86404 Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 

17See supra note 3. 

18 15 U.S.C. 78s(b)(3)(A). 

19 17 CFR 240.19b–4(f). 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

that they may participate on and 

director their order flow, including 16 

other options exchanges and offexchange venues. Additionally, the 

Exchange represents a small percentage 

of the overall market. Based on publicly 

available information, no single options 

exchange has more than 16% of the 

market share.17 Therefore, no exchange 

possesses significant pricing power in 

the execution of option order flow. 

Indeed, participants can readily choose 

to send their orders to other exchange 

and off-exchange venues if they deem 

fee levels at those other venues to be 

more favorable. Moreover, the 

Commission has repeatedly expressed 

its preference for competition over 

regulatory intervention in determining 

prices, products, and services in the 

securities markets. Specifically, in 

Regulation NMS, the Commission 

highlighted the importance of market 

forces in determining prices and SRO 

revenues and, also, recognized that 

current regulation of the market system 

‘‘has been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’ . . . .’’. Accordingly, the 

Exchange does not believe its proposed 

fee change imposes any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

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) 

of the Act 18 and paragraph (f) of Rule 

19b–4 19 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 will 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– 

C2–2023–024 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–C2–2023–024. 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–C2–2023–024 and should be 

submitted on or before January 3, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–27268 Filed 12–12–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99104; File No. SR–ISE– 

2023–32] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Adopt Monthly 

Options Series and Amend 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 November 

29, 2023, Nasdaq ISE, LLC (‘‘ISE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to adopt 

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/ise/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 


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3The proposed rule change defines the term 

‘‘Monthly Options Series’’ in Options 4A, Section 

2(l) (and re-letters current paragraphs (l) through (p) 

as (m) through (q)) as 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 also proposes to fix an 

incorrect cross cite to the definition of broad-based 

index in Options 4A, Section 3(d)(1). 

4The Exchange proposes to amend Options 4, 

Section 5(a) to provide that proposed 

Supplementary Material .08 to Options 4, Section 

5 will describe how the Exchange will fix a specific 

expiration date and exercise price for Monthly 

Options Series. This is consistent with language in 

current Options 4, Section 5(a) for other Short Term 

Option Series and Quarterly Options Series. 

5The Commission recently approved a Cboe 

Options proposed rule change to adopt 

substantively identical Monthly Options Series. See 

Securities Exchange Act Release No. 98915 

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

2023) (SR–CBOE–2023–049) (‘‘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 Supplementary Material .08(b) to 

Options 4, Section 5 and proposed Supplementary 

Material .06(b) to Options 4A, Section 12. 

8See proposed Supplementary Material .08(c) to 

Options 4, Section 5 and proposed Supplementary 

Material .06(c) to Options 4A, Section 12. 

9See proposed Supplementary Material .08(d) to 

Options 4, Section 5 and proposed Supplementary 

Material .06(d) to Options 4A, Section 12. The 

Exchange notes these proposed provisions are 

consistent with the initial series provision for the 

Quarterly Options Series program in 

Supplementary Material .02(d) to Options 4A, 

Section 12. While different than the initial strike 

listing provision for the Quarterly Options Series 

program in current Supplementary Material .04(c) 

to Options 4, Section 5, the Exchange believes the 

proposed provision is appropriate, as it 

contemplates classes that may have strike intervals 

of $5 or greater. For consistency, the Exchange also 

proposes to amend Supplementary Material .04(c) 

to Options 4, Section 5 to incorporate the same 

provision for initial series. The Exchange also 

proposes a non-substantive punctuation changes in 

the Quarterly Options Series header in 

Supplementary Material .04 to Options 4, Section 

5 and Supplementary Material .02 to Options 4A, 

Section 12. 

10See proposed Supplementary Material .08(e) to 

Options 4, Section 5 and proposed Supplementary 

Material .06(e) to Options 4A, Section 12. 

11See proposed Supplementary Material .08(f) to 

Options 4, Section 5 and proposed Supplementary 

Material .06(f) to Options 4A, Section 12. See also 

Options 4, Section 5(d), (e), Supplementary 

Material .01, .02, .05, .06 (permissible strikes prices 

for ETF classes) and Options 4, Section 5(f) and 

Options 4A, Section 12(c) (permissible strike prices 

for index options). 

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. 

Each change is discussed in detail 

below. 

Monthly Options Series 

The Exchange proposes to amend its 

Rules to accommodate the listing of 

options series that would expire at the 

close of business on the last business 

day of a calendar month (‘‘Monthly 

Options Series’’).3 Pursuant to proposed 

Supplementary Material .08(a) to 

Options 4, Section 5 and Supplementary 

Material .06(a) to Options 4A, Section 

12, the Exchange may list Monthly 

Options Series for up to five currently 

listed option classes that are either 

index options or options on exchangetraded funds (‘‘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 

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 


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86406 Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 

12The Exchange proposes non-substantive 

changes to clarify in Options 4A, Section 12(a)(3) 

that index options contracts may expire at three (3)- 

month intervals, in consecutive weeks or in 

consecutive months (as specified by class in 

Options 4A, Section 12). This is merely a 

clarification for punctuation and clarity. 

13The Exchange also proposes a non-substantive 

punctuation change in Supplementary Material .01 

to Options 4A, Section 12. 

14The Exchange also proposes to make a nonsubstantive change to Supplementary Material .03 

to Options 4, Section 5 and Supplementary Material 

.01 to Options 4A, Section 12 to 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. 

15The 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 

Options 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 Options 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). This could 

not occur with respect to ETFs, as all Short Term 

Options Series on ETFs are P.M.-settled. 

16See proposed Supplementary Material .08(g) to 

Options 4, Section 5 and proposed Supplementary 

Material .06(g) to Options 4A, Section 12. 

17The Exchange’s proposal is based on a recently 

approved rule change by Cboe Options. See SR– 

CBOE–2023–054 (‘‘Cboe Nonstandard Approval 

Order’’). 

18See Supplementary Material .07 to Options 4A, 

Section 12. 

Term Options Series 12 or Quarterly 

Options Series. Therefore, to avoid any 

confusion in the marketplace, the 

Exchange proposes to amend 

Supplementary Material .03 to Options 

4, Section 5 and Supplementary 

Material .01 to Options 4A, Section 12 13

to provide the Exchange will not list a 

Short Term Options Series in a class on 

a date on which a Monthly Options 

Series or Quarterly Options Series 

expires.14 Similarly, proposed 

Supplementary Material .08(b) to 

Options 4, Section 5 and Supplementary 

Material .06(b) to Options 4A, Section 

12 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 or ETF class. In other words, the 

Exchange will not list a Short Term 

Options Series on an index or ETF if a 

Monthly Options Series on that index or 

ETF were to expire on the same date, 

nor will the Exchange list a Monthly 

Options Series on an ETF or index if a 

Quarterly Options Series on that index 

or ETF were to expire on the same date 

to prevent the listing of series with 

concurrent expirations.15

With respect to Monthly Options 

Series added pursuant to proposed 

Options 4, Section 5, Supplementary 

Material .08(a) through (f) and proposed 

Options 4A, Section 12, Supplementary 

Material .06(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. 

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.16

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 also proposes to amend 

Options 4A, Sections 6 and 7 to provide 

that positions in Monthly Options 

Series will be aggregated with positions 

in options contracts on the same 

underlying security or index. This is 

consistent with how position (and 

exercise) limits are currently imposed 

on series with other expirations (Short 

Term Options Series, and Quarterly 

Options Series). Therefore, positions in 

options within class of index or ETF 

options, 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 index and ETF 

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 or 

ETF) and reporting requirements— 

would continue to apply. 

Nonstandard Expirations Program 

The Exchange proposes to amend 

Options 4A, Section 12, Supplementary 

Material .07, 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.17

Currently under the Program, the 

Exchange is permitted to list P.M.- 

settled options on any broad-based 

index eligible for standard trading that 

expire on: (1) any Monday, Wednesday, 

or Friday (other than the third Fridayof-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’’).18 The 

Exchange notes that permitting Tuesday 

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


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19The 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. 

20 15 U.S.C. 78f. 

21 15 U.S.C. 78f(b)(5). 

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 Supplementary Material 

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

Material .07, 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, pursuant to 

Supplementary Material .07(c) to 

Options 4A, Section 12, 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.19 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 that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,20

in general, and with Section 6(b)(5) of 

the Act,21 in that it is designed 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; and is not 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 and 

ETF options listed pursuant to the 

proposed rule change based on their 

timing as needed and allow them to 


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86408 Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 

22Compare proposed Supplementary Material .08 

to Options 4, Section 5 and proposed 

Supplementary Material .06 to Options 4A, Section 

12 to Supplementary Material .04 to Options 4, 

Section 5 and Supplementary Material .02 to 

Options 4A, Section 12. 

23The Exchange notes the proposed maximum 

number of expirations is consistent with the 

maximum number of expirations permitted for endof-month (‘‘EOM’’) series in index classes. See 

Supplementary Material .07(b) (which states that 

the maximum number of expirations that may be 

listed for EOMs in a given class is the same as the 

maximum number of expirations permitted for 

standard options on the same broad-based index 

back (i.e., up to 12 standard monthly expirations on 

the majority of index options currently listed on the 

Exchange, as set forth in Options 4A, Section 

12(a)(3)). 

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 Options 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 that the proposed 

terms of Monthly Options Series, 

including the limitation to five index 

and ETF option classes, are 

substantively the same as the current 

terms of Quarterly Options Series.22

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.23 As is 

the case with Quarterly Options Series, 

no Short Term Options 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 Quarterly Options Series the 

Exchange currently lists are essentially 

Monthly Options Series that can expire 

at the end of only certain calendar 

months, 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 ETF or 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 Options Series 

and Quarterly Options Series). 

Therefore, options positions within ETF 

or 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 and ETF 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 ETF or 

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 

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 


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Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 86409 

24See Securities Exchange Act Release Nos. 

95393 (July 29, 2022), 87 FR 47807 (August 4, 2022) 

(SR–ISE–2022–13) (‘‘NDX Options Rule Change’’); 

and 98886 (November 8, 2023), 88 FR 78417 

(November 15, 2023) (SR–ISE–2023–24) (‘‘XND 

Options Rule Change’’) 

25See NDX Options Rule Change at 47808; and 

XND Options Rule Change at 78421. 

26See Securities Exchange Act Release No. 98450 

(September 20, 2023), 88 FR 66111 (September 26, 

2023) (SR–ISE–2023–08) at 66114. 

27See id. 

28See Supplementary Material .04 to Options 4, 

Section 5 and Supplementary Material .02 to 

Options 4A, Section 12. 

29See supra note 23. 

30As noted above, at least one other options 

exchange recently adopted a substantively identical 

Monthly Options Series program. See Cboe Monthly 

Approval Order. 

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.24

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.25 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. 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.26 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.27

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule changes 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 intra-market 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 five index and ETF option 

classes, are substantively the same as 

the current terms of Quarterly Options 

Series.28 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 and 

ETF 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.29

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 inter-market 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.30 As discussed 

above, the proposed rule change would 

permit listing of Monthly Options Series 

in five index or ETF options, 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 does not believe the 

proposed rule change to provide that 

positions in Monthly Options Series 

will be aggregated with positions in 

options contracts on the same 

underlying index or security for 

purposes of determining compliance 

with position (and exercise) limits will 

impose any burden on intra-market 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act, as it will apply in 

the same manner to all market 

participants. The Exchange proposes to 

apply position (and exercise) limits to 

Monthly Options Series in the same 

manner it applies position limits to 

series with other expirations (Short 

Term Options Series and Quarterly 

Options Series). Therefore, positions in 

options in a class of ETF or 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 inter-market 

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 


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86410 Federal Register / Vol. 88, No. 238 / Wednesday, December 13, 2023 / Notices 

31See, e.g., Phlx 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). 

32 15 U.S.C. 78s(b)(3)(A)(iii). 

33 17 CFR 240.19b–4(f)(6). 

34 15 U.S.C. 78s(b)(3)(A)(iii). 

35 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. 

36 17 CFR 240.19b–4(f)(6). 

37 17 CFR 240.19b–4(f)(6)(iii). 

38See Cboe Monthly Approval Order, supra note 

5. 

39See Cboe Nonstandard Approval Order, supra 

note 17. 

40For 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). 

41 17 CFR 200.30–3(a)(12), (59). 

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 31 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 32 and Rule 

19b–4(f)(6) thereunder.33 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 34 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.35

A proposed rule change filed 

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

Act 36 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 37

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 38 and 

Nonstandard Expirations Program.39

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.40

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– 

ISE–2023–32 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–ISE–2023–32. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–ISE–2023–32 and should be 

submitted on or before January 3, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.41

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–27270 Filed 12–12–23; 8:45 am] 

BILLING CODE 8011–01–P 


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