Document ID: SEC-2023-0183-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2023-02-17T05:00Z

[Federal Register Volume 88, Number 33 (Friday, February 17, 2023)]
[Notices]
[Pages 10412-10418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-03334]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96904; File No. SR-NYSEARCA-2023-12]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 6.4-O

February 13, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on February 6, 2023, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 6.4-O (Series of Options Open 
for Trading), Commentary .07 regarding the Short Term Option Series 
Program. The proposed rule change is available on the Exchange's 
website at www.nyse.com, 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 self-regulatory organization 
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 6.4-O (Series of Options Open 
for Trading), Commentary .07 (hereinafter ``Commentary .07''). 
Specifically, the Exchange proposes to amend the Short Term Option 
Series Program to: (1) limit the number of Short Term Option Expiration 
Dates for options on SPDR S&P 500 ETF Trust (SPY), the INVESCO QQQ 
TrustSM, Series 1 (QQQ), and iShares Russell 2000 ETF (IWM) from five 
to two expirations for Monday and Wednesday expirations; and (2) expand 
the Short Term Option Series program to permit the listing and trading 
of options series with Tuesday and Thursday expirations for options on 
SPY and QQQ listed pursuant to the Short Term Option Series Program, 
subject to the same proposed limitation of two expirations. This is a 
competitive filing and is substantially identical to a rule recently 
approved on Nasdaq ISE, LLC (``Nasdaq ISE'').\4\
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    \4\ See Securities and Exchange Act Release No. 96281 (November 
9, 2022), 87 FR 68769 (November 16, 2022) (SR-ISE-2022-18) (``ISE 
Approval Order'').
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Curtail Short Term Option Expiration Dates
    Currently, per Commentary .07(a), after an option class has been 
approved for listing and trading on the Exchange, the Exchange may open 
for trading on any Thursday or Friday that is a business day (``Short 
Term Option Opening Date'') series of options on that class that expire 
at the close of business on each of the next five Fridays that are 
business days and are not Fridays on which monthly options series or 
Quarterly Options Series expire (hereinafter referred to as ``Short 
Term Option Expiration Dates'').\5\ In addition, the Exchange may have 
no more than a total of five Short Term Option Expiration Dates not 
including any Monday or Wednesday SPY, QQQ, and IWM Expirations. 
Further, if the Exchange is not open for business on the respective 
Thursday or Friday, the Short Term Option Opening Date will be the 
first business day immediately prior to that respective Thursday or 
Friday. Similarly, if the Exchange is not open for business on a 
Friday, the Short Term Option Expiration Date will be the

[[Page 10413]]

first business day immediately prior to that Friday.
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    \5\ The Exchange notes that Rule 6.1-O(41) contains a definition 
for Short Term Options Series that is no longer applicable and is 
slated for deletion (together with the entire Rule 6.1-O) in a 
subsequent rule filing. See Securities Exchange Act Release No. 
94072 (January 26, 2022), 87 FR 5592 (February 1, 2022) (Notice of 
filing Notice of Filing of Amendment No. 4 and Order Granting 
Accelerated Approval of a Proposed Rule Change, as Modified by 
Amendment No. 4) (SR-NYSEArca-2021-47) (proving, in relevant part, 
that the definition of ``Short Term Options Series'' was duplicative 
of Commentary .07 to Rule 6.4-O and therefore would be deleted in a 
subsequent filing). Id., 87 FR at 5594 and 5653, n. 18.
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    Today, per Commentary .07(g), with respect to Wednesday SPY, QQQ, 
and IWM Expirations, the Exchange may open for trading on any Tuesday 
or Wednesday that is a business day series of options on SPY, QQQ, and 
IWM to expire on any Wednesday of the month that is a business day and 
is not a Wednesday in which Quarterly Options Series expire 
(``Wednesday SPY Expirations,'' ``Wednesday QQQ Expirations,'' and 
``Wednesday IWM Expirations''). In addition, with respect to Monday 
SPY, QQQ, and IWM Expirations, the Exchange may open for trading on any 
Friday or Monday that is a business day series of options on the SPY, 
QQQ, or IWM to expire on any Monday of the month that is a business day 
and is not a Monday in which Quarterly Options Series expire (``Monday 
SPY Expirations,'' ``Monday QQQ Expirations,'' and ``Monday IWM 
Expirations''), provided that Monday SPY Expirations, Monday QQQ 
Expirations, and Monday IWM Expirations that are listed on a Friday 
must be listed at least one business week and one business day prior to 
the expiration. In addition, the Exchange may list up to five 
consecutive Wednesday SPY Expirations, Wednesday QQQ Expirations, and 
Wednesday IWM Expirations and five consecutive Monday SPY Expirations, 
Monday QQQ Expirations, and Monday IWM Expirations at one time; the 
Exchange may have no more than a total of five each of Wednesday SPY 
Expirations, Wednesday QQQ Expirations, and Wednesday IWM Expirations 
and a total of five each of Monday SPY Expirations, Monday QQQ 
Expirations, and Monday IWM Expirations. Monday and Wednesday SPY 
Expirations, Monday and Wednesday QQQ Expirations, and Monday and 
Wednesday IWM Expirations are subject to Commentary .07(g).
Proposal
    At this time, the Exchange proposes to curtail the number of Short 
Term Option Expiration Dates from five to two \6\ for SPY, QQQ and IWM 
for Monday and Wednesday Expirations, as well as the proposed Tuesday 
and Thursday Expirations in SPY and QQQ, which expirations are set 
forth in Commentary .07(g). To effectuate this change, the Exchange 
proposes new paragraph (g) (which incorporates current paragraph (g)) 
as set forth below.\7\
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    \6\ The Exchange proposes to list the two front weeks for Short 
Term Options Daily Expirations.
    \7\ See proposed Rule 6.4-O, Commentary .07(g).
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    Proposed Commentary .07(g), entitled ``Short Term Option Daily 
Expirations'', would limit to two the number of option series in 
symbols (set forth in ``Table 1'') that expire at the close of business 
beyond the current week for each of the following two Mondays, 
Tuesdays, Wednesdays, and Thursdays (collectively, the ``Short Term 
Expiration Dates'') as set forth below:
* * * * *

                                                     Table 1
----------------------------------------------------------------------------------------------------------------
                                                                       Number of expirations
                     Symbol                      ---------------------------------------------------------------
                                                      Monday          Tuesday        Wednesday       Thursday
----------------------------------------------------------------------------------------------------------------
SPY.............................................               2               2               2               2
IWM.............................................               2               0               2               0
QQQ.............................................               2               2               2               2
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* * * * *
    As shown above, Table 1 sets forth the number of permissible 
expirations for each symbol as well as permissible expiration days. 
Specifically, the Exchange proposes to include Monday and Wednesday 
expirations for SPY, QQQ, and IWM and Tuesday and Thursday expirations 
for SPY and QQQ and list ``2'' as the number of permissible expirations 
for these symbols. The Exchange's proposal to permit Tuesday and 
Thursday expirations for options on SPY and QQQ listed pursuant to the 
Short Term Option Series Program is explained below in more detail. In 
the event Short Term Option Daily Expirations expire on the same day in 
the same class as a monthly options series or a Quarterly Options 
Series, the Exchange would skip that week's listing and instead list 
the following week; the two weeks of Short Term Option Expiration Dates 
would therefore not be consecutive. To this end, specifically, the 
Exchange proposes to state within Commentary .07(g):

    In addition to the above, the Exchange may open for trading 
series of options on the symbols provided in Table 1 below that 
expire at the close of business on each of the next two Mondays, 
Tuesdays, Wednesdays, and Thursdays beyond the current week, 
respectively, that are business days and are not business days on 
which monthly options series or Quarterly Options Series expire 
(``Short Term Option Daily Expirations''). The Exchange may have no 
more than a total of two Short Term Option Daily Expirations beyond 
the current week for each of Monday, Tuesday, Wednesday, and 
Thursday expirations at one time. Short Term Option Daily 
Expirations would be subject to this paragraph (g).

    In connection with the foregoing change, the Exchange proposes to 
modify Commentary .07(a) to distinguish the expirations set forth in 
Table 1 from other permissible expirations. Specifically, SPY, QQQ, and 
IWM Friday expirations and other option symbols expiring on a Friday 
(that are not noted in Table 1) will continue to have a total of five 
Short Term Option Expiration Dates, provided those Friday expirations 
are not Fridays on which monthly options series or Quarterly Options 
Series expire and will be referred to as ``Friday Short Term Option 
Expiration Dates.'' \8\ In addition, these expirations would be 
referred to as ``Short Term Option Weekly Expirations'' to distinguish 
them from the proposed expirations that would be subject to Table 1 
(i.e., Short Term Option Daily Expirations).\9\
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    \8\ See proposed Commentary .07(a).
    \9\ Id.
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    Finally, proposed Commentary .07(g) would provide that Monday Short 
Term Option Expiration Dates, Tuesday Short Term Option Expiration 
Dates, Wednesday Short Term Option Expiration Dates, and Thursday Short 
Term Option Expiration Dates, together with Friday Short Term Option 
Expiration Dates, would collectively refer to ``Short Term Option 
Expiration Dates.'' \10\
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    \10\ Defining the term ``Short Term Option Expiration Dates'' 
will make clear that this term includes expiration dates for each 
day Short Term Options are listed.

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[[Page 10414]]

Tuesday and Thursday Expirations
    At this time, the Exchange proposes to expand the Short Term Option 
Series Program to permit the listing and trading of no more than a 
total of two consecutive Tuesday and Thursday expirations (i.e., 
``Tuesday Short Term Option Daily Expirations'' and ``Thursday Short 
Term Option Daily Expirations'') beyond the current week each for SPY 
and QQQ. Tuesday and Thursday Short Term Option Daily Expirations would 
be subject to proposed Commentary .07(g).
    Currently, series listed pursuant to the Short Term Option Series 
program are series in an option class that is approved for listing and 
trading on the Exchange in which the series opened for trading on any 
Monday, Tuesday, Wednesday, Thursday, or Friday (as applicable) that is 
a business day and that expires on the Monday, Wednesday, or Friday of 
the following business week that is a business day, or, in the case of 
a series that is listed on a Friday and expires on a Monday, is listed 
one business week and one business day prior to that expiration. If a 
Tuesday, Wednesday, Thursday, or Friday is not a business day, the 
series may be opened (or will expire) on the first business day 
immediately prior to that Tuesday, Wednesday, Thursday, or Friday. For 
a series listed for Monday expiration, if a Monday is not a business 
day, the series will expire on the first business day immediately 
following that Monday.\11\
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    \11\ See Commentary .07(g).
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    Current (and proposed) Commentary .07(g), which sets forth the 
requirements for SPY and QQQ options that are listed pursuant to the 
Short Term Option Series Program as Short Term Option Daily 
Expirations, will be modified to accommodate the listing of options 
series that expire on Tuesdays and Thursdays. Similar to Monday and 
Wednesday SPY, QQQ, and IWM Short Term Option Daily Expirations, per 
current (and proposed) Commentary .07(g), the Exchange proposes that it 
may open for trading on any Monday or Tuesday that is a business day 
series of options in symbols set forth in Table 1 that expire at the 
close of business on each of the next two Tuesdays beyond the current 
week that are business days and are not business days in which monthly 
options series or Quarterly Options Series expire (``Tuesday Short Term 
Option Expiration Date'').\12\
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    \12\ See proposed Commentary .07(g).
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    Likewise, per proposed Commentary .07(g), the Exchange may open for 
trading on any Wednesday or Thursday that is a business day series of 
options on symbols set forth in Table 1 that expire at the close of 
business on each of the next two Thursdays that are business days and 
are not business days in which monthly options series or Quarterly 
Options Series expire (``Thursday Short Term Option Expiration Date'').
    In the event that options on SPY and QQQ expire on a Tuesday or 
Thursday and that Tuesday or Thursday is the same day that a monthly 
option series or Quarterly Options Series expires, the Exchange would 
skip that week's listing and instead list the following week; the two 
weeks would therefore not be consecutive. Today, Monday and Wednesday 
Expirations in SPY, QQQ, and IWM skip the weekly listing in the event 
the weekly listing expires on the same day in the same class as a 
Quarterly Options Series. Currently, there is no rule text provision 
that states that Monday and Wednesday Expirations in SPY, QQQ, and IWM 
skip the weekly listing in the event the weekly listing expires on the 
same day in the same class as a monthly option series. Practically 
speaking, Monday and Wednesday Expirations in SPY, QQQ, and IWM would 
not expire on the same day as a monthly expiration.
    The interval between strike prices for the proposed Tuesday and 
Thursday SPY and QQQ Short Term Option Daily Expirations will be the 
same as those for the current Short Term Option Series for Monday, 
Wednesday, and Friday expirations applicable to the Short Term Option 
Series Program.\13\ Specifically, the Tuesday and Thursday SPY and QQQ 
Short Term Option Daily Expirations will have a $0.50 strike interval 
minimum.\14\ As is the case with other equity options series listed 
pursuant to the Short Term Option Series Program, the Tuesday and 
Thursday SPY and QQQ Short Term Option Daily Expiration series will be 
P.M.-settled.
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    \13\ See Commentary .07(e).
    \14\ See id.
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    Pursuant to proposed Commentary .07(g), with respect to the Short 
Term Option Series Program, a Tuesday or Thursday expiration series 
will expire on the first business day immediately prior to that Tuesday 
or Thursday, e.g., Monday or Wednesday of that week, respectively, if 
the Tuesday or Thursday is not a business day.
    Currently, for each option class eligible for participation in the 
Short Term Option Series Program, the Exchange is limited to opening 
thirty (30) series for each expiration date for the specific class.\15\ 
The thirty (30) series restriction does not include series that are 
open by other securities exchanges under their respective weekly rules; 
the Exchange may list these additional series that are listed by other 
options exchanges.\16\ This thirty (30) series restriction would apply 
to Tuesday and Thursday SPY and QQQ Short Term Option Daily Expiration 
series as well. In addition, the Exchange will be able to list series 
that are listed by other exchanges, assuming they file similar rules 
with the Commission to list SPY and QQQ options expiring on Tuesdays 
and Thursdays with a limit of two Tuesday Short Term Daily Expirations 
and two Thursday Short Term Daily Expirations beyond the current week.
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    \15\ See Commentary .07(a).
    \16\ See id.
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    In addition, today, with the exception of Monday and Wednesday SPY 
Expirations, Monday and Wednesday QQQ Expirations, and Monday and 
Wednesday IWM Expirations, no Short Term Option Series may expire in 
the same week in which monthly option series on the same class expire. 
With this proposal, Tuesday and Thursday SPY Expirations and Tuesday 
and Thursday QQQ Expirations would be treated similarly to existing 
Monday and Wednesday SPY, QQQ, and IWM Expirations. Specifically, with 
respect to monthly option series, Short Term Option Daily Expirations 
will be permitted to expire in the same week in which monthly option 
series in the same class expire.\17\ Not listing Short Term Option 
Daily Expirations for one week every month because there was a monthly 
on that same class on the Friday of that week would create investor 
confusion.
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    \17\ See proposed Commentary .07(g).
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    Further, as with Monday and Wednesday SPY, QQQ, and IWM 
Expirations, the Exchange would not permit Tuesday and Thursday Short 
Term Option Daily Expirations to expire on a business day in which 
monthly options series or Quarterly Options Series expire.\18\ 
Therefore, all Short Term Option Daily Expirations would expire at the 
close of business on each of the next two Mondays, Tuesdays, 
Wednesdays, and Thursdays, respectively, that are business days and are 
not business days on which monthly options series or Quarterly Options

[[Page 10415]]

Series expire. The Exchange believes that it is reasonable to not 
permit two expirations on the same day in which a monthly options 
series or a Quarterly Options Series would expire.
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    \18\ While the Exchange proposes to add rule text within 
Commentary .07(g) with respect to Monday Expirations, Tuesday 
Expirations, and Wednesday Expirations stating that those 
expirations would not expire on business days that are business days 
on which monthly options series expire, practically speaking this 
would not occur.
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    The Exchange does not believe that any market disruptions will be 
encountered with the introduction of P.M.-settled Tuesday and Thursday 
Short Term Option Daily Expirations. The Exchange has the necessary 
capacity and surveillance programs in place to support and properly 
monitor trading in the proposed Tuesday and Thursday Short Term Option 
Daily Expirations. The Exchange currently trades P.M.-settled Short 
Term Option Series that expire Monday and Wednesday for SPY, QQQ and 
IWM and has not experienced any market disruptions nor issues with 
capacity. Today, the Exchange has surveillance programs in place to 
support and properly monitor trading in Short Term Option Series that 
expire Monday and Wednesday for SPY, QQQ and IWM.
Impact of Proposal
    The Exchange notes that listings in the Short Term Option Series 
Program comprise a significant part of the standard listing in options 
markets. The below tables sets forth the percentage of weekly listings 
as compared to monthly, quarterly, and Long-Term Option Series in 2020 
and 2022 in the options industry.\19\ The weekly strikes decreased from 
24% to19% in these two years. The Exchange notes that during this 
timeframe, all options exchanges mitigated weekly strike intervals.
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    \19\ Nasdaq ISE sourced this information from The Options 
Clearing Corporation (``OCC''). The information includes time 
averaged data for all 16 options markets up to August 18, 2022. See 
ISE Approval Order, supra note 4.

                         Number of Strikes--2020
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                                                            Percent of
                       Expiration                              total
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Monthly.................................................              59
Weekly..................................................              24
LEAP....................................................              16
Quarterly...............................................               1
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                         Number of Strikes--2022
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                                                            Percent of
                       Expiration                              total
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Monthly.................................................              64
Weekly..................................................              19
LEAP....................................................              17
Quarterly...............................................               0
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    By limiting the number of Short Term Option Daily Expirations for 
SPY, QQQ, and IWM to two expirations for Monday and Wednesday 
expirations, and expanding the Short Term Option Series Program to 
permit Tuesday and Thursday expirations for SPY and QQQ, the Exchange 
anticipates that it would overall reduce the number of weekly 
expiration dates. With respect to SPY, the reduction from five to two 
expirations will reduce 11.80% of strikes on SPY with Monday and 
Wednesday expirations. With respect to QQQ, the reduction from five to 
two expirations will reduce 12.86% of strikes on QQQ with Monday and 
Wednesday expirations. With respect to IWM, the reduction from five to 
two expirations will reduce 11.86% of strikes on IWM with Monday and 
Wednesday expirations. Additionally, expanding the Short Term Option 
Series Program to permit the listing of Tuesday and Thursday 
expirations in SPY and QQQ will account for the addition of 7.86% of 
strikes in SPY and the addition of 8.57% of strikes in QQQ. Therefore, 
the total net reduction would be 3.94% for SPY and 4.29% for QQQ.\20\ 
The overall reduction offered by this proposal reduces the number of 
Short Term Option Expirations to be listed on the Exchange and should 
encourage Market-Makers to continue to deploy capital more efficiently 
and improve displayed market quality.\21\ Also, the Exchange's proposal 
curtails the number of expirations in SPY, QQQ, and IWM without 
reducing the classes of options available for trading on the Exchange. 
The Exchange believes that despite the proposed curtailment of 
expirations, Trading Permit Holders will continue to be able to expand 
hedging tools because all days of the week would be available to permit 
Trading Permit Holders to tailor their investment and hedging needs 
more effectively in SPY and QQQ.
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    \20\ Nasdaq ISE sourced this information, which are estimates, 
from LiveVol[supreg]. The information includes data for all 16 
options markets as of August 18, 2022. See id.
    \21\ Market-Makers (including Lead Market-Makers) are required 
to quote a specified time in their assigned options series. See 
Rules 6.37-O and 6.37AP-O.

                           Total Volume--2022
                           [Through August 18]
------------------------------------------------------------------------
                                                            Percent of
                       Expiration                          total series
------------------------------------------------------------------------
Monthly.................................................              39
Weekly..................................................              48
LEAP....................................................              12
Quarterly...............................................               1
------------------------------------------------------------------------

    Weeklies comprise 48% of the total volume of options listings.\22\ 
The Exchange believes that inner weeklies represent high volume as 
compared to outer weeklies and would be more attractive to market 
participants. Similar to SPY, QQQ and IWM Monday and Wednesday 
Expirations, the introduction of SPY and QQQ Tuesday and Thursday 
expirations will, among other things, expand hedging tools available to 
market participants and continue the reduction of the premium cost of 
buying protection. The Exchange believes that SPY and QQQ Tuesday and 
Thursday expirations will allow market participants to purchase SPY and 
QQQ options based on their timing as needed and allow them to tailor 
their investment and hedging needs more effectively.
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    \22\ This table sets forth industry volume. Weeklies comprise 
48% of volume while only being 19% of the strikes. Nasdaq ISE 
sourced this information from OCC. The information includes data for 
all 16 options markets as of August 18, 2022.) See ISE Approval 
Order, supra note 4.
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Implementation
    The Exchange will announce the implementation of this proposal via 
Trader Update to be published no later than 60 days following the 
effectiveness of this this rule. Notwithstanding this implementation, 
Monday and Wednesday Expirations in SPY, QQQ, and IWM that were listed 
prior to the date of implementation will continue to be listed on the 
Exchange until those options expire pursuant to current Commentary .07 
regarding Short Term Option Series.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\23\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \24\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \25\ requirement that

[[Page 10416]]

the rules of an exchange not be designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
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    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(5).
    \25\ Id.
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    The proposal is consistent with the Act as the overall reduction 
offered by this proposal reduces the number of Short Term Option 
Expirations to be listed on the Exchange. This reduction would remove 
impediments to and perfect the mechanism of a free and open market by 
encouraging Market-Makers to continue to deploy capital more 
efficiently and improve displayed market quality.\26\ Also, the 
Exchange's proposal curtails the number of Monday, Tuesday, Wednesday, 
and Thursday expirations in SPY, QQQ, and IWM without reducing the 
classes of options available for trading on the Exchange. The Exchange 
believes that despite the proposed curtailment of expirations, Trading 
Permit Holders will continue to be able to expand hedging tools and 
tailor their investment and hedging needs more effectively in SPY, QQQ, 
and IWM.
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    \26\ Market Makers (including Lead Market Makers) are required 
to quote a specified time in their assigned options series. See 
e.g., Rules 6.37-O and 6.37AP-O.
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    Similar to SPY, QQQ, and IWM Monday and Wednesday Expirations 
(proposed to be SPY, QQQ and IWM Monday and Wednesday Short Term Daily 
Expirations), the introduction of SPY and QQQ Tuesday and Thursday 
Short Term Daily Expirations is consistent with the Act as it will, 
among other things, expand hedging tools available to market 
participants and continue the reduction of the premium cost of buying 
protection. The Exchange believes that SPY and QQQ Tuesday and Thursday 
expirations (proposed to be SPY and QQQ Tuesday and Thursday Short Term 
Daily Expirations) will allow market participants to purchase SPY and 
QQQ options based on their timing as needed and allow them to tailor 
their investment and hedging needs more effectively. Further, the 
proposal to permit Tuesday and Thursday Short Term Daily Expirations 
for options on SPY and QQQ listed pursuant to the Short Term Option 
Series Program, subject to the proposed limitation of two expirations, 
would protect investors and the public interest by providing the 
investing public and other market participants more flexibility to 
closely tailor their investment and hedging decisions in SPY and QQQ 
options, thus allowing them to better manage their risk exposure.
    In particular, the Exchange believes the Short Term Option Series 
Program has been successful to date and that Tuesday and Thursday SPY 
and QQQ Short Term Daily Expirations should simply expand the ability 
of investors to hedge risk against market movements stemming from 
economic releases or market events that occur throughout the month in 
the same way that the Short Term Option Series Program has expanded the 
landscape of hedging. Similarly, the Exchange believes Tuesday and 
Thursday SPY and QQQ Short Term Daily Expirations should create greater 
trading and hedging opportunities and flexibility and will provide 
customers with the ability to tailor their investment objectives more 
effectively. The Exchange currently lists Monday and Wednesday SPY, 
QQQ, and IWM Expirations (proposed to be SPY, QQQ, and IWM Monday and 
Wednesday ``Short Term Daily Expirations'').\27\
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    \27\ See Commentary .07(g) and proposed Commentary .07(g).
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    Today, with the exception of Monday and Wednesday SPY Expirations, 
Monday and Wednesday QQQ Expirations, and Monday and Wednesday IWM 
Expirations, no Short Term Option Series may expire in the same week in 
which monthly option series on the same class expire. With this 
proposal, Tuesday and Thursday SPY Expirations and Tuesday and Thursday 
QQQ Expirations would be treated similarly to existing Monday and 
Wednesday SPY, QQQ, and IWM Expirations. The Exchange believes that 
permitting Short Term Option Daily Expirations to expire in the same 
week that standard monthly options expire on Fridays is consistent with 
Act. Not listing Short Term Option Daily Expirations for one week every 
month because there was a monthly on that same class on the Friday of 
that week would create investor confusion.
    Further, as with Monday and Wednesday SPY, QQQ, and IWM 
Expirations, the Exchange would not permit Tuesday and Thursday Short 
Term Option Daily Expirations to expire on a business day in which 
monthly options series or Quarterly Options Series expire. Therefore, 
all Short Term Option Daily Expirations would expire at the close of 
business on each of the next two Mondays, Tuesdays, Wednesdays, and 
Thursdays, respectively, that are business days and are not business 
days in which monthly options series or Quarterly Options Series 
expire. The Exchange believes that it is consistent with the Act to not 
permit two expirations on the same day in which a monthly options 
series or a Quarterly Options Series would expire similar to Monday and 
Wednesday SPY, QQQ, and IWM Expirations.
    There are no material differences in the treatment of Wednesday SPY 
and QQQ expirations for Short Term Option Series as compared to the 
proposed Tuesday and Thursday SPY and QQQ Short Term Daily Expirations. 
Given the similarities between Wednesday SPY, QQQ and IWM Expirations 
and the proposed Tuesday and Thursday SPY and QQQ Short Term Daily 
Expirations, the Exchange believes that applying the provisions in 
Commentary .07 (g) that currently apply to Wednesday SPY, QQQ and IWM 
Expirations to Tuesday and Thursday SPY and QQQ Short Term Daily 
Expirations (per proposed Commentary .07(g)) is justified.
    The Exchange further represents that it has an adequate 
surveillance program in place to detect manipulative trading in the 
proposed Tuesday and Thursday SPY and QQQ Short Term Daily Expirations, 
in the same way that it monitors trading in the current Short Term 
Option Series and trading in Monday and Wednesday SPY, QQQ, and IWM 
Expirations. The Exchange also represents that it has the necessary 
systems capacity to support the new options series. Finally, the 
Exchange does not believe that any market disruptions will be 
encountered with the introduction of Tuesday and Thursday SPY and QQQ 
Short Term Daily Expirations.
    Finally, the Exchange notes the proposed rule change is 
substantively the same as a rule change proposed by Nasdaq ISE, which 
the Commission recently approved.\28\
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    \28\ See ISE Approval Order, supra note 4.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposal will provide an 
overall reduction in the number of Short Term Option Expirations to be 
listed on the Exchange. The Exchange believes this reduction will not 
impose an undue burden on competition, rather, it should encourage 
Market- Makers to continue to deploy capital more efficiently and 
improve displayed market quality.\29\ Also, the Exchange's proposal 
curtails the number of weekly expirations in SPY, QQQ, and IWM without 
reducing the classes of options available for trading on the Exchange. 
The Exchange

[[Page 10417]]

believes that despite the proposed curtailment of weekly expirations, 
Trading Permit Holders will continue to be able to expand hedging tools 
and tailor their investment and hedging needs more effectively in SPY, 
QQQ, and IWM.
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    \29\ Market Makers (including Lead Market Makers) are required 
to quote a specified time in their assigned options series. See 
e.g., Rules 6.37-O and 6.37AP-O.
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    Similar to SPY, QQQ and IWM Monday and Wednesday Expirations, the 
Exchange believes the introduction of SPY and QQQ Tuesday and Thursday 
Short Term Daily Expirations will not impose an undue burden on 
competition. The Exchange believes that it will, among other things, 
expand hedging tools available to market participants and continue the 
reduction of the premium cost of buying protection. The Exchange 
believes that SPY and QQQ Tuesday and Thursday Short Term Daily 
Expirations will allow market participants to purchase SPY and QQQ 
options based on their timing as needed and allow them to tailor their 
investment and hedging needs more effectively. The Exchange does not 
believe the proposal will impose any burden on intermarket competition, 
as nothing prevents the other options exchanges from proposing similar 
rules to list and trade Short Term Option Series with Tuesday and 
Thursday Short Term Daily Expirations. The Exchange notes that having 
Tuesday and Thursday SPY and QQQ expirations is not a novel proposal, 
as Wednesday SPY, QQQ and IWM Expirations are currently listed on the 
Exchange.\30\ Additionally, as noted above, the Commission recently 
approved a substantively identical proposal of another exchange.\31\ 
Further, the Exchange does not believe the proposal will impose any 
burden on intramarket competition, as all market participants will be 
treated in the same manner under this proposal.
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    \30\ See Commentary .07(g).
    \31\ See ISE Approval Order, supra note 4.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

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\
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    \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.
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    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 proposed rule change may become operative upon filing. The 
Commission notes that it recently approved Nasdaq ISE's substantially 
similar proposal.\38\ The Exchange has stated that waiver of the 30-day 
operative delay will allow the Exchange to implement the proposal at 
the same time as its competitor exchanges, thus creating competition 
among Short Term Option Series throughout the industry. For these 
reasons, 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.\39\
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    \36\ 17 CFR 240.19b-4(f)(6).
    \37\ 17 CFR 240.19b-4(f)(6)(iii).
    \38\ See Securities Exchange Act Release No. 96281 (November 9, 
2022), 87 FR 68769 (November 11, 2022) (SR-ISE-2022-18).
    \39\ For 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).
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    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 [email protected]. Please include 
File Number SR-NYSEARCA-2023-12 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-NYSEARCA-2023-12. 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 such 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-NYSEARCA-2023-12 and

[[Page 10418]]

should be submitted on or before March 10, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\40\
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    \40\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-03334 Filed 2-16-23; 8:45 am]
BILLING CODE 8011-01-P