
[Federal Register Volume 88, Number 243 (Wednesday, December 20, 2023)]
[Notices]
[Pages 88148-88152]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27921]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99180; File No. SR-PEARL-2023-70]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange 
Rule 404, Series of Option Contracts Open for Trading

December 14, 2023.
    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 December 13, 2023, MIAX PEARL, LLC (``MIAX Pearl'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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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 is filing a proposal to amend Exchange Rule 404, 
Series of Option Contracts Open for Trading.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/pearl-options/rule-filings, at MIAX Pearl's principal office, and at the Commission's 
Public Reference Room.

[[Page 88149]]

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 Rule 404, Series of Option Contracts 
Open for Trading.\3\ Specifically, the Exchange proposes to amend 
Interpretations and Policies .02 to expand the Short Term Option Series 
Program to permit the listing of two Wednesday expirations for options 
on United States Oil Fund, LP (``USO''), United States Natural Gas 
Fund, LP (``UNG''), SPDR Gold Shares (``GLD''), iShares Silver Trust 
(``SLV''), and iShares 20+ Year Treasury Bond ETF (``TLT'') 
(collectively ``Exchange Traded Products'' or ``ETPs''). This is a 
competitive filing based on proposals submitted by Nasdaq ISE, LLC 
(``Nasdaq ISE''),\4\ and the Cboe Options Exchange (``Cboe 
Exchange'').\5\
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    \3\ The Exchange notes that its affiliate exchange, MIAX 
Options, has submitted a substantively identical proposal.
    \4\ See Securities Exchange Act Release No. 98905 (November 13, 
2023) (SR-ISE-2023-11) (Order Approving a Proposed Rule Change to 
Amend the Short Term Option Series Program to Permit the Listing of 
Two Wednesday Expirations for Options on Certain Exchange Traded 
Products) (``Nasdaq ISE Approval'').
    \5\ See Securities Exchange Act Release No. 99035 (November 29, 
2023), 88 FR 84367 (December 5, 2023) (SR-Cboe-2023-062).
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    Currently, as set forth in Policy .02 of Rule 404, 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 in which 
monthly options series or Quarterly Options Series expire (``Friday 
Short Term Option Expiration Dates''). The Exchange may have no more 
than a total of five Short Term Option Friday Expiration Dates (``Short 
Term Option Weekly Expirations''). If the Exchange is not open for 
business on the respective Thursday or Friday, the Short Term Option 
Opening Date for Short Term Option Weekly Expirations 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 for Short Term Option Weekly 
Expirations will be the first business day immediately prior to that 
Friday.
    Additionally, the Exchange may open for trading series of options 
on the symbols provided in Table 1 of Policy .02 of Rule 404 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 in which monthly options series or 
Quarterly Options Series expire (``Short Term Option Daily 
Expirations''). For those symbols listed in Table 1, 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.
    At this time, the Exchange proposes to expand the Short Term Option 
Daily Expirations to permit the listing and trading of options on USO, 
UNG, GLD, SLV, and TLT expiring on Wednesdays. The Exchange proposes to 
permit two Short Term Option Expiration Dates beyond the current week 
for each Wednesday expiration at one time.\6\ In order to effectuate 
the proposed changes, the Exchange would add USO, UNG, GLD, SLV, and 
TLT to Table 1 of Policy .02 of Rule 404, which specifies each symbol 
that qualifies as a Short Term Option Daily Expiration.
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    \6\ Consistent with the current operation of the rule, the 
Exchange notes that if it adds a Wednesday expiration on a Tuesday, 
it could technically list three outstanding Wednesday expirations at 
one time. The Exchange will therefore clarify the rule text in 
Policy .02 of Rule 404 to specify that it can list two Short Term 
Option Expiration Dates beyond the current week for each Monday, 
Tuesday, Wednesday, and Thursday expiration.
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    The proposed Wednesday USO, UNG, GLD, SLV, and TLT expirations will 
be similar to the current Wednesday SPY, QQQ, and IWM Short Term Option 
Daily Expirations set forth in Policy .02 of Rule 404, such that the 
Exchange may open for trading on any Tuesday or Wednesday that is a 
business day (beyond the current week) series of options on USO, UNG, 
GLD, SLV, and TLT 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 USO Expirations,'' ``Wednesday UNG Expirations,'' 
``Wednesday GLD Expirations,'' ``Wednesday SLV Expirations,'' and 
``Wednesday TLT Expirations'') (collectively, ``Wednesday ETP 
Expirations'').\7\ In the event Short Term Option Daily Expirations 
expire on a Wednesday and that Wednesday is the same day that a 
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, Wednesday expirations in SPY, QQQ, 
and IWM similarly skip the weekly listing in the event the weekly 
listing expires on the same day in the same class as a Quarterly Option 
Series.
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    \7\ While the relevant rule text in Policy .02 of Rule 404 also 
indicates that the Exchange will not list such expirations on a 
Wednesday that is a business day in which monthly options series 
expire, practically speaking this would not occur.
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    USO, UNG, GLD, SLV, and TLT Friday expirations would continue to 
have a total of five Short Term Option Expiration Dates provided those 
Friday expirations are not Fridays in which monthly options series or 
Quarterly Options Series expire (``Friday Short Term Option Expiration 
Dates'').
    Similar to Wednesday SPY, QQQ, and IWM Short Term Option Daily 
Expirations within Policy .02 of Rule 404, the Exchange proposes that 
it may open for trading on any Tuesday or Wednesday that is a business 
day series of options on USO, UNG, GLD, SLV, and TLT that expire at the 
close of business on each of the next two Wednesdays that are business 
days and are not business days in which Quarterly Options Series 
expire.
    The interval between strike prices for the proposed Wednesday ETP 
Expirations will be the same as those for the current Short Term Option 
Series for Friday expirations applicable to the Short Term Option 
Series Program.\8\ Specifically, the Wednesday ETP Expirations will 
have a strike interval of $0.50 or greater for strike prices below 
$100, $1 or greater for strike prices between $100 and $150, and $2.50 
or greater for strike prices above $150.\9\ As is the case with other 
equity options listed pursuant to the Short Term Option Series Program, 
the Wednesday ETP Expirations series will be P.M.-settled.
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    \8\ See Policy .02(e) of Rule 404.
    \9\ Id.
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    Pursuant to Policy .02 of Rule 404, with respect to the Short Term 
Option Series Program, a Wednesday expiration series shall expire on 
the first business day immediately prior to that

[[Page 88150]]

Wednesday, e.g., Tuesday of that week if the Wednesday 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\ With the proposed changes, this thirty (30) 
series restriction would apply to Wednesday USO, UNG, GLD, SLV, and TLT 
Short Term Option Daily Expirations as well. In addition, the Exchange 
will be able to list series that are listed by other exchanges, 
assuming that they file similar rules with the Commission to list 
Wednesday ETP Expirations.
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    \10\ See Policy .02(c) of Rule 404.
    \11\ Id.
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    With this proposal, Wednesday ETP Expirations would be treated 
similarly to existing 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 on 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 Wednesday SPY, QQQ, and IWM Expirations, the 
Exchange would not permit Wednesday ETP 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 Wednesdays 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 reasonable to not permit two expirations on the same day in which 
a monthly options series or a Quarterly Options Series would expire 
because those options would be duplicative of each other.
    The Exchange does not believe that any market disruptions will be 
encountered with the introduction of Wednesday ETP Expirations. The 
Exchange has the necessary capacity and surveillance programs in place 
to support and properly monitor trading in the proposed Wednesday ETP 
Expirations. The Exchange currently trades P.M.-settled Short Term 
Option Series that expire on 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 Wednesday for 
SPY, QQQ, and IWM.
2. Statutory Basis
    The Exchange believes that its 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.\12\ Specifically, the Exchange believes that its proposed rule 
change is consistent with Section 6(b)(5) \13\ requirements in that it 
is 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.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    Similar to Wednesday expirations in SPY, QQQ, and IWM, the proposal 
to permit Wednesday ETP Expirations, subject to the proposed limitation 
of two expirations beyond the current week, would protect investors and 
the public interest by providing the investing public and other market 
participants more choice and flexibility to closely tailor their 
investment and hedging decisions in these options and allow for a 
reduced premium cost of buying portfolio protection, thus allowing them 
to better manage their risk exposure.
    The Exchange represents that it has an adequate surveillance 
program in place to detect manipulative trading in the proposed option 
expirations, in the same way that it monitors trading in the current 
Short Term Option Series for Wednesday SPY, QQQ and IWM expirations. 
The Exchange also represents that it has the necessary system capacity 
to support the new expirations. Finally, the Exchange does not believe 
that any market disruptions will be encountered with the introduction 
of these option expirations. As discussed above, the Exchange believes 
that its proposal is a modest expansion of weekly expiration dates for 
GLD, SLV, USO, UNG, and TLT given that it will be limited to two 
Wednesday expirations beyond the current week. Lastly, the Exchange 
believes its proposal will not be a strain on liquidity providers 
because of the multi-class nature of GLD, SLV, USO, UNG, and TLT and 
the available hedges in highly correlated instruments, as described 
above.
    The Exchange believes that the proposal is consistent with the Act 
as the proposal would overall add a small number of Wednesday ETP 
Expirations by limiting the addition of two Wednesday expirations 
beyond the current week. The addition of Wednesday ETP Expirations 
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 market quality. The Exchange believes that 
the proposal will allow market participants to expand hedging tools and 
tailor their investment and hedging needs more effectively in USO, UNG, 
GLD, SLV, and TLT as these funds are most likely to be utilized by 
market participants to hedge the underlying asset classes.
    Similar to Wednesday SPY, QQQ, and IWM expirations, the 
introduction of Wednesday ETP Expirations is consistent with the Act as 
it will, among other things, expand hedging tools available to market 
participants and allow for a reduced premium cost of buying portfolio 
protection. The Exchange believes that Wednesday ETP Expirations will 
allow market participants to purchase options on USO, UNG, GLD, SLV, 
and TLT based on their timing as needed and allow them to tailor their 
investment and hedging needs more effectively, thus allowing them to 
better manage their risk exposure. Today, the Exchange lists Wednesday 
SPY, QQQ, and IWM Expirations.\14\
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    \14\ See Policy .02 of Rule 404.
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    The Exchange believes the Short Term Option Series Program has been 
successful to date and that Wednesday ETP 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. There are no material differences in 
the treatment of Wednesday SPY, QQQ, and IWM expirations compared to 
the proposed Wednesday ETP Expirations. Given the similarities between 
Wednesday SPY, QQQ, and IWM expirations and the proposed Wednesday ETP 
Expirations, the Exchange believes that applying the

[[Page 88151]]

provisions in Policy .02 of Rule 404 that currently apply to Wednesday 
SPY, QQQ, and IWM expirations is justified. For example, the Exchange 
believes that allowing Wednesday ETP Expirations and monthly ETP 
expirations in the same week will benefit investors and minimize 
investor confusion by providing Wednesday ETP Expirations in a 
continuous and uniform manner.

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. In this regard and as 
indicated above, the Exchange notes that the rule change is being 
proposed as a competitive response to filings submitted by Nasdaq ISE 
\15\ and the Cboe Exchange.\16\
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    \15\ See supra note 4.
    \16\ See supra note 5.
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    While the proposal will expand the Short Term Options Expirations 
to allow Wednesday ETP Expirations to be listed on the Exchange, the 
Exchange believes that this limited expansion for Wednesday expirations 
for options on USO, UNG, GLD, SLV, and TLT will not impose an undue 
burden on competition; rather, it will meet customer demand. The 
Exchange believes that market participants will continue to be able to 
expand hedging tools and tailor their investment and hedging needs more 
effectively in USO, UNG, GLD, SLV, and TLT given multi-class nature of 
these products and the available hedges in highly correlated 
instruments, as described above. Similar to Wednesday SPY, QQQ, and IWM 
expirations, the introduction of Wednesday ETP Expirations does not 
impose an undue burden on competition. The Exchange believes that it 
will, among other things, expand hedging tools available to market 
participants and allow for a reduced premium cost of buying portfolio 
protection. The Exchange believes that Wednesday ETP Expirations will 
allow market participants to purchase options on USO, UNG, GLD, SLV, 
and TLT 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 inter-market competition, as nothing prevents the other options 
exchanges from proposing similar rules to list and trade Wednesday ETP 
Expirations. Further, the Exchange does not believe the proposal will 
impose any burden on intra-market competition, as all market 
participants will be treated in the same manner under this proposal.

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

    Written comments were neither solicited nor 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 after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \17\ and Rule 19b-
4(f)(6) \18\ thereunder.
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    \17\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, 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 under Rule 19b-4(f)(6) \19\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\20\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. According to the 
Exchange, the proposed rule change is a competitive response to a 
filing submitted by Nasdaq ISE that was recently approved by the 
Commission.\21\ The Exchange has stated that waiver of the 30-day 
operative delay would ensure fair competition among the exchanges by 
allowing the Exchange to permit the listing of two Wednesday 
expirations for options on the ETPs. The Commission believes that 
waiver of the 30-day operative delay is consistent with the protection 
of investors and the public interest because the proposed rule change 
does not raise any new or novel issues. Accordingly, the Commission 
hereby waives the 30-day operative delay and designates the proposed 
rule change as operative upon filing.\22\
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    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 17 CFR 240.19b-4(f)(6)(iii).
    \21\ See supra note 4.
    \22\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-PEARL-2023-70 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-PEARL-2023-70. 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 (https://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

[[Page 88152]]

a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-PEARL-2023-70 and should be 
submitted on or before January 10, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27921 Filed 12-19-23; 8:45 am]
BILLING CODE 8011-01-P


