[Federal Register Volume 87, Number 223 (Monday, November 21, 2022)]
[Notices]
[Pages 70875-70880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25231]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96315; File No. SR-CBOE-2022-059]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Short Term Option Series Program in Rule 4.5(d)

November 15, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 14, 2022, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II below, which Items have been prepared by the Exchange. The 
Exchange filed the proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 
19b-4(f)(6) thereunder.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend the Short Term Option Series Program in Rule 4.5(d). The text 
of the proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, 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 the Short Term Option Series Program 
in Rule 4.5(d). 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.
Curtail Short Term Option Expiration Dates
    Currently, 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 (``Short Term Option Expiration Dates''). 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 first 
business day immediately prior to that Friday.
    Today, 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''). 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. 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 
will be subject to the provisions of Rule 4.5(d).
Proposal
    At this time, the Exchange proposes to curtail the number of Short 
Term Option Expiration Dates from five to two \5\ for SPY, QQQ and IWM 
for Monday and Wednesday Expirations, as well as the proposed Tuesday 
and

[[Page 70876]]

Thursday Expirations in SPY and QQQ (``Short Term Option Daily 
Expirations''). The Exchange proposes to create a new category of Short 
Term Option Expirations Dates called ``Short Term Option Daily 
Expirations,'' which will only permit two Short Term Option Expiration 
Dates for each of Monday, Tuesday, Wednesday, and Thursday expirations 
at one time. The Exchange proposes to include a table, labelled ``Table 
1'', within Rule 4.5(d), which specifies each symbol that qualifies as 
a Short Term Option Daily Expiration. The table would note the number 
of expirations for each symbol as well as expiration days. 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 the 
number of expirations as ``2'' 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. Specifically, the Exchange proposes to state within Rule 
4.5(d):
---------------------------------------------------------------------------

    \5\ The Exchange proposes to list the two front months for Short 
Term Option Daily Expirations.

    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, 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 for each of Monday, Tuesday, 
Wednesday, and Thursday expirations at one time. Short Term Option 
---------------------------------------------------------------------------
Daily Expirations would be subject to this paragraph (d).

    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 (``Friday Short Term Option Expiration 
Dates''). These expirations would be referred to as ``Short Term Option 
Weekly Expirations'' to distinguish them from the proposed expirations 
that would be subject to Short Term Option Daily Expirations. The 
Exchange proposes to add rule text to Rule 4.5(d), which states 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, are collectively ``Short Term Option 
Expiration Dates.'' \6\
---------------------------------------------------------------------------

    \6\ 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.
---------------------------------------------------------------------------

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 ``Tuesday Short Term 
Option Daily Expirations'' and ``Thursday Short Term Option Daily 
Expirations'' each for SPY and QQQ at one time. Tuesday and Thursday 
Short Term Option Daily Expirations would be subject to Rule 4.5(d).
    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 pursuant to Rule 4.5(d) for Monday expiration, if a 
Monday is not a business day, the series will expire on the first 
business day immediately following that Monday.\7\
---------------------------------------------------------------------------

    \7\ See current Rule 4.5(d).
---------------------------------------------------------------------------

    The Exchange proposes changes within Rule 4.5(d), 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, 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 within Rule 4.5(d), the 
Exchange proposes that it may open for trading on any Monday or Tuesday 
that is a business day series of options on the symbols provided in 
Table 1 that expire at the close of business on each of the next two 
Tuesdays 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'').
    Likewise, the Exchange proposes that it may open for trading on any 
Wednesday or Thursday that is a business day series of options on 
symbols provided 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.\8\ Specifically, the Tuesday and Thursday SPY and QQQ 
Short Term Option Daily Expirations will have a $0.50 strike interval 
minimum.\9\ 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.
---------------------------------------------------------------------------

    \8\ See Rule 4.5(d)(5).
    \9\ See id.
---------------------------------------------------------------------------

    Pursuant to proposed Rule 4.5(d), 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

[[Page 70877]]

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.\10\ 
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.\11\ 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.
---------------------------------------------------------------------------

    \10\ See Rule 4.5(d)(1).
    \11\ See id.
---------------------------------------------------------------------------

    Finally, the Exchange is amending Rule 4.5(d)(2) to conform the 
rule text to the usage of the term ``Short Term Option Daily 
Expirations.'' 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. 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. 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.\12\ 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 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.
---------------------------------------------------------------------------

    \12\ While the Exchange proposes to add rule text within Rule 
4.5(d) with respect to Monday Expirations, Tuesday Expirations, and 
Wednesdays 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.
---------------------------------------------------------------------------

    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.\13\ The weekly strikes decreased from 
24% to 19% in these two years. The Exchange notes that during this 
timeframe, all options exchanges mitigated weekly strike intervals.
---------------------------------------------------------------------------

    \13\ Per Nasdaq ISE, LLC (``Nasdaq ISE''), this information was 
sourced from The Options Clearing Corporation (``OCC''). The 
information includes time averaged data for all 16 options markets 
up to August 18, 2022. See Securities Exchange Act Release No. 95841 
(September 20, 2022), 87 FR 58399 (September 26, 2022) (SR-ISE-2022-
18).

                         Number of Strikes--2020
------------------------------------------------------------------------
                                                              Percent of
                         Expiration                              total
                                                                series
------------------------------------------------------------------------
Monthly.....................................................          59
Weekly......................................................          24
LEAP........................................................          16
Quarterly...................................................           1
------------------------------------------------------------------------


                         Number of Strikes--2022
------------------------------------------------------------------------
                                                              Percent of
                         Expiration                              total
                                                                series
------------------------------------------------------------------------
Monthly.....................................................          64
Weekly......................................................          19
LEAP........................................................          17
Quarterly...................................................           0
------------------------------------------------------------------------

    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.\14\ 
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.\15\ 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.
---------------------------------------------------------------------------

    \14\ 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.
    \15\ Market-Makers (including Lead Market-Makers, Designated 
Primary Market-Makers, and Preferred Market-Makers) are required to 
quote a specified time in their assigned options series. See Rules 
5.52, 5.54, 5.55, and 5.56.

[[Page 70878]]



                            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.\16\ 
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.
---------------------------------------------------------------------------

    \16\ 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 Securities 
Exchange Act Release No. 95841 (September 20, 2022), 87 FR 58399 
(September 26, 2022) (SR-ISE-2022-18)
---------------------------------------------------------------------------

Implementation
    The Exchange proposes to implement this rule change on November 14, 
2022. The Exchange will issue an Exchange Notice to notify Trading 
Permit Holders of the implementation date. 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 Short Term Option Series rules within Rule 4.5(d).
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\17\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \18\ 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) \19\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ Id.
---------------------------------------------------------------------------

    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.\20\ 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.
---------------------------------------------------------------------------

    \20\ Market-Makers (including Lead Market-Makers, Designated 
Primary Market-Makers, and Preferred Market-Makers) are required to 
quote a specified time in their assigned options series. See Rules 
5.52, 5.54, 5.55, and 5.56.
---------------------------------------------------------------------------

    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).\21\
---------------------------------------------------------------------------

    \21\ See Rule 4.5(d).
---------------------------------------------------------------------------

    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

[[Page 70879]]

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 Rule 
4.5(d) that currently apply to Wednesday SPY, QQQ and IWM Expirations 
to Tuesday and Thursday SPY and QQQ Short Term Daily Expirations 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 ISE, which the 
Commission recently approved.\22\
---------------------------------------------------------------------------

    \22\ See Securities and Exchange Act Release No. 96281 (November 
9, 2022) (SR-ISE-2022-18).
---------------------------------------------------------------------------

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.\23\ 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 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.
---------------------------------------------------------------------------

    \23\ Market-Makers (including Lead Market-Makers, Designated 
Primary Market-Makers, and Preferred Market-Makers) are required to 
quote a specified time in their assigned options series. See Rules 
5.52, 5.54, 5.55, and 5.56.
---------------------------------------------------------------------------

    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.\24\ Additionally, as noted above, the Commission recently 
approved a substantively identical proposal of another exchange.\25\ 
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.
---------------------------------------------------------------------------

    \24\ See Rule 4.5(d).
    \25\ See Securities and Exchange Act Release No. 96281 (November 
9, 2022) (SR-ISE-2022-18).
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \26\ and Rule 19b-4(f)(6) thereunder.\27\ 
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 \28\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\29\ The Commission notes that it recently 
approved Nasdaq ISE's substantially similar proposal.\30\ 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 competitor 
exchanges. 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.\31\
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \27\ 17 CFR 240.19b-4(f)(6).
    \28\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \29\ 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.
    \30\ See Securities Exchange Act Release No. 96281 (November 9, 
2022) (SR-ISE-2022-18).
    \31\ 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).
---------------------------------------------------------------------------

    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

[[Page 70880]]

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-CBOE-2022-059 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-CBOE-2022-059. 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-CBOE-2022-059 and should be submitted on 
or before December 12, 2022.
---------------------------------------------------------------------------

    \32\ 17 CFR 200.30-3(a)(12), (59).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25231 Filed 11-18-22; 8:45 am]
BILLING CODE 8011-01-P


