[Federal Register Volume 85, Number 223 (Wednesday, November 18, 2020)]
[Notices]
[Pages 73537-73540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25380]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90395; File No. SR-NASDAQ-2020-075]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Make Technical and Conforming Amendments to The Nasdaq Options Market 
Rules at Options 4

November 12, 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 3, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit

[[Page 73538]]

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 The Nasdaq Options Market (``NOM'') 
Rules at Options 4, Section 3, ``Criteria for Underlying Securities,'' 
Options 4, Section 5, ``Series of Options Contracts Open for Trading,'' 
and Options 4, Section 6, which is currently reserved, 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/nasdaq/rules, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to amend Options 4, Section 3, ``Criteria for 
Underlying Securities,'' Options 4, Section 5, ``Series of Options 
Contracts Open for Trading,'' and Options 4, Section 6, which is 
currently reserved, 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(1)(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 Participants in locating this 
rule text.
Options 4, Section 5
Relocate Rule Text
    The Exchange proposes to relocate certain portions of 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.
    The Exchange proposes to relocate Supplementary Material .11 within 
Options 4, Section 5 to new Options 4, Section 5(a)(1).
    The Exchange proposes to relocate Supplementary Material .14 within 
Options 4, Section 5 to new Options 4, Section 5(e).
    The Exchange proposes to relocate Supplementary Material .12 within 
Options 4, Section 5 to new Options 4, Section 5(f).
    The Exchange proposes to relocate Supplementary Material .02 within 
Options 4, Section 5 to new Options 4, Section 6.
    The Exchange proposes to relocate Supplementary Material .07 within 
Options 4, Section 5 to new Options 4, Section 5(h).
    The Exchange proposes to relocate Supplementary Material .08 within 
Options 4, Section 5 to new Options 4, Section 5(i).
    The Exchange proposes to relocate Options 4, Section 5(d)(iv) 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 delete the first sentence of Supplementary 
Material .03(e) within Options 4, Section 5, 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 relocate Supplementary Material .13 within 
Options 4, Section 5 to the end of Supplementary .03(e) of Options 4, 
Section 5.
Other Technical Amendments
    The Exchange proposes to update certain outdated citations to rule 
text within Options 4, Section 5. The Exchange proposes to lowercase 
the term ``customer'' within Options 4, Section 5(c). The Exchange 
proposes to re-number and re-letter certain sections for consistency, 
and remove reserved sections from the rule. The Exchange proposes to 
utilize the defined term ``Commission'' \5\ within Options 4, Section 
5(f). The Exchange proposes to add the words ``Long-Term Options Series 
or'' before the term ``LEAPS'' and add quotation marks in that same 
sentence within current Supplementary Material .01(b)(v) at Options 5, 
Section 5 which is being renumbered as Supplementary Material .01(b)(5) 
at Options 5, Section 5.
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    \5\ The terms ``Commission'' or ``SEC'' mean the Securities and 
Exchange Commission (SEC), established pursuant to the Act. See 
General 1(b)(7).
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Options 4, Section 6
    The Exchange proposes to amend Options 4, Section 6, which is 
currently reserved. Similar to Nasdaq ISE, LLC (``ISE'') and Nasdaq BX, 
Inc., the Exchange proposes to relocate current Supplementary Material 
.02 to Options 4, Section 5 to new Options 4, Section 6 and title the 
section ``Select Provisions of Options Listing Procedures Plan.'' The 
Exchange proposes to update and conform the rule text of current 
Supplementary Material .02 to Options 4, Section 5 to mirror the rule 
text within ISE Options 4, Section 6 as well as BX Options 4, Section 
6. The Exchange proposes to add this sentence. ``A complete copy of the 
current OLPP may be accessed at: http://www.optionsclearing.com/products/options_listing_proceduresplan.pdf '' to the end of proposed 
Options 4, Section 6(a) to provide greater detail. The Exchange also 
proposes to add a clause which provides that, ``The series exercise 
price range limitations contained in subparagraph (a) above do not 
apply with regard to: the listing of Flexible Exchange Options,'' 
similar to ISE and BX. In addition to renumbering this section to 
correspond to ISE's and BX's numbering, the Exchange proposes 
additional rule text which mirrors ISE's and BX's rule text which 
states,

    (iii) The Exchange may designate up to five options classes to 
which the series exercise price range may be up to 100% above and 
below the price of the underlying security (which underlying 
security price shall be determined in accordance with subparagraph 
(i) above). Such designations shall be made on an annual basis and 
shall not be removed during the calendar year unless the options

[[Page 73539]]

class is delisted by the Exchange, in which case the Exchange may 
designate another options class to replace the delisted class. If a 
designated options class is delisted by the Exchange but continues 
to trade on at least one options exchange, the options class shall 
be subject to the limitations on listing new series set forth in 
subparagraph (i) above unless designated by another exchange.
    (iv) If the Exchange that has designated five options classes 
pursuant to subparagraph (iii) above requests that one or more 
additional options classes be excepted from the limitations on 
listing new series set forth in subparagraph (i) above, the 
additional options class(es) shall be so designated upon the 
unanimous consent of all exchanges that trade the options class(es). 
Additionally, pursuant to the Exchange's request, the percentage 
range for the listing of new series may be increased to more than 
100% above and below the price of the underlying security for an 
options class, by the unanimous consent of all exchanges that trade 
the designated options class.
    Exceptions for an additional class or for an increase of the 
exercise price range shall apply to all standard expiration months 
existing at the time of the vote, plus the next standard expiration 
month to be added, and also to any non-standard expirations that 
occur prior to the next standard monthly expiration.

    The Exchange believes that the addition of this rule text will 
harmonize NOM's Rule to ISE's Options 4, Section 6 as well as BX 
Options 4, Section 6 and also memorialize certain aspects of the 
Options Listing Procedures Plan so that market participants will have 
ease of reference in locating language concerning the Options Listing 
Procedures Plan.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\7\ 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 Options 
4, Section 3 to add the more commonly used term ``ETN'' next to 
``Index-Linked Securities'' will allow Participants to search the rule 
text using the term ``ETN''.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    Amending Options 4, Section 5 to relocate rule text within the 
related listing program will make the rule easier to understand. The 
rule text being relocated is not amended by this proposal. The 
remainder of the rule changes within Options 4, Section 5 are non-
substantive and intended to provide clarity to the rule text.
    Relocating current Supplementary Material .02 to Options 4, Section 
5 to new Options 4, Section 6 and titling the section ``Select 
Provisions of Options Listing Procedures Plan'' will harmonize NOM's 
listing rules with those of ISE and BX. Further, the Exchange believes 
that the addition of rule text within Options 4, Section 6, similar to 
ISE Options 4, Section 6 and BX Options 4, Section 6, will provide 
market participants with ease of reference in locating language 
concerning the Options Listing Procedures Plan.
    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 NOM'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 \8\ and Rule 19b-
4(f)(6) thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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 \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ 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.\12\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ 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 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-NASDAQ-2020-075 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-NASDAQ-2020-075. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your

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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-
NASDAQ-2020-075, and should be submitted on or before December 9, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25380 Filed 11-17-20; 8:45 am]
BILLING CODE 8011-01-P


