. Other exchanges 

offer nonstandard expiration programs 

for index options as well as short-term 

options programs for certain equity 

options (including options on certain 

exchange-traded funds that track broadbased indexes) that expire on Tuesdays 

and Thursdays 35 and are welcome to 

similarly propose to list Tuesday and 

Thursday options on those index or 

equity products. To the extent that the 

addition of options on additional broadbased indexes that expire on Tuesdays 

and Thursdays being available for 

trading on the Exchange makes the 

Exchange a more attractive marketplace 

to market participants at other 

exchanges, such market participants are 

free to elect to become market 

participants on the Exchange. 

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 36 and Rule 

19b–4(f)(6) thereunder.37 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 38 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.39

A proposed rule change filed 

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

Act 40 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 41

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 the 

Exchange may list Monthly Options 

Series and options on all broad-based 

indexes with Tuesday and Thursday 

expirations close in time to Cboe 

Options, which the Exchange believes 

will benefit investors by promoting 

competition in both of these programs. 

The Exchange notes that its proposal is 

substantively identical to the proposals 

submitted by Cboe Options for its 

Monthly Options Series program 42 and 

Nonstandard Expirations Program.43

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.44

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. 

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– 

PHLX–2023–54 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–PHLX–2023–54. 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 


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Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 86399 

45 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3Self-Regulatory Organizations; ICE Clear Credit 

LLC; Notice of Filing of Proposed Rule Change 

Relating to the Clearance of Additional Credit 

Default Swap Contracts; Exchange Act Release No. 

98833 (Nov. 1, 2023), 88 FR 76870 (Nov. 7, 2023) 

(File No. SR–ICC–2023–014) (‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2)(C). 

5 15 U.S.C. 78q–1(b)(3)(F). 

6 17 CFR 240.17Ad–22(e)(1). 

7 15 U.S.C. 78q–1(b)(3)(F). 

8 15 U.S.C. 78q–1(b)(3)(F). 

9 15 U.S.C. 78q–1(b)(3)(F). 

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–PHLX–2023–54 and should be 

submitted on or before January 3, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.45

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–27274 Filed 12–12–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99115; File No. SR–ICC– 

2023–014] 

Self-Regulatory Organizations; ICE 

Clear Credit LLC; Order Approving 

Proposed Rule Change Relating to the 

Clearance of Additional Credit Default 

Swap Contracts 

December 7, 2023. 

I. Introduction 

On October 25, 2023, ICE Clear Credit 

LLC (‘‘ICC’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to section 

19(b)(2) of the Securities Exchange Act 

of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

clear additional credit default swap 

(‘‘CDS’’) contracts. The proposed rule 

change was published for comment in 

the Federal Register on November 7, 

2023.3 The Commission did not receive 

comments regarding the proposed rule 

change. For the reasons discussed 

below, the Commission is approving the 

proposed rule change. 

II. Description of the Proposed Rule 

Change 

ICC is registered with the Commission 

as a clearing agency for the purpose of 

clearing CDS contracts. Chapter 26 of 

ICC’s Rulebook covers the CDS contracts 

that ICC clears, with each subchapter of 

Chapter 26 defining the characteristics 

and additional Rules applicable to the 

various specific categories of CDS 

contracts that ICC clears. Among other 

CDS contracts, ICC currently clears 

Standard Emerging Market Sovereign 

Single Name CDS (‘‘SES’’) contracts. 

The purpose of the proposed rule 

change is to amend ICC’s rules to permit 

ICC to clear additional SES contracts, 

specifically, SES contracts on the 

Kingdom of Morocco and the Federal 

Republic of Nigeria. 

To carry out this change, the proposed 

rule change would amend Subchapter 

26D of Chapter 26. In Rule 26D–102 

(Definitions), ‘‘Eligible SES Reference 

Entities,’’ the proposed rule change 

would add the Kingdom of Morocco and 

the Federal Republic of Nigeria to the 

list of specific Eligible SES Reference 

Entities to be cleared by ICC. 

As discussed below, these additional 

SES contracts have terms consistent 

with the other SES contracts that ICC is 

already clearing. Likewise, to clear these 

additional contracts, ICC will be able to 

rely on its existing Risk Management 

Framework and other policies and 

procedures without making any 

changes. 

III. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Act requires 

the Commission to approve a proposed 

rule change of a self-regulatory 

organization if it finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

the organization.4 For the reasons given 

below, the proposed rule change is 

consistent with section 17A(b)(3)(F) of 

the Act 5 and Rule 17Ad–22(e)(1) 

thereunder.6

a. Consistency With Section 17A(b)(3)(F) 

of the Act 

Section 17A(b)(3)(F) of the Act 

requires, among other things, that the 

rules of ICC be designed to promote the 

prompt and accurate clearance and 

settlement of securities transactions 

and, to the extent applicable, derivative 

agreements, contracts, and 

transactions.7

The proposed rule change is 

consistent with section 17A(b)(3)(F) of 

the Act.8 The terms and conditions of 

the additional SES contracts proposed 

for clearing are substantially similar to 

the terms and conditions of the other 

contracts listed in Subchapter 26D of 

ICC’s Rules, all of which ICC currently 

clears, with the key difference being the 

underlying reference obligations. The 

underlying reference obligations will be 

issuances by the Kingdom of Morocco 

and the Federal Republic of Nigeria. 

A review of the Notice and ICC’s 

Rules, policies, and procedures shows 

that ICC would be able to clear the 

additional SES contracts pursuant to its 

existing clearing arrangements and 

related financial safeguards, protections, 

and risk management procedures. 

Furthermore, a review of data on 

volume, open interest, and the number 

of ICC Clearing Participants (‘‘CPs’’) that 

currently trade in the SES contracts, as 

well as certain model parameters for the 

additional contracts, show that ICC’s 

rules, policies, and procedures are 

reasonably designed to price and 

measure the potential risk presented by 

the additional SES contracts, collect 

financial resources in proportion to 

such risk, and liquidate the additional 

contracts in the event of a CP default. 

This should help ensure ICC’s ability to 

maintain the financial resources it needs 

to provide its critical services and 

function as a central counterparty, 

thereby promoting the prompt and 

accurate settlement of the additional 

SES contracts and other credit default 

swap transactions. 

Therefore, clearance of the additional 

SES contracts would promote the 

prompt and accurate clearance and 

settlement of securities transactions, 

consistent with section 17A(b)(3)(F) of 

the Act.9

b. Consistency With Rule 17Ad–22(e)(1) 

Rule 17Ad–22(e)(1) requires ICC to 

establish, implement, maintain, and 

enforce written policies and procedures 

reasonably designed to provide for a 

well-founded, clear, transparent, and 

enforceable legal basis for each aspect of 


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