Document ID: SEC-2020-1882-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq ISE, LLC
Posted Date: 2020-11-24T05:00Z

[Federal Register Volume 85, Number 227 (Tuesday, November 24, 2020)]
[Notices]
[Pages 75094-75097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25899]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90450; File No. SR-ISE-2020-38]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Make Technical 
and Conforming Amendments to Options 4, Sections 3 and 5

November 18, 2020.
    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 6, 2020, 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

[[Page 75095]]

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\ 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 Options 4, Section 3, ``Criteria for 
Underlying Securities,'' and Options 4, Section 5, ``Series of Options 
Contracts Open for Trading'' to relocate certain rule text and make 
other minor technical amendments.
    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 4, Section 3, ``Criteria for 
Underlying Securities,'' and Options 4, Section 5, ``Series of Options 
Contracts Open for Trading'' to relocate certain rule text and make 
other minor technical amendments. This rule change is similar to a rule 
change filed by Nasdaq BX, Inc.\3\
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    \3\ See Securities Exchange Act Release No. 90218 (October 19, 
2020), 85 FR 67579 (October 23, 2020) (SR-BX-2020-030) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Make 
Technical Amendments to the Options Listing Rules).
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Options 4, Section 3
    The Exchange proposes to amend Options 4, Section 3(k)(i) to add 
the words ``or ETNs'' after the phrase ``collectively known as ``Index-
Linked Securities'' for additional clarity. The Exchange believes that 
this addition of ``ETNs'' will assist Members in locating this rule 
text.
Options 4, Section 5
    The Exchange proposes to amend and relocate certain portions of 
Options 4, Section 5, as well as the Supplementary Material to Options 
4, Section 5 in order that rule text related to certain strike listing 
programs be placed with related rule text. Proposed relocated rule text 
is not being amended with this proposal, unless otherwise noted.
    The Exchange proposes to relocate Supplementary Material .10 within 
Options 4, Section 5 to new Options 4, Section 5(a)(1).
    The Exchange proposes to amend ISE Options 4, Section 5(b) to 
mirror the exact language of BX Options 4, Section 5(b). The amendments 
to this provision (b) are non-substantive. The introductory clause is 
being removed as the Rule is read as whole. The phrase ``type of 
options of a class of options'' is being simplified to read ``class of 
options.'' The term ``shall'' is being replaced with ``will.'' A number 
``(1)'' is being added next to the term ``one.'' The phrase 
``expiration month and series for each class of options open for 
trading on the Exchange'' is being replaced with ``series of options in 
that class'' for simplicity. The last sentence is being amended to 
replace ``each'' with ``that'' and replace ``which is reasonably 
close'' with ``relative.'' Finally, the phrase ``price per share at 
which the underlying stock is traded in the primary market at about the 
time that class of options is first opened for trading on the 
Exchange'' is being replaced with ``underlying stock price in the 
primary market at about the time that class of options is first opened 
for trading on the Exchange.'' These amendments are non-substantive.
    The Exchange proposes to relocate Options 4, Section 5(f) to the 
end of Options 4, Section 5(c).
    The Exchange proposes to remove the phrase ``this Rule and'' from 
ISE Options 4, Section 5(d) so that it is identical to BX Options 4, 
Section 5(d). The Exchange also proposes to add a ``the'' to that 
sentence. These amendments are non-substantive.
    The Exchange proposes to relocate Options 4, Section 5(h) to the 
end of Options 4, Section 5(d). The Exchange proposes to amend the 
phrase ``Fund Shares'' to ``Exchange-Traded Fund Shares.'' The citation 
to ``Section 5(h)'' is being replaced with ``Section 3(h) of this 
Options 4''. These amendments are non-substantive.
    The Exchange proposes to relocate Supplementary Material .13 within 
Options 4, Section 5 to new Options 4, Section 5(e).
    The Exchange proposes to relocate Supplementary Material .11 within 
Options 4, Section 5 to new Options 4, Section 5(f).
    The Exchange proposes to add a new ISE Options 4, Section 5(g), 
which is identical to BX Options 4, Section 5(g), which provides, ``The 
Exchange will open at least one expiration month for each class of 
options open for trading on the Exchange.'' Today the Exchange opens at 
least one expiration month for each class of options. Adding this rule 
text will make clear the manner in which ISE lists options.
    The Exchange proposes to relocate Supplementary Material .06 within 
Options 4, Section 5 to new Options 4, Section 5(h).
    The Exchange proposes to relocate Supplementary Material .07 within 
Options 4, Section 5 to new Options 4, Section 5(i).
    The Exchange proposes to add a new ISE Options 4, Section 5(j), 
which is identical to BX Options 4, Section 5(j), which provides, ``The 
interval of strike prices may be $2.50 in any multiply-traded option 
class to the extent permitted on the Exchange by the Commission or once 
another exchange trading that option lists strike prices of $2.50 on 
such options class.'' The addition of this rule text will align ISE's 
Rule with BX's Rule and provide context on permissible intervals.
    The Exchange proposes to add a new ISE Options 4, Section 5(k), 
which is identical to BX Options 4, Section 5(k), which provides, ``New 
series of equity options, options on Exchange Traded Funds, and options 
on Trust Issued Receipts opened for trading shall be subject to the 
range limitations set forth in Options 4, Section 6(b).'' The addition 
of this rule text will align ISE's Rule with BX's Rule and provide a 
cross-citation to the appropriate range limitation rule.
    The Exchange proposes to amend Supplementary Material .01(a) to ISE 
Options 4, Section 5 to add the word ``national'' before securities 
exchange to conform ISE's rule text to BX's rule text at Supplementary 
Material .01(a) to Options 4, Section 5.
    The Exchange proposes to amend Supplementary Material .01(b) to ISE 
Options 4, Section 5 to change the word ``stock'' to ``security.'' This 
is a non-substantive amendment which conforms ISE's rule text to BX's 
rule text at Supplementary Material .01(b) to Options 4, Section 5.
    The Exchange proposes to amend current Supplementary Material 
.01(b)(v) to ISE Options 4, Section 5 to add the title ``Long-Term 
Options Series or'' before ``LEAPS'' for greater context.
    The Exchange proposes to amend current Supplementary Material 
.01(d)

[[Page 75096]]

to ISE Options 4, Section 5 to remove the word ``Interval'' in two 
places to conform ISE's rule text to BX's rule text at Supplementary 
Material .01(d) to Options 4, Section 5.
    The Exchange proposes to relocate Supplementary Material .01(e) to 
ISE Options 4, Section 5 to the end of Supplementary Material .01(b) to 
Options 4, Section 5.
    The Exchange proposes to relocate ISE Options 4, Section 5(g) to 
Supplementary Material .02 within Options 4, Section 5 and add a title 
``$2.50 Strike Price Interval Program.'' \4\
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    \4\ The Exchange proposes to relocate current Supplementary 
Material .02 to Options 4, Section 5 to new Options 4, Section 6, as 
described below.
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    The Exchange proposes to relocate Supplementary Material .12 within 
ISE Options 4, Section 5 to the end of renumbered Supplementary .03(e) 
of Options 4, Section 5.
    The Exchange proposes to delete the first sentence of renumbered 
Supplementary Material .03(e) within ISE Options 4, Section 5 of the 
Short Term Options Series Program, which provides ``The interval 
between strike prices on Short Term Option Series shall be the same as 
the strike prices for series in that same option class that expire in 
accordance with the normal monthly expiration cycle.'' The Exchange 
notes that this rule text is not necessary because with the relocation 
of the strike listing rules for Short Term Option Series, which are 
proposed to be relocated from Supplementary Material .13 of Options 4, 
Section 5 to the end of Supplementary .03(e) of Options 4, Section 5, 
the reference becomes unnecessary.
    The Exchange proposes to remove Supplementary Material .04 to ISE 
Options 5, Section 4 as this cross reference to the Mini-Nasdaq-100 
Index (``MNX'' or ``Mini-NDX'') is not necessary as this index is 
discussed within Options 4A, Section 12(c)(5). This amendment is non-
substantive.
Other Technical Amendments
    The Exchange proposes to update certain outdated citations to rule 
text within ISE Options 4, Section 5. The Exchange proposes to re-
number and re-letter certain sections for consistency, and remove 
reserved sections from the rule.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\6\ 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. 
The Exchange's proposal to make a non-substantive amendment to ISE 
Options 4, Section 3(k)(i) to add the more commonly used term ``ETN'' 
next to ``Index-Linked Securities'' will allow Members to search the 
rule text using the term ``ETN''.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    Amending ISE Options 4, Section 5 to relocate rule text within the 
related listing program will make the rule easier to understand. 
Conforming the rule text of ISE within Options 4, Section 5 to the rule 
text of BX within Options 4, Section 5 will harmonize the listing rules 
of these Nasdaq affiliated markets. The proposed amendments to conform 
ISE's rule text to BX rule text are non-substantive. The technical rule 
changes within ISE Options 4, Section 5, to re-number and re-letter 
sections of the rule are non-substantive and intended to provide 
clarity to the rule text.
    The Exchange's proposal to add a new ISE Options 4, Section 5(g), 
which is identical to BX Options 4, Section 5(g), will add greater 
clarity to ISE's rule. This rule makes clear that at least one 
expiration month for each class of options will be opened. Today the 
Exchange opens at least one expiration month for each class of options. 
Adding this rule text will make clear the manner in which ISE lists 
options.
    The Exchange's proposal to add a new ISE Options 4, Section 5(j), 
which is identical to BX Options 4, Section 5(j) will align ISE's Rule 
with BX's Rule and provide context on permissible intervals. 
Additionally, the proposal to add a new ISE Options 4, Section 5(k), 
which is identical to BX Options 4, Section 5(k), will align ISE's Rule 
with BX's Rule and provide a cross-citation to the appropriate range 
limitation rule.
    The proposal to remove Supplementary Material .04 to ISE Options 5, 
Section 4 as this cross reference to the Mini-Nasdaq-100 Index (``MNX'' 
or ``Mini-NDX'') is not necessary as this product is discussed within 
Options 4A, Section 12(c)(5). This amendment is non-substantive.
    The Exchange believes that the proposed amendments are consistent 
with the Act and the protection of investors and the general public 
because the amendments bring greater clarity to ISE's listing rules.

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 proposed rule changes 
are non-substantive and are intended to provide greater clarity.

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

    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 \7\ and Rule 19b-
4(f)(6) thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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 \9\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \10\ 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. As 
the proposed rule change raises no novel issues and promotes clarity 
and consistency within the Exchange's options listing rules, the 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the operative delay and 
designates the proposed rule change operative upon filing.\11\
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    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6)(iii).
    \11\ For 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).
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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

[[Page 75097]]

it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-ISE-2020-38 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-2020-38. 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-2020-38, and should be submitted on 
or before December 15, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25899 Filed 11-23-20; 8:45 am]
BILLING CODE 8011-01-P