86420 Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 

16 15 U.S.C. 78s(b)(3)(A)(ii). 

17 17 CFR 240.19b–4(f)(2). 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

activity on behalf of Customers, but also 

the Member’s relationship with its 

Customers via more labor-intensive 

exam-based programs. As a result, the 

costs associated with administering the 

customer component of the Exchange’s 

overall regulatory program are 

materially higher than the costs 

associated with administering the noncustomer component (e.g., Member 

proprietary transactions) of its 

regulatory program. Thus, the Exchange 

believes the Initial ORF Rate (like the 

rate assessed for every other day since 

the ORF was implemented), is not 

unfairly discriminatory because it is 

charged to all Members on all their 

transactions that clear in the Customer 

range at the OCC. 

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. 

Intramarket Competition 

The Exchange believes the proposed 

change will change will not impose an 

undue burden on competition as it is 

charged to all Members on all their 

transactions that clear in the Customer 

range at the OCC; thus, the amount of 

ORF imposed is based on the amount of 

Customer volume transacted. The 

Exchange believes that the proposed 

ORF would not place certain market 

participants at an unfair disadvantage 

because all options transactions must 

clear via a clearing firm. Such clearing 

firms can then choose to pass through 

all, a portion, or none of the cost of the 

ORF to its customers, i.e., the entering 

firms. In addition, because the ORF is 

collected from Member clearing firms by 

the OCC on behalf of the Exchange, the 

Exchange believes that using options 

transactions in the Customer range 

serves as a proxy for how to apportion 

regulatory costs among such Members. 

Intermarket Competition 

The proposed fee change is not 

designed to address any competitive 

issues. Rather, the proposed change is 

designed to help the Exchange 

adequately fund its regulatory activities 

while seeking to ensure that total 

regulatory revenues do not exceed total 

regulatory costs. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to section 

19(b)(3)(A)(ii) of the Act 16 and Rule 

19b–4(f)(2) 17 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 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

MEMX–2023–31 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–MEMX–2023–31. 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–MEMX–2023–31 and should be 

submitted on or before January 3, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–27261 Filed 12–12–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99114; File No. SRCboeBZX–2023–100] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Adopt a 

Low Priced Stock Strike Price Interval 

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, Cboe BZX Exchange, Inc. 

(‘‘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 Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 3 and 

Rule 19b–4(f)(6) thereunder.4 The 


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5See Securities Exchange Act Release No. 98917 

(November 13, 2023), 88 FR 80361 (November 17, 

2023) (SR–MIAX–2023–36) (Order Approving a 

Proposed Rule Change To Amend Exchange Rule 

404, Series of Option Contracts Open for Trading). 

6See Rule 19.6, Interpretation and Policy .03(a). 

7See Rule 19.6, Interpretation and Policy .02(a). 

8See Rule 19.6, Interpretation and Policy .06. 

9Rule 19.6, Interpretation and Policy .05. 

10See Rule 19.6, Interpretation and Policy .06. 

11While the Exchange may list new strikes on 

underlying stocks that meet the eligibility 

requirements of the new program, the Exchange 

will exercise its discretion and will not list strikes 

on underlying stocks the Exchange believes are 

subject to imminent delisting from their primary 

exchange. 

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 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX Options’’) 

proposes to adopt a Low Priced Stock 

Strike Price Interval Program. The text 

of the proposed rule change is provided 

in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

equities/regulation/rule_filings/bzx/), at 

the Exchange’s Office of the Secretary, 

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 19.6. Miami International 

Securities Exchange, LLC (‘‘MIAX’’) 

recently received approval to amend its 

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 3 

preceding calendar months.5 At this 

time, the Exchange proposes to adopt 

rules substantively identical to MIAX in 

proposed Rule 19.6, Interpretation and 

Policy .08 and amend Rule 19.6, 

Interpretation and Policy .05(f) to 

harmonize the table within that Rule to 

the proposed rule text. 

Currently, Rule 19.6 describes the 

process and procedures for listing and 

trading series of options on the 

Exchange. Rule 19.6 provides for a $2.50 

Strike Price Program, where the 

Exchange may select up to 200 option 

classes on individual stocks for which 

the interval of strike prices will be $2.50 

where the strike price is greater than 

$25 but less than $50.6 Rule 19.6, 

Interpretation and Policy .02 also 

provides for a $1 Strike Price Program, 

where the interval between strike prices 

of series of options 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 19.6, 

Interpretation and Policy .06 provides 

for a ‘‘$0.50 Strike Program.’’ 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 (‘‘OCC’’) 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 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.8

The Exchange proposes to adopt a 

new strike interval program for stocks 

that are not in the aforementioned $0.50 

Strike Program (or the Short Term 

Option Series Program) 9 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 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 

limitations of that program which 

provides that the listing of $0.50 strike 

prices is limited to option classes 

overlying no more than 20 individual 

stocks as specifically designated by the 

Exchange and requires a national 

average daily volume that equals or 

exceeds 1,000 contracts per day as 

determined by OCC during the 

preceding three calendar months.10

Therefore, the Exchange is proposing to 

implement a new strike interval 

program termed the ‘‘Low Priced Stock 

Strike Price Interval Program.’’ 

To be eligible for the inclusion in the 

Low Priced Stock Strike Price Interval 

Program, an underlying stock must (1) 

close below $2.50 in its primary market 

on the previous trading day; and (2) 

have an average daily trading volume of 

at least 1,000,000 shares per day for the 

three preceding calendar months. The 

Exchange notes that there is no limit to 

the number of classes that will be 

eligible for inclusion in the proposed 

program, provided, of course, that the 

underlying stocks satisfy both the price 

and average daily trading volume 

requirements of the proposed program. 

The Exchange also proposes that after 

a stock is added to the Low Priced Stock 

Strike Price Interval Program, the 

Exchange may list $0.50 strike price 

intervals from $0.50 up to $2.00.11 For 

the purpose of adding strikes under the 

Low Priced Stock Strike Price Interval 

Program, the ‘‘price of the underlying 

stock’’ is measured in the same way as 

‘‘the price of the underlying security’’ is 

measured as set forth in Section 3(g) of 

the Options Listing Procedures Plan 

(‘‘OLPP’’). Further, no additional series 

in $0.50 intervals may be listed if the 

underlying stock closes at or above 

$2.50 in its primary market. Additional 

series in $0.50 intervals may not be 

added until the underlying stock again 

closes below $2.50. 

The Exchange’s proposal addresses a 

gap in strike coverage for low priced 

stocks. The $0.50 Strike Program 

considers stocks that close below $5.00 

and limits the number of option classes 

listed to no more than 20 individual 

stocks (provided that the open interest 

criteria is also satisfied). Whereas, the 

Exchange’s proposal has a narrower 

focus, with respect to the underlying’s 

stock price, and is targeted on those 

stocks that close below $2.50 and does 

not limit the number of stocks that may 

participate in the program (provided 

that the average daily trading volume is 

also satisfied). The Exchange does not 

believe that any market disruptions will 

be encountered with the addition of 

these new strikes. The Exchange 


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86422 Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 

12See Rule 19.3(b)(4). 

13See Rule 19.3(f)(3)(B). 

14See Rule 29.3(b)(7). 

15See Securities Exchange Release Act No. 91455 

(April 1, 2021), 86 FR 18099 (April 7, 2021) (SR– 

CboeBZX–2021–022) (Notice of Filing and 

Immediate Effectiveness of a Proposed Rule Change 

To Amend Rule 19.6 (Series of Options Contracts 

Open for Trading) in Connection With Limiting the 

Number of Strikes Listed for Short Term Option 

Series Which Are Available for Quoting and 

Trading on the Exchange). 

16 Id. 17 Id. 

18 Id. 

19See proposed Rule 19.6, Interpretation and 

Policy .08(a), which requires that an underlying 

stock must (1) close below $2.50 in its primary 

market on the previous trading day; and (2) have 

an average daily trading volume of at least 

1,000,000 shares per day for the three preceding 

calendar months. 

represents that it has the necessary 

capacity and surveillance programs in 

place to support and properly monitor 

trading in the proposed Low Priced 

Stock Strike Price Interval Program. 

The Exchange believes that the 

program’s average daily trading volume 

requirement of 1,000,000 shares is a 

reasonable threshold to ensure adequate 

liquidity in eligible underlying stocks as 

it is substantially greater than the 

thresholds used for listing options on 

equities, American Depository Receipts 

(‘‘ADRs’’), and broad-based indexes. 

Specifically, underlying securities with 

respect to which put or call option 

contracts are approved for listing and 

trading on the Exchange must meet 

certain criteria as determined by the 

Exchange. One of those requirements is 

that trading volume (in all markets in 

which the underlying security is traded) 

has been at least 2,400,000 shares in the 

preceding 12 months.12 Rule 19.3(f) 

provides the criteria for listing options 

on ADRs if they meet certain criteria 

and guidelines set forth in Rule 19.3. 

One of the requirements is that the 

average daily trading volume for the 

security in the U.S. markets over the 

three months preceding the selection of 

the ADR for options trading is 100,000 

or more shares.13 Finally, the Exchange 

may trade options on a broad-based 

index pursuant to Rule 19b–4(e) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) provided a number of conditions 

are satisfied. One of those conditions is 

that each component security that 

accounts for at least 1% of the weight 

of the index has an average daily trading 

volume of at least 90,000 shares during 

the last six-month period.14

Additionally, the Exchange proposes 

to amend the table in Rule 19.6, 

Interpretation and Policy .05(f) to insert 

a new column to harmonize the 

Exchange’s proposal to the strike 

intervals for Short Term Options Series 

as described in Rule 19.6, Interpretation 

and Policy .05. The table in Rule 19.6, 

Interpretation and Policy .05(f) is 

intended to limit the intervals between 

strikes for multiply listed equity options 

within the Short Term Options Series 

program that have an expiration date 

more than twenty-one days from the 

listing date. Specifically, the table 

defines the applicable strike intervals 

for options on underlying stocks given 

the closing price on the primary market 

on the last day of the calendar quarter, 

and a corresponding average daily 

volume of the total number of options 

contracts traded in a given security for 

the applicable calendar quarter divided 

by the number of trading days in the 

applicable calendar quarter.15 However, 

the lowest share price column is titled 

‘‘less than $25.’’ The Exchange now 

proposes to insert a column titled ‘‘Less 

than $2.50’’ and to set the strike interval 

at $0.50 for each average daily volume 

tier represented in the table. Also, the 

Exchange proposes to amend the 

heading of the column currently titled 

‘‘Less than $25,’’ to ‘‘$2.50 to less than 

$25’’ as a result of the adoption of the 

new proposed column, ‘‘Less than 

$2.50.’’ The Exchange believes this 

change will remove any potential 

conflict between the strike intervals 

under the Short Term Options Series 

Program and those described herein 

under the Exchange’s proposal. 

The Exchange recognizes that its 

proposal will introduce new strikes in 

the marketplace and further 

acknowledges that there has been 

significant effort to curb strike 

proliferation. For example, the 

Exchange filed a proposal focused on 

the removal, and prevention of the 

listing, of strikes which are extraneous 

and do not add value to the marketplace 

(the ‘‘Strike Interval Proposal’’).16 The 

Strike Interval Proposal was intended to 

remove repetitive and unnecessary 

strike listings across the weekly 

expiries. Specifically, the Strike Interval 

Proposal aimed to reduce the density of 

strike intervals that would be listed in 

the later weeks, by creating limitations 

for intervals between strikes which have 

an expiration date more than twentyone days from the listing date.17 The 

Strike Interval Proposal took into 

account OCC customer-cleared volume, 

using it as an appropriate proxy for 

demand. The Strike Interval Proposal 

was designed to maintain strikes where 

there was customer demand and 

eliminate strikes where there was not 

demand. At the time of its proposal, the 

Exchange estimated that the Strike 

Interval Proposal would reduce the 

number of listed strikes in the options 

market by approximately 81,000 

strikes.18 The Exchange proposes to 

amend the table to define the strike 

interval at $0.50 for underlying stocks 

with a share price of less than $2.50. 

The Exchange believes this amendment 

will harmonize the Exchange’s proposal 

with the Strike Interval Proposal 

described above. 

The Exchange recognizes that its 

proposal will moderately increase the 

total number of option series available 

on the Exchange. However, the 

Exchange’s proposal is designed to only 

add strikes where there is investor 

demand 19 which will improve market 

quality. Under the requirements for the 

Low Priced Stock Strike Price Interval 

Program as described herein, the 

Exchange determined that as of August 

9, 2023, 106 symbols met the proposed 

criteria. Of those symbols, the Exchange 

notes that 36 were in the $1 Strike Price 

Interval Program with $1.00 and $2.00 

strikes listed. Under the Exchange’s 

proposal, the $0.50 and $1.50 strikes for 

these symbols would be added for the 

current expiration terms. The remaining 

70 symbols eligible under the proposal 

would have $0.50, $1.00, $1.50 and 

$2.00 strikes added to their current 

expiration terms. Therefore, the 

Exchange notes that for the 106 symbols 

eligible for the Low Priced Stock Strike 

Price Interval Program, a total of 

approximately 3,250 options would be 

added. As of August 9, 2023, the 

Exchange listed 1,106,550 options, and 

therefore, the additional options that 

would be listed under this proposal 

would represent a relatively minor 

increase of 0.294% in the number of 

options listed. 

The Exchange does not believe that its 

proposal contravenes any previous 

efforts to curtail unnecessary strikes. 

The Exchange’s proposal is targeted to 

only underlying stocks that close at less 

than $2.50 and that also meet the 

average daily trading volume 

requirement. Additionally, because the 

strike increment is $0.50 there are only 

a total of four strikes that may be listed 

under the program ($0.50, $1.00, $1.50, 

and $2.00) for an eligible underlying 

stock. Finally, if an eligible underlying 

stock is in another program (e.g., the 

$0.50 Strike Program or the $1 Strike 

Price Interval Program) the number of 

strikes that may be added is further 

reduced if there are pre-existing strikes 

as part of another strike listing program. 

Therefore, the Exchange does not 

believe that it will list any unnecessary 

or repetitive strikes as part of its 

program, and that the strikes that will be 

listed will improve market quality and 

satisfy investor demand. 


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20 15 U.S.C. 78f(b). 21 15 U.S.C. 78f(b)(5). 22 Id. 23See Yahoo! Finance, https://finance.

yahoo.com/quote/SOND/history?p=SOND (last 

visited August 10, 2023). 24 Id. 

25See supra note 12. 

26See supra note 13. 

27See supra note 14. 

28 15 U.S.C. 78f(b)(1). 

The Exchange further believes that the 

Options Price Reporting Authority 

(‘‘OPRA’’), has the necessary systems 

capacity to handle any additional 

messaging traffic associated with this 

proposed rule change. The Exchange 

also believes that Members will not 

have a capacity issue as a result of the 

proposed rule change. Finally, the 

Exchange believes that the additional 

options will serve to increase liquidity, 

provide additional trading and hedging 

opportunities for all market 

participants, and improve market 

quality. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.20 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 21 requirements that the rules of 

an exchange be 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) 22 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In particular, 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 the 

Exchange has identified a subset of 

stocks that are trading under $2.50 and 

do not have meaningful strikes 

available. For example, on August 9, 

2023, symbol SOND closed at $0.50 and 

had open interest of over 44,000 

contracts and an average daily trading 

volume in the underlying stock of over 

1,900,000 shares for the three preceding 

calendar months.23 Currently the lowest 

strike listed is for $2.50, making the 

lowest strike 400% away from the 

closing stock price. Another symbol, 

CTXR, closed at $0.92 on August 9, 

2023, and had open interest of 63,000 

contracts and an average daily trading 

volume in the underlying stock of over 

1,900,000 shares for the three preceding 

calendar months.24 Similarly, the lowest 

strike listed is for $2.50, making the 

lowest strike more than 170% away 

from the closing stock price. Currently, 

such products have no at-the-money 

options, as well as no in-the-money 

calls or out-of-the-money puts. The 

Exchange’s proposal will provide 

additional strikes in $0.50 increments 

from $0.50 up to $2.00 to provide more 

meaningful trading and hedging 

opportunities for this subset of stocks. 

Given the increased granularity of 

strikes as proposed under the 

Exchange’s proposal out-of-the-money 

puts and in-the-money calls will be 

created. The Exchange believes this will 

allow market participants to tailor their 

investment and hedging needs more 

effectively. 

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 and, in general, protects 

investors and the public interest by 

adding strikes that improves market 

quality and satisfies investor demand. 

The Exchange does not believe that the 

number of strikes that will be added 

under the program will negatively 

impact the market. Additionally, the 

proposal does not run counter to any 

previous efforts to curb strike 

proliferation as those efforts focused on 

the removal and prevention of 

extraneous strikes where there was no 

investor demand. The Exchange’s 

proposal requires the satisfaction of an 

average daily trading volume threshold 

in addition to the underlying stock 

closing at a price below $2.50 to be 

eligible for the program. The Exchange 

believes that the average daily trading 

volume threshold of the program 

ensures that only strikes with investor 

demand will be listed and fills a gap in 

strike interval coverage as described 

above. Further, being that the strike 

interval is $0.50, there are only a 

maximum of four strikes that may be 

added ($0.50, $1.00, $1.50, and $2.00). 

Therefore, the Exchange does not 

believe that its proposal will undermine 

any previous efforts to eliminate 

repetitive and unnecessary strikes in 

any fashion. 

The Exchange believes that the 

proposed program’s average daily 

trading volume threshold 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 

and, in general, protects investors and 

the public interest as it is designed to 

permit only those stocks with 

demonstrably high levels of trading 

activity to participate in the program. 

The Exchange notes that the proposed 

program’s average daily trading volume 

requirement is substantially greater than 

the average daily trading requirement 

currently in place on the Exchange for 

options on equity underlyings,25

ADRs,26 and broad-based indexes.27

The Exchange also believes the 

proposed rule change is consistent with 

Section 6(b)(1) of the Act,28 which 

provides that the Exchange be organized 

and have the capacity to be able to carry 

out the purposes of the Act and to 

enforce compliance by the Exchange’s 

Members and persons associated with 

its Members with the Act, the rules and 

regulations thereunder, and the rules of 

the Exchange. The proposed rule change 

allows the Exchange to respond to 

customer demand to provide 

meaningful strikes for low priced stocks. 

The Exchange does not believe that the 

proposed rule would create any capacity 

issue or negatively affect market 

functionality. Additionally, the 

Exchange represents that it has the 

necessary systems capacity to support 

the new options series and handle 

additional messaging traffic associated 

with this proposed rule change. The 

Exchange also believes that its Members 

will not experience any capacity issues 

as a result of this proposal. In addition, 

the Exchange represents that it believes 

that additional strikes for low priced 

stocks will serve to increase liquidity 

available as well as improve price 

efficiency by providing more trading 

opportunities for all market 

participants. The Exchange believes that 

the proposed rule change will benefit 

investors by giving them increased 

opportunities to execute their 

investment and hedging decisions. 

Finally, the Exchange believes its 

proposal is designed to prevent 

fraudulent and manipulative acts and 

practices as options may only be listed 

on underlyings that satisfy the listing 

requirements of the Exchange as 

described in 19.3. Specifically, Rule 

19.3(a) requires that underlying 

securities for which put or call option 

contracts are approved for listing and 

trading on the Exchange must meet the 


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86424 Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 

29 15 U.S.C. 78s(b)(3)(A). 30 17 CFR 240.19b–4(f)(6). 31 In addition, Rule 19b–4(f)(6) requires a selfregulatory organization to give the Commission 

written notice of its intent to file the proposed rule 

change at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. The 

Exchange has satisfied this requirement. 

32 17 CFR 240.19b–4(f)(6)(iii). 

33See supra note 5. 

34For 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). 

following criteria: (1) the security must 

be registered with the Commission and 

be an ‘‘NMS stock’’ as defined in Rule 

600 of Regulation NMS under the Act; 

(2) the security shall be characterized by 

a substantial number of outstanding 

shares that are widely held and actively 

traded. Additionally, Rule 19.3(b) 

provides that, subject to other factors 

the Exchange may consider, an 

underlying security will not be selected 

for options transactions unless: (1) there 

are a minimum of 7,000,000 shares of 

the underlying security which are 

owned by persons other than those 

required to report their stock holdings 

under Section 16(a) of the Act; (2) there 

are a minimum of 2,000 holders of the 

underlying security; (3) the issuer is in 

compliance with any applicable 

requirements of the Act; and (4) trading 

volume (in all markets in which the 

underlying security is traded) has been 

at least 2,400,000 shares in the 

preceding 12 months. The Exchange’s 

proposal does not impact the eligibility 

of an underlying stock to have options 

listed on it, but rather addresses only 

the listing of new additional option 

classes on an underlying listed on the 

Exchange in accordance with the 

Exchange’s listings rules. As such, the 

Exchange believes that the listing 

requirements described in Rule 19.3 

address potential concerns regarding 

possible manipulation. Additionally, in 

conjunction with the proposed average 

daily volume requirement described 

herein, the Exchange believes any 

possible market manipulation is further 

mitigated. 

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 intramarket competition as 

the Rules of the Exchange apply equally 

to all Members and all Members may 

trade the new proposed strikes if they so 

choose. Specifically, the Exchange 

believes that investors and market 

participants will significantly benefit 

from the availability of finer strike price 

intervals for stocks priced below $2.50, 

which will allow them to tailor their 

investment and hedging needs more 

effectively. The Exchange’s proposal is 

substantively identical to MIAX 

Interpretations and Policies .11 and .12 

to Rule 404. 

The Exchange does not believe that its 

proposed rule change will impose any 

burden on intermarket competition, as 

nothing prevents other options 

exchanges from proposing similar rules 

to list and trade options on low priced 

stocks. Rather the Exchange believes 

that its proposal will promote 

intermarket competition, as the 

Exchange’s proposal will result in 

additional opportunities for investors to 

achieve their investment and trading 

objectives, to the benefit of investors, 

market participants, and the 

marketplace in general. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Pursuant to Section 19(b)(3)(A) of the 

Act 29 and Rule 19b–4(f)(6) 30

thereunder, the Exchange has 

designated this proposal as one that 

effects a change that: (i) does not 

significantly affect the protection of 

investors or the public interest; (ii) does 

not impose any significant burden on 

competition; and (iii) by its terms, does 

not become operative for 30 days after 

the date of the filing, or such shorter 

time as the Commission may designate 

if consistent with the protection of 

investors and the public interest.31

A proposed rule change filed 

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

Act normally does not become operative 

for 30 days after the date of its filing. 

However, Rule 19b–4(f)(6)(iii) 32 permits 

the Commission to designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange requested that 

the Commission waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Commission notes it has 

approved a proposed rule change 

substantially identical to the one 

proposed by the Exchange.33 The 

proposed change raises no novel legal or 

regulatory issues. Therefore, the 

Commission believes 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 30-day 

operative delay and designates the 

proposed rule change operative upon 

filing.34

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– 

CboeBZX–2023–100 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–CboeBZX–2023–100. 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 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 86425 

35 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 98915 

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

2023) (SR–Cboe–2023–049) (‘‘Cboe Approval 

Order’’). 

4 Id. 

5The Exchange also proposes to fix an incorrect 

cross cite to the definition of broad-based index in 

Options 4A, Section 3(b)(1). 

6As provided in the proposed Options 4A, 

Section 12(i)(1)(A), the Exchange may list Monthly 

Options Series for up to five currently listed option 

classes that are index options or options on ETFs; 

the five Monthly Options Series include both index 

options and ETF options in the aggregate. 7See Cboe Approval Order. 8The 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). 

9See proposed Options 4A, Section 12(i)(1)(B). 

10See proposed Options 4A, Section 12(i)(1)(C). 

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–CboeBZX–2023–100 and should be 

submitted on or before January 3, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–27271 Filed 12–12–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99102; File No. SR– 

NASDAQ–2023–051] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend 

Options 4A To Adopt Monthly Options 

Series 

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 November 

29, 2023, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ 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 amend the 

Rules at Options 4A (Options Index 

Rules) to adopt Monthly Options Series. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/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 amend 

Options 4A (Options Index Rules), 

identical to the rules recently approved 

for Cboe Exchange, Inc. (‘‘Cboe’’),3 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’’). Cboe’s recently approved rule 

change 4 introduces Monthly Options 

Series for indexes and exchange-traded 

funds (‘‘ETFs’’). This rule change 

proposes to adopt Monthly Options 

Series for indexes in Options 4A. 

Nasdaq ISE, LLC (‘‘ISE’’) will separately 

file a rule change to proposes to adopt 

Monthly Options Series for ETFs in ISE 

Options 4. The Exchange’s Options 4 

rules, which govern the ability to 

transact options on ETFs, incorporate 

ISE Options 4 by reference. 

The Exchange proposes to define 

‘‘Monthly Options Series’’ in Options 

4A, Section 2(l) to mean 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 re-letter the subsequent 

definitions in Options 4A, Section 2.5

Pursuant to proposed Options 4A, 

Section 12(i)(1)(A), the Exchange may 

list Monthly Options Series for up to 

five currently listed option classes that 

are index options or options on ETFs.6

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.7 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.8

Other expirations in the same class are 

not counted as part of the maximum 

numbers of Monthly Options Series 

expirations for a class.9 Monthly 

Options Series will be P.M.-settled.10

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 


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