34096 Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Notices 

72 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 42455 

(February 24, 2000), 65 FR 11388 (March 2, 2000) 

(In the Matter of the Application of The 

International Securities Exchange LLC for 

Registration as a National Securities Exchange; 

Findings and Opinion of the Commission). 

4Prior Interpretation and Policy .02 to Rule 8.7 

provided, ‘‘Market-Makers are expected ordinarily 

to refrain from purchasing a call option or a put 

option at a price more than $0.25 below parity, 

although a larger amount may be appropriate 

considering the particular market conditions. In the 

case of calls, parity is measured by the bid in the 

underlying security, and in the case of puts, parity 

is measured by the offer in the underlying security. 

The $0.25 amount above may be increased, or the 

provisions of this Interpretation may be waived, by 

the Exchange on a series-by-series basis.’’ 

5Cboe’s rule change merely noted, with respect 

to the removal of Cboe’s parity rule, that the filing 

makes non-substantive changes to the rule 

governing a Market-Maker’s general obligations 

(current Rule 8.7, in part), most of which remove 

redundant provisions that are already covered 

under the umbrella of a Market-Maker’s obligation 

to engage in dealing to maintain fair and orderly 

markets. No specific argument is provided with 

respect to removing this provision. See Securities 

Exchange Act 87024 (September 19, 2019), 84 FR 

50545 (September 25, 2019) (SR–CBOE–2019–059) 

(Notice of Filing and Immediate Effectiveness of a 

Proposed Rule Change To Amend Certain Rules 

Relating To Market-Makers Upon Migration to the 

Trading System Used by Cboe Affiliated 

Exchanges). 

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–FINRA–2021–016. 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 (http://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 such filing 

also will be available for inspection and 

copying at the principal office of 

FINRA. All comments received will be 

posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–FINRA– 

2021–016 and should be submitted on 

or before July 19, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.72

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–13653 Filed 6–25–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92226; File No. SR–ISE– 

2021–14] 

Self-Regulatory Organizations; Nasdaq 

ISE, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Options 2, 

Section 4 (Obligations of Market 

Makers), Options 4, Section 3 (Criteria 

for Underlying Securities), Options 4, 

Section 8 (Long-Term Options 

Contracts), and Options 4A, Section 12 

(Terms of Index Options Contracts) 

June 22, 2021. 

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 June 9, 

2021, 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 amend 

Options 2, Section 4, Obligations of 

Market Makers; Options 4, Section 3, 

Criteria for Underlying Securities; 

Options 4, Section 8, Long-Term 

Options Contracts; and Options 4A, 

Section 12, Terms of Index Options 

Contracts. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/ise/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Options 2, Section 4, Obligations of 

Market Makers; Options 4, Section 3, 

Criteria for Underlying Securities; 

Options 4, Section 8, Long-Term 

Options Contracts; and Options 4A, 

Section 12, Terms of Index Options 

Contracts. Each change will be 

described below. 

Options 2, Section 4(a) 

The Exchange proposes to remove the 

following rule text from Options 2, 

Section 4(a), which has been in place 

since ISE’s inception: 3

. . . Ordinarily, Market Makers are expected 

to: 

(1) Refrain from purchasing a call option or 

a put option at a price more than $0.25 below 

parity, although a larger amount may be 

appropriate considering the particular market 

conditions. In the case of calls, parity is 

measured by the bid in the underlying 

security, and in the case of puts, parity is 

measured by the offer in the underlying 

security. 

(2) The $0.25 amount above may be 

increased, or the provisions of this Rule may 

be waived, by the Exchange on a series-byseries basis. 

This proposed rule text also previously 

existed on Cboe Exchange, Inc. within 

prior Rule 8.7 4 and was removed from 

Cboe’s Rulebook in 2019.5 The 


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6See Nasdaq Phlx LLC, The Nasdaq Options 

Market LLC and Nasdaq BX, Inc. at Options 2, 

Section 4 (Obligations of Market Makers). 

7See Options 7 (Option Pricing). ISE offers lower 

fees and rebates to Market Makers based on the 

percentage of time spent on the National Best Bid 

or National Best Offer (‘‘NBBO’’) for certain 

qualifying series. 

8See Options 3, Section 10 (Priority of Quotes 

and Orders). Primary Market Makers are offered an 

enhanced allocation provided the Primary Market 

Maker is quoting at same price as a non-Priority 

Customer Order or Market Maker quote. 

9See Options 2, Section 4. ISE Market Makers 

must for example: (1) Compete with other Market 

Makers to improve the market in all series of 

options classes to which the Market Maker is 

appointed; (2) make markets that, absent changed 

market conditions, will be honored for the number 

of contracts entered into the Exchange’s System in 

all series of options classes to which the Market 

Maker is appointed; (3) update market quotations in 

response to changed market conditions in all series 

of options classes to which the Market Maker is 

appointed; and (4) price options contracts fairly by, 

among other things, bidding and offering so as to 

create differences of no more than $5 between the 

bid and offer following the opening rotation in an 

equity or index options contract. See Options 2, 

Section 4(b). 

10See Options 2, Section 5 (Electronic Market 

Maker Obligations and Quoting Requirements). 

Further, Options 3, Section 8(c)(3) requires Primary 

Market Makers to submit a Valid Width Quote 

during the Opening Process. 

11See Options 3, Section 20 (Nullification and 

Adjustment of Options Transactions including 

Obvious Errors). 

12See Options 3, Section 4(b)(6). 

13Similar rule changes will also be made for 

Nasdaq GEMX, LLC and Nasdaq MRX, LLC. 

14 General 2, Sections 5 and 6 are currently 

reserved. These sections are proposed to be deleted. 

The proposed text would instead reflect General 2, 

Sections 5–10 are reserved. 

15Phlx will also file to conform its rule text to 

the proposed text within Options 4, Section 3(h)(2). 

Exchange likewise desires to remove 

this restriction on Market Makers which 

does not exist on Cboe or other Nasdaq 

affiliated markets.6 The proposed rule 

text is currently waived on ISE pursuant 

to Options 2, Section 4(a)(2). The 

Exchange proposes to remove this rule 

text from Options 2, Section 4 as the 

Exchange does not desire to enforce this 

provision in the future. The Exchange 

believes that this market maker 

provision is no longer necessary. Today, 

ISE incentivizes Market Makers through 

pricing 7 and allocation 8 to quote tightly 

in their assigned options series. Primary 

Market Makers and Competitive Market 

Makers also have other obligations with 

respect to market making 9 in addition 

to other quoting obligations 10 that they 

must abide by when quoting on ISE. 

Also, since the adoption of the rule, the 

Exchange has adopted the obvious error 

rule 11 which permits the Exchange to 

review a transaction as potentially 

erroneous based on a theoretical price. 

Also, ISE orders are subject to tradethrough compliance, thereby limiting 

the prices at which orders may 

execute.12 Market Makers are relied 

upon to provide liquidity on ISE, which 

benefits other Members who have an 

opportunity to interact with the order 

flow. The Exchange believes that the 

obligation to refrain from purchasing a 

call option or a put option at a price 

more than $0.25 below parity places yet 

another obligation on ISE Market 

Makers that is not required on Cboe or 

other Nasdaq markets. The Exchange 

believes that this additional obligation 

is not necessary to maintain fair and 

orderly markets and notes the Exchange 

has waived this obligation. 

Bid/Ask Differentials 

The Exchange proposes to amend 

Options 2, Section 4(b)(4) and Options 

4A, Section 12(b)(i) to relocate text 

concerning bid/ask differentials for 

long-term option series. Currently, 

Options 4, Section 8(a) describes the 

bid/ask differentials for long-term 

options series for equity options and 

exchange-traded products and Options 

4A, Section 12(b)(i) describes the bid/ 

ask differentials for long-term options 

series for indexes. Currently, the bid/ask 

differentials shall not apply to any 

options series until the time to 

expiration is less than nine (9) months 

for equity options and exchange-traded 

funds as provided for within Options 4, 

Section 8(a). Currently, bid/ask 

differentials shall not apply to any 

options series until the time to 

expiration is less than twelve (12) 

months for index options as provided 

for within Options 4A, Section 12(b)(i). 

The Exchange proposes to centralize 

the bid/ask differentials within new 

Options 2, Section 4(b)(4)(iii) and add a 

sentence to both Options 4, Section 8(a) 

and Options 4A, Section 12(b)(i) that 

cites to Options 2, Section 4(b)(4)(iii) for 

information on bid/ask differentials for 

the various products. The Exchange 

believes that this relocation will provide 

Primary Market Makers and Competitive 

Market Makers with centralized 

information regarding their bid/ask 

differential requirements. The Exchange 

is not amending the bid/ask 

differentials; the rule text is simply 

being relocated. 

Business Continuity and Disaster 

Recovery Plan 

The Exchange proposes to relocate 

Supplementary Material .02 to Options 

2, Section 4, concerning business 

continuity and disaster recovery plans, 

to General 2, Section 12, which is 

currently reserved. The Exchange 

proposes to title General 2, Section 12 

as ‘‘Business Continuity and Disaster 

Recovery Plan Testing Requirements for 

Members Pursuant to Regulation SCI.’’ 

The rule text is being relocated without 

change. The Exchange proposes to 

relocate this rule text to harmonize ISE’s 

rules with that of Nasdaq PHLX LLC 

(‘‘Phlx’’), Nasdaq BX, Inc. and The 

Nasdaq Stock Market LLC which all 

have business continuity and disaster 

recovery plans located within General 2, 

Section 12 of their respective 

rulebooks.13 The Exchange also 

proposes to reserve Sections 7–10 and 

13–22 within General 2.14 Harmonizing 

the rule locations of the rules of the 

Nasdaq affiliated markets will make it 

easier for market participants to review 

and compare the rules of each Nasdaq 

market. 

Options 4, Section 3 

The Exchange proposes to remove the 

following products from Options 4, 

Section 3(h): The ETFS Silver Trust, the 

ETFS Palladium Trust, the ETFS 

Platinum Trust or the Sprott Physical 

Gold Trust. The Exchange no longer 

lists these products and proposes to 

remove them the products from its 

listing rules. The Exchange will file a 

proposal with the Commission if it 

determines to list these products in the 

future. 

The Exchange proposes to amend 

Options 4, Section 3(h) by removing the 

rule text at the end of the paragraph 

which provides, ‘‘all of the following 

conditions are met.’’ Paragraph (h) 

would simply end with ‘‘provided that:’’ 

and direct market participants to 

subparagraphs (1) and (2). The Exchange 

also proposes to capitalize ‘‘the’’ at the 

beginning of Options 4, Section 3(h)(1) 

and remove ‘‘; and’’ at the end of the 

paragraph and instead at a period so 

that subparagraphs (1) and (2) are not 

linked, but rather read independently. 

Today, Options 4, Section 3(h)(1) 

applies to all Exchange-Traded Fund 

Shares. The Exchange proposes to 

clarify that Options 4, Section 3(h)(2) 

applies to only international or global 

Exchange-Traded Fund Shares. 

Specifically, the Exchange proposes to 

amend Options 4, Section 3(h)(2) to 

provide, ‘‘Exchange-Traded Fund 

Shares based on international or global 

indexes, or portfolios that include nonU.S. securities, shall meet the following 

criteria.’’ Phlx Options 4, Section 3(h) 

currently has similar rule text.15

Proposed Options 4, Sections 3(h) 

generally concerns securities deemed 

appropriate for options trading. The 

proposed new rule text adds language 

stating that subparagraph (h)(2) of 

Options 4, Section 3 applies to the 

extent the Exchange-Traded Fund Share 

is based on international or global 

indexes, or portfolios that include nonU.S. securities. This language is 


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16Subsection (h)(i) concerns passive ExchangeTraded Fund Shares. Subsection (h)(1) provides, 

‘‘represent interests in registered investment 

companies (or series thereof) organized as open-end 

management investment companies, unit 

investment trusts or similar entities that hold 

portfolios of securities and/or financial instruments, 

including, but not limited to, stock index futures 

contracts, options on futures, options on securities 

and indices, equity caps, collars and floors, swap 

agreements, forward contracts, repurchase 

agreements and reverse repurchase agreements (the 

‘‘Financial Instruments’’), and money market 

instruments, including, but not limited to, U.S. 

government securities and repurchase agreements 

(the ‘‘Money Market Instruments’’) comprising or 

otherwise based on or representing investments in 

broad-based indexes or portfolios of securities and/ 

or Financial Instruments and Money Market 

Instruments (or that hold securities in one or more 

other registered investment companies that 

themselves hold such portfolios of securities and/ 

or Financial Instruments and Money Market 

Instruments).’’ 

17Subsection (h)(v) concerns active ExchangeTraded Fund Shares. Subsection (h)(v) Provides, 

‘‘represents an interest in a registered investment 

company (‘‘Investment Company’’) organized as an 

open-end management company or similar entity, 

that invests in a portfolio of securities selected by 

the Investment Company’s investment adviser 

consistent with the Investment Company’s 

investment objectives and policies, which is issued 

in a specified aggregate minimum number in return 

for a deposit of a specified portfolio of securities 

and/or a cash amount with a value equal to the next 

determined net asset value (‘‘NAV’’), and when 

aggregated in the same specified minimum number, 

may be redeemed at a holder’s request, which 

holder will be paid a specified portfolio of 

securities and/or cash with a value equal to the next 

determined NAV (‘‘Managed Fund Share’’). 

18See Securities Exchange Act Release No. 91488 

(April 6, 2021), 86 FR 19037 (April 12, 2021) (SR– 

Phlx–2021–14) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change To Amend 

the Phlx Options Rules at Options 4 Under the 

Options 4 Title in the Exchanges Rulebooks Shell 

Structure). 

19 15 U.S.C. 78f(b). 

20 15 U.S.C. 78f(b)(5). 

21See supra note 5. 

22See supra note 7. 

23See supra note 8. 

24See supra note 9. 

25See supra note 10. 

26See supra note 11. 

27See supra note 12. 

intended to serve as a guidepost and 

clarify that (1) subparagraph (h)(2) does 

not apply to an Exchange-Traded Fund 

Shares based on a U.S. domestic index 

or portfolio, and (2) subparagraph (h)(2) 

includes Exchange-Traded Fund Shares 

that track a portfolio and do not track 

an index. 

The Exchange proposes to amend 

Options 4, Section 3(h)(2)(A) to remove 

the phrase ‘‘for series of portfolio 

depositary receipts and index fund 

shares based on international or global 

indexes,’’. Today, Options 4, Section 

3(h), subparagraphs (h)(1) 16 and (h)(v) 17

permit the Exchange to list options on 

Exchange-Traded Fund Shares based on 

generic listing standards for portfolio 

depositary receipts and index fund 

shares without applying component 

based requirements in subparagraphs 

(h)(2)(B)–(D). By removing the proposed 

rule text, the Exchange would make 

clear that subparagraph (h)(2)(A) applies 

to Exchange-Traded Fund Shares based 

on international or global indexes, or 

portfolios that include non-U.S. 

securities, that are listed pursuant to 

generic listing standards and comply 

with Options 4, Section 3(h) and 

subparagraph (h)(1). 

The Exchange also proposes to amend 

the term ‘‘comprehensive surveillance 

agreement’’ within Options 4, Section 

3(h)(2)(A)–(D) to instead provide 

‘‘comprehensive surveillance sharing 

agreement.’’ This amendment will bring 

greater clarity to the term. 

Further, the Exchange proposes to add 

the phrase ‘‘if not available or 

applicable, the Exchange-Traded 

Fund’s’’ within Options 4, Section 

3(h)(2)(B), (C), and (D) to clarify that 

when component securities are not 

available, the portfolio of securities 

upon which the Exchange-Traded Fund 

Share is based can be used instead. The 

Exchange notes that ‘‘not available’’ is 

intended for cases where the Exchange 

does not have access to the index 

components, in those cases the 

Exchange would look to the portfolio 

components. The term ‘‘not applicable’’ 

is intended if the fund is active and does 

not track an index and only the portfolio 

is available. As noted above, this rule 

text currently exists within Phlx 

Options 4, Section 3(h). 

The Exchange also proposes to 

wordsmith Options 4, Section 3(h)(2)(B) 

to amend the phrase to provide, ‘‘any 

non-U.S. component securities of an 

index on which the Exchange-Traded 

Fund Shares are based or if not available 

or applicable, the Exchange-Traded 

Fund’s portfolio of securities that are 

not subject to comprehensive 

surveillance sharing agreements do not 

in the aggregate represent more than 

50% of the weight of the index or 

portfolio;’’. The Exchange believes that 

the revised wording will bring greater 

clarity to the rule text. 

Similarly, the Exchange proposes to 

wordsmith Options 4, Section 3(h)(2)(C) 

and (D) to relocate the phrase ‘‘on which 

the Exchange-Traded Fund Shares are 

based’’ and add ‘‘or portfolio’’ to bring 

greater clarity to the rule text by 

conforming the rule text of (C) and (D) 

to the language within (B). 

Technical Amendments 

The Exchange proposes a nonsubstantive technical amendment to 

Options 4, Section 3(C)(2)(A)(ii) to 

correct a typographical error by 

changing a ‘‘than’’ to a ‘‘that’’. The 

Exchange proposes a non-substantive 

technical amendment to Options 4, 

Section 3(g)(2) to capitalize ‘‘section’’. 

The Exchange proposes a nonsubstantive technical amendment to 

Options 4, Section 3(h)(1) to change 

‘‘In’’ to ‘‘in’’. 

Finally, the Exchange proposes to add 

new Options 4C and mark it as reserved. 

Phlx added a 4C to its Rulebook and this 

rule change will harmonize ISE’s 

Rulebook structure to Phlx’s Rulebook 

Structure.18

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,19 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,20

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. 

Options 2, Section 4(a) 

The Exchange’s proposal to remove 

certain rule text from Options 2, Section 

4(a) that refrains Market Makers from 

purchasing a call option or a put option 

at a price more than $0.25 below parity 

is consistent with the Act. The 

Exchange desires to remove this 

restriction on Market Makers which 

does not exist on Cboe or other Nasdaq 

affiliated markets.21 The proposed rule 

text is currently waived on ISE pursuant 

to Options 2, Section 4(a)(2). The 

Exchange believes that this market 

maker provision is no longer necessary. 

Today, ISE incentivizes Market Makers 

through pricing 22 and allocation 23 to 

quote tightly in their assigned options 

series. Primary Market Makers and 

Competitive Market Makers also have 

other obligations with respect to market 

making 24 in addition to other quoting 

obligations 25 that they must abide by 

when quoting on ISE. Also, since the 

adoption of the rule, the Exchange has 

adopted the obvious error rule 26 which 

permits the Exchange to review a 

transaction as potentially erroneous 

based on a theoretical price. Also, ISE 

orders are subject to trade-through 

compliance, thereby limiting the prices 

at which orders may execute.27 Market 

Makers are relied upon to provide 

liquidity on ISE, which benefits other 

Members who have an opportunity to 

interact with the order flow. The 

Exchange believes that the obligation to 

refrain from purchasing a call option or 


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28See supra note 13. 

29Phlx will also file to conform its rule text to 

the proposed text within Options 4, Section 3(h)(2). 

30See supra note 16. 

31See supra note 17. 32See supra note 18. 

a put option at a price more than $0.25 

below parity places yet another 

obligation on ISE Market Makers that is 

not required on Cboe or other Nasdaq 

markets. The Exchange believes that this 

additional obligation is not necessary to 

maintain fair and orderly markets and 

notes the Exchange has waived this 

obligation and the removal of this 

provision would remove an impediment 

to and perfect the mechanism of a free 

and open market and a national market 

system. 

Bid/Ask Differentials 

The Exchange’s proposal to amend 

Options 2, Section 4(b)(4) and Options 

4A, Section 12(b)(i) to relocate text 

concerning bid/ask differentials for 

long-term option series is consistent 

with the Act. The Exchange’s proposal 

will centralize the bid/ask differentials 

within new Options 2, Section 

4(b)(4)(iii) and add a sentence to both 

Options 4, Section 8(a) and Options 4A, 

Section 12(b)(i) that cites to Options 2, 

Section 4(b)(4)(iii) for information on 

bid/ask differentials for the various 

products. The Exchange is not 

amending the bid/ask differentials; the 

rule text is simply being relocated. The 

Exchange believes that this relocation 

will provide Primary Market Makers 

and Competitive Market Makers with 

centralized information regarding their 

bid/ask differential requirements. 

Business Continuity and Disaster 

Recovery Plan 

The Exchange’s proposal to relocate 

Supplementary Material .02 to Options 

2, Section 4, concerning business 

continuity and disaster recovery plans, 

to General 2, Section 12, which is 

currently reserved, is consistent with 

the Act. This rule text will harmonize 

ISE’s rules with that of Phlx, Nasdaq 

BX, Inc. and The Nasdaq Stock Market 

LLC which all have business continuity 

and disaster recovery plans located 

within General 2, Section 12 of their 

respective rulebooks.28 Harmonizing the 

rule locations of the rules of the Nasdaq 

affiliated markets will make it easier for 

market participants to review and 

compare the rules of each Nasdaq 

market. The Exchange also proposes to 

reserve Sections 7–10 and 13–22 within 

General 2. These changes are nonsubstantive as the rule text is not being 

amended. 

Options 4, Section 3 

The Exchange’s proposal to remove 

the following products from Options 4, 

Section 3(h): The ETFS Silver Trust, the 

ETFS Palladium Trust, the ETFS 

Platinum Trust or the Sprott Physical 

Gold Trust is consistent with the Act 

because the Exchange no longer lists 

these products and proposes to remove 

them the products from its listing rules. 

The Exchange will file a proposal with 

the Commission if it determines to list 

these products in the future. 

The Exchange’s proposal to amend 

Options 4, Section 3(h) by removing the 

rule text at the end of the paragraph 

which provides, ‘‘all of the following 

conditions are met,’’ and creating 

separate paragraphs for Options 4, 

Section 3(h)(1) and (2) is consistent with 

the Act. These amendments will de-link 

these subparagraphs so they are read 

independently. Today, Options 4, 

Section 3(h)(1) applies to all ExchangeTraded Fund Shares. The Exchange’s 

proposal to clarify that Options 4, 

Section 3(h)(2) applies to only 

international or global indexes or 

portfolios that include non-U.S. 

securities will bring greater clarity to the 

qualification standards for listing 

options on Exchange-Traded Fund 

Shares. Phlx Options 4, Section 3(h) 

currently has similar rule text.29

Proposed Options 4, Sections 3(h) 

generally concerns securities deemed 

appropriate for options trading. The 

proposed new rule text adds language 

stating that subparagraph (h)(2) of 

Options 4, Section 3 applies to the 

extent the Exchange-Traded Fund Share 

is based on international or global 

indexes or portfolios that include nonU.S. securities. This language is 

intended to serve as a guidepost and 

clarify that (1) subparagraph (h)(2) does 

not apply to an Exchange-Traded Fund 

Shares based on a U.S. domestic index 

or portfolio, and (2) subparagraph (h)(2) 

includes Exchange-Traded Fund Shares 

that track a portfolio and do not track 

an index. 

The Exchange’s proposal to amend 

Options 4, Section 3(h)(2)(A) to remove 

the phrase ‘‘for series of portfolio 

depositary receipts and index fund 

shares based on international or global 

indexes,’’ is consistent with the Act. 

Today, Options 4, Section 3(h), 

subparagraphs (h)(1) 30 and (h)(v) 31

permit the Exchange to list options on 

Exchange-Traded Fund Shares based on 

generic listing standards for portfolio 

depositary receipts and index fund 

shares without applying component 

based requirements in subparagraphs 

(h)(2)(B)–(D). By removing the proposed 

rule text, the Exchange would make 

clear that subparagraph (h)(2)(A) applies 

to Exchange-Traded Fund Shares based 

on international or global indexes, or 

portfolios that include non-U.S. 

securities, that are listed pursuant to 

generic listing standards and comply 

with Options 4, Section 3(h) and 

subparagraph (h)(1). 

The Exchange’s proposal to amend 

the term ‘‘comprehensive surveillance 

agreement’’ within Options 4, Section 

3(h)(2) (A)–(D) to instead provide 

‘‘comprehensive surveillance sharing 

agreement’’ is consistent with the Act as 

the amendment will bring greater clarity 

to the term. 

The Exchange’s proposal to add the 

phrase ‘‘if not available or applicable, 

the Exchange-Traded Fund’s’’ to 

Options 4, Section 3(h)(2)(B), (C), and 

(D) is consistent with the Act as it will 

clarify that when component securities 

are not available, the portfolio of 

securities upon which the ExchangeTraded Fund Share is based can be used 

instead. This rule text currently exists 

within Phlx Options 4, Section 3(h). 

The Exchange’s proposal to amend 

and relocate the rule text within 

Options 4, Section 3(h)(2)(B), (C), and 

(D) will bring greater clarity to the 

current rule text by explicitly providing 

that the index being referenced is the 

one on which the Exchange-Traded 

Fund Shares is based. Also, adding ‘‘or 

portfolio’’ to Options 4, Section 

3(h)(2)(C), and (D) will bring greater 

clarity to the rule text by conforming the 

rule text of (C) and (D) to the language 

within (B). 

Technical Amendments 

The Exchange’s proposal to make 

certain non-substantive technical 

amendment to Options 4, Section 

3(C)(2)(A)(ii), Options 4, Section 3(g)(2) 

and Options 4, Section 3(h)(1) are 

consistent with the Act. Also, adding 

Options 4C and reserving it within the 

rules is a non-substantive amendment 

which will harmonize ISE’s Rulebook 

structure to Phlx’s Rulebook 

Structure.32

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. 

Options 2, Section 4(a) 

The Exchange’s proposal to remove 

certain rule text from Options 2, Section 

4(a) that refrains Market Makers from 

purchasing a call option or a put option 

at a price more than $0.25 below parity 


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34100 Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Notices 

33See supra note 5. 

34See supra note 13. 

35See supra note 16. 

36See supra note 17. 37See supra note 18. 

does not impose an undue burden on 

competition. The Exchange desires to 

remove this restriction on Market 

Makers which does not exist on Cboe or 

other Nasdaq affiliated markets.33 The 

proposed rule text is currently waived 

on ISE pursuant to Options 2, Section 

4(a)(2). Market Makers are relied upon 

to provide liquidity on ISE, which 

benefits other Members who have an 

opportunity to interact with the order 

flow. The Exchange believes that the 

obligation to refrain from purchasing a 

call option or a put option at a price 

more than $0.25 below parity places yet 

another obligation on ISE Market 

Makers that is not required on Cboe or 

other Nasdaq markets. The Exchange 

believes that this additional obligation 

is not necessary to maintain fair and 

orderly markets and notes the Exchange 

has waived this obligation. 

Bid/Ask Differentials 

The Exchange’s proposal to amend 

Options 2, Section 4(b)(4) and Options 

4A, Section 12(b)(i) to relocate text 

concerning bid/ask differentials for 

long-term option series does not impose 

an undue burden on competition. The 

Exchange’s proposal will centralize the 

bid/ask differentials within new 

Options 2, Section 4(b)(4)(iii) and add a 

sentence to both Options 4, Section 8(a) 

and Options 4A, Section 12(b)(i) that 

cites to Options 2, Section 4(b)(4)(iii) for 

information on bid/ask differentials for 

the various products. The Exchange 

believes that this relocation will provide 

Primary Market Makers and Competitive 

Market Makers with centralized 

information regarding their bid/ask 

differential requirements. 

Business Continuity and Disaster 

Recovery Plan 

The Exchange’s proposal to relocate 

Supplementary Material .02 to Options 

2, Section 4, concerning business 

continuity and disaster recovery plans, 

to General 2, Section 12, which is 

currently reserved, does not impose an 

undue burden on competition. This rule 

text will harmonize ISE’s rules with that 

of Phlx, Nasdaq BX, Inc. and The 

Nasdaq Stock Market LLC which all 

have business continuity and disaster 

recovery plans located within General 2, 

Section 12 of their respective 

rulebooks.34 Harmonizing the rule 

locations of the rules of the Nasdaq 

affiliated markets will make it easier for 

market participants to review and 

compare the rules of each Nasdaq 

market. This change is non-substantive 

as the rule text is not being amended. 

Options 4, Section 3 

The Exchange’s proposal to remove 

the following products from Options 4, 

Section 3(h): The ETFS Silver Trust, the 

ETFS Palladium Trust, the ETFS 

Platinum Trust or the Sprott Physical 

Gold Trust does not impose an undue 

burden on competition because the 

Exchange no longer lists these products 

and proposes to remove them the 

products from its listing rules. No 

Member will be permitted to trade these 

products on ISE. 

The Exchange’s proposal to amend 

Options 4, Section 3(h) by removing the 

rule text at the end of the paragraph 

which provides, ‘‘all of the following 

conditions are met,’’ and creating 

separate paragraphs for Options 4, 

Section 3(h)(1) and (2) does not impose 

an undue burden on competition. These 

amendments will de-link these 

subparagraphs so they are read 

independently. Today, Options 4, 

Section 3(h)(1) applies to all ExchangeTraded Fund Shares. The Exchange’s 

proposal to clarify that Options 4, 

Section 3(h)(2) applies to only 

international or global Exchange-Traded 

Fund Shares that include non-U.S. 

securities will bring greater clarity to the 

qualification standards for listing 

options on Exchange-Traded Fund 

Shares. Specifically, this language is 

intended to serve as a guidepost and 

clarify that (1) subparagraph (h)(2) does 

not apply to an Exchange-Traded Fund 

Shares based on a U.S. domestic index 

or portfolio, and (2) subparagraph (h)(2) 

includes Exchange-Traded Fund Shares 

that track a portfolio and do not track 

an index. This amendment will 

uniformly apply the criteria within 

Options 4, Section 3 when it lists 

options products on ISE. 

The Exchange’s proposal to amend 

Options 4, Section 3(h)(2)(A) to remove 

the phrase ‘‘for series of portfolio 

depositary receipts and index fund 

shares based on international or global 

indexes,’’ does not impose an undue 

burden on competition. Today, Options 

4, Section 3(h), subparagraphs (h)(1) 35

and (h)(v) 36 permit the Exchange to list 

options on Exchange-Traded Fund 

Shares based on generic listing 

standards for portfolio depositary 

receipts and index fund shares without 

applying component based 

requirements in subparagraphs 

(h)(2)(B)–(D). By removing the proposed 

rule text, the Exchange would make 

clear that subparagraph (h)(2)(A) applies 

to Exchange-Traded Fund Shares based 

on international or global indexes, or 

portfolios that include non-U.S. 

securities, that are listed pursuant to 

generic listing standards and comply 

with Options 4, Section 3(h) and 

subparagraph (h)(1). This amendment 

will uniformly apply the criteria within 

Options 4, Section 3 when it lists 

options products on ISE. 

The Exchange’s proposal to amend 

the term ‘‘comprehensive surveillance 

agreement’’ within Options 4, Section 

3(h)(2) (A)–(D) to instead provide 

‘‘comprehensive surveillance sharing 

agreement’’ does not impose an undue 

burden on competition as the 

amendment will bring greater clarity to 

the term. 

The Exchange’s proposal to add the 

phrase ‘‘if not available or applicable, 

the Exchange-Traded Fund’s’’ to 

Options 4, Section 3(h)(2)(B), (C), and 

(D) does not impose an undue burden 

on competition as it will clarify that 

when component securities are not 

available, the portfolio of securities 

upon which the Exchange-Traded Fund 

Share is based can be used instead. 

The Exchange’s proposal to amend 

and relocate the rule text within 

Options 4, Section 3(h)(2)(B), (C), and 

(D) will bring greater clarity to the 

current rule text by explicitly providing 

that the index being referenced is the 

one on which the Exchange-Traded 

Fund Shares is based. Also, adding ‘‘or 

portfolio’’ to Options 4, Section 

3(h)(2)(C), and (D) will bring greater 

clarity to the rule text by conforming the 

rule text of (C) and (D) to the language 

within (B). 

Technical Amendments 

The Exchange’s proposal to make 

certain non-substantive technical 

amendment to Options 4, Section 

3(C)(2)(A)(ii), Options 4, Section 3(g)(2) 

and Options 4, Section 3(h)(1) does no 

impose an undue burden on 

competition. Also, adding Options 4C 

and reserving it within the rules is a 

non-substantive amendment which will 

harmonize ISE’s Rulebook structure to 

Phlx’s Rulebook Structure.37

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. 


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Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Notices 34101 

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

39 17 CFR 240.19b–4(f)(6). 

40 15 U.S.C. 78s(b)(3)(A). 

41 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s 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. 

42 17 CFR 240.19b–4(f)(6). 

43 17 CFR 240.19b–4(f)(6). 

44For purposes only of waiving the 30-day 

operative delay, the Commission also has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

45 15 U.S.C. 78s(b)(3)(A)(iii). 

46 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change 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. 

47 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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) of the Act 38 and Rule 19b– 

4(f)(6) 39 thereunder. Because the 

foregoing proposed rule change does 

not: (i) Significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 40 and Rule 19b– 

4(f)(6) 41 thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 42 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),43 the 

Commission may designate a shorter 

time if such action is consistent with 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposed 

rule change may become operative upon 

filing. The Exchange’s proposal does not 

raise any new or novel issues. 

Therefore, the Commission believes that 

waving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Accordingly, the Commission 

designates the proposed rule change to 

be operative on upon filing.44

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

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 45 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.46

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

ISE–2021–14 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–2021–14. 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 (http://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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–ISE–2021–14 and should be 

submitted on or before July 19, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.47

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–13654 Filed 6–25–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92231; File No. SR–Phlx– 

2021–37] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the 

Exchange’s Pricing Schedule at Equity 

7, Section 3 

June 22, 2021 

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 June 11, 

2021, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 


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