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Federal Register / Vol. 86, No. 43 / Monday, March 8, 2021 / Notices those for the current Short Term Option Series for Wednesday and Friday expirations applicable to the Program.4
Specifically, the Monday and Wednesday QQQ Expirations will have a $0.50 strike interval minimum.5 As is the case with other equity options series listed pursuant to the Program, the Monday and Wednesday QQQ
Expiration series will be P.M.-settled.
Pursuant to Options 1, Section 1b53, with respect to the Program, if Monday is not a business day the series shall expire on the first business day immediately following that Monday.
This procedure differs from the expiration date of Wednesday expiration series that are scheduled to expire on a holiday. Pursuant to Options 1, Section 1b53 a Wednesday expiration series shall expire on the first business day immediately prior to that Wednesday, e.g., Tuesday of that week, if the Wednesday is not a business day.
For purposes of QQQ, however, the Exchange believes that it is preferable to require Monday expiration series in this scenario to expire on the Tuesday of that week rather than the previous business day, e.g., the previous Friday, since the Tuesday is closer in time to the scheduled expiration date of the series than the previous Friday, and therefore may be more representative of anticipated market conditions. Monday SPY expirations are treated in this manner today.6 Cboe Exchange, Inc.
Cboe uses the same procedure for options on the S&P 500 index SPX
with Monday expirations that are listed pursuant to its Nonstandard Expirations Pilot Program and that are scheduled to expire on a holiday.7 Also, Nasdaq Phlx LLC Phlx 8 and Nasdaq ISE, LLC
ISE 9 use the same procedure for options on the Nasdaq-100 NDX
with Monday expirations that are listed pursuant to its sic Nonstandard Expirations Pilot Programs, respectively.
Currently, for each option class eligible for participation in the 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 4 See
Commentary .11e to Options 4, Section 5.
Commentary .11e to Options 4, Section 5.
6 See Commentary .11 at Options 4, Section 5.
7 See Cboe Rule 4.13e1 . . . If the Exchange is not open for business on a respective Monday, the normally Monday expiring Weekly Expirations will expire on the following business day. If the Exchange is not open for business on a respective Wednesday or Friday, the normally Wednesday or Friday expiring Weekly Expirations will expire on the previous business day.
8 See Phlx Options 4A, Section 12b5.
9 See ISE Supplementary Material .07 to Options 4A, Section 12.
10 See Commentary .11a to Options 4, Section 5.

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that are open by other securities exchanges under their respective short term option rules; the Exchange may list these additional series that are listed by other exchanges.11 This thirty 30 series restriction would apply to Monday and Wednesday QQQ 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 QQQ
options expiring on Mondays and Wednesdays.
Finally, the Exchange is amending Commentary .11b to Options 4, Section 5, which addresses the listing of Short Term Options Series that expire in the same week as monthly or quarterly options series. Currently, that rule states that no Short Term Option Series may expire in the same week in which monthly option series on the same class expire with the exception of Monday and Wednesday SPY Expirations or, in the case of Quarterly Options Series, on an expiration that coincides with an expiration of Quarterly Option Series on the same class.12 As with Monday and Wednesday SPY Expirations, the Exchange is proposing to permit Monday and Wednesday QQQ
Expirations to expire in the same week as monthly options series on the same class. The Exchange believes that it is reasonable to extend this exemption to Monday and Wednesday QQQ
Expirations because Monday and Wednesday QQQ Expirations and standard monthly options will not expire on the same trading day, as standard monthly options expire on Fridays. Additionally, the Exchange believes that not listing Monday and Wednesday QQQ Expirations for one week every month because there was a monthly QQQ expiration on the Friday of that week would create investor confusion.
The Exchange does not believe that any market disruptions will be encountered with the introduction of P.M.-settled Monday and Wednesday QQQ expirations. The Exchange has the necessary capacity and surveillance programs in place to support and properly monitor trading in the proposed Monday and Wednesday QQQ
Expirations. The Exchange currently trades P.M.-settled Short Term Option Series that expire Monday and Wednesday for SPY 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.
Similar to SPY, the introduction of QQQ Monday and Wednesday 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 Monday and Wednesday QQQ
expirations will allow market participants to purchase QQQ based on their timing as needed and allow them to tailor their investment and hedging needs more effectively.
Implementation The Exchange intends to begin implementation of the proposed rule change in Q2 2021. The Exchange will issue an Options Trader Alert to Participants with the date of implementation.
2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6b of the Act,13 in general, and furthers the objectives of Section 6b5
of the Act,14 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 by providing the investing public and other market participants more flexibility to closely tailor their investment and hedging decisions in QQQ options, thus allowing them to better manage their risk exposure.
In particular, the Exchange believes the Program has been successful to date and that Monday and Wednesday QQQ
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 Program has expanded the landscape of hedging. Similarly, the Exchange believes Monday and Wednesday QQQ Expirations should create greater trading and hedging opportunities and flexibility, and will provide customers with the ability to tailor their investment objectives more effectively. Phlx currently lists Monday and Wednesday SPY Expirations.15
Also, Cboe 16 currently permits Monday and Wednesday expirations for other options with a weekly expiration, such 13 15

11 See
Commentary .11a to Options 4, Section 5.
12 See current Commentary .11b to Options 4, Section 5.

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15 See Commentary .11 at Options 4, Section 5.
16 See note 6 sic above.
14 15

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