Self-Regulatory Organizations; Nasdaq ISE, LLC; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Amend the Short Term Option Series Program To List Qualifying Securities

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-103658; File No. SR-ISE-2025-15]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; Nasdaq ISE, LLC; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Amend the Short Term Option Series Program To List Qualifying Securities</SUBJECT> <DATE>August 7, 2025.</DATE> <HD SOURCE="HD1">I. Introduction</HD> On May 1, 2025, the Nasdaq ISE, LLC (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)  <SU>1</SU> <FTREF/> and Rule 19b-4 thereunder, <SU>2</SU> <FTREF/> a proposed rule change to amend the Exchange's Short Term Option Series Program to permit the listing of up to two Monday and Wednesday expirations for options on certain individual stocks or Exchange-Traded Fund Shares. The proposed rule change was published for comment in the <E T="04">Federal Register</E> on May 21, 2025. <SU>3</SU> <FTREF/> On June 27, 2025, the Commission designated a longer period within which to take action on the proposed rule change. <SU>4</SU> <FTREF/> On July 1, 2025, the Exchange filed Amendment No. 1 to the proposed rule change (“Amendment No. 1”), which replaced and superseded the original filing in its entirety. <SU>5</SU> <FTREF/> Amendment No. 1 was published for comment in the <E T="04">Federal Register</E> on July 15, 2025. <SU>6</SU> <FTREF/> The Commission has received comments on the proposed rule change. <SU>7</SU> <FTREF/> The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act  <SU>8</SU> <FTREF/> to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1. <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  17 CFR 240.19b-4. </FTNT> <FTNT> <SU>3</SU>   <E T="03">See</E> Securities Exchange Act Release No. 103048 (May 15, 2025), 90 FR 21805. </FTNT> <FTNT> <SU>4</SU>   <E T="03">See</E> Securities Exchange Act Release No. 103343, 90 FR 29098 (July 2, 2025). The Commission designated August 19, 2025 as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. <E T="03">See id.</E> </FTNT> <FTNT> <SU>5</SU>  Amendment No. 1 is publicly available on the Commission's website at: <E T="03">https://www.sec.gov/comments/sr-ise-2025-15/srise202515-619387-1817874.pdf.</E> </FTNT> <FTNT> <SU>6</SU>   <E T="03">See</E> Securities Exchange Act Release No. 103434 (July 10, 2025), 90 FR 31716. </FTNT> <FTNT> <SU>7</SU>  Comments on the proposed rule change are available at <E T="03">https://www.sec.gov/comments/sr-ise-2025-15/srise202515.htm.</E> </FTNT> <FTNT> <SU>8</SU>  15 U.S.C. 78s(b)(2)(B). </FTNT> <HD SOURCE="HD1">II. Description of the Proposed Rule Change, as Modified by Amendment No. 1</HD> Currently, the Exchange may open for trading series of options on certain symbols that expire at the close of business on each of the next two Mondays, Tuesdays, Wednesdays, and Thursdays, respectively, that are business days beyond the current week and are not business days in which standard expiration series, Monthly Options Series or Quarterly Options Series expire (“Short Term Option Daily Expirations”). <SU>9</SU> <FTREF/> Table 1 in Supplementary Material .03 to Options 4, Section 5 specifies each symbol that qualifies as a Short Term Option Daily Expiration as well as the permitted expiration days. <SU>10</SU> <FTREF/> <FTNT> <SU>9</SU>   <E T="03">See</E> Supplementary Material .03 to Options 4, Section 5. </FTNT> <FTNT> <SU>10</SU>   <E T="03">See id.</E> As set forth in Table 1 of Supplementary Material .03 to Options 4, Section 5, the Exchange currently permits expirations in SPDR S&P 500 ETF Trust (“SPY”), iShares Russell 2000 ETF (“IWM”), and Invesco QQQ Trust (“QQQ”) on Mondays, Tuesdays, Wednesdays and Thursdays. <E T="03">See</E> Amendment No. 1, <E T="03">supra</E> note 6, 90 FR at 31717, n.9. The Exchange also permits expirations in symbols SPDR Gold Shares (“GLD”), iShares Silver Trust (“SLV”), and iShares 20+ Year Treasury Bond ETF (“TLT”) on Mondays and Wednesdays, as well as expirations in symbols United States Oil Fund, LP (“USO”) and United States Natural Gas Fund, LP (“UNG”) on Wednesdays. <E T="03">See id.</E> </FTNT> The Exchange proposes to expand the Short Term Option Series Program to permit the listing of up to two Monday and Wednesday expirations beyond the current week for options on certain individual stocks or Exchange-Traded Fund Shares  <SU>11</SU> <FTREF/> (collectively “Qualifying Securities”). The Exchange proposes to define Qualifying Securities as eligible individual stocks or Exchange-Traded Fund Shares, which are separate and apart from the symbols listed in Table 1 in Supplementary Material .03 to Options 4, Section 5, that have received approval to list additional expiries on specific symbols, and that meet the following criteria on a quarterly basis: (1) an underlying security, as measured on the last day of the prior calendar quarter, must have: (A) a market capitalization of greater than 700 billion dollars for an individual stock based on the closing price, <SU>12</SU> <FTREF/> or (B) assets under management (“AUM”) greater than 50 billion dollars for an Exchange-Traded Fund Share based on net asset value (“NAV”); (2) monthly options volume, as measured by sides traded in the last month preceding the quarter end, of greater than 10 million options; (3) a position limit of at least 250,000 contracts; and (4) participation in the Penny Interval Program  <SU>13</SU> <FTREF/> (collectively, “Qualifying Securities Criteria”). <SU>14</SU> <FTREF/> <FTNT> <SU>11</SU>   <E T="03">See</E> Options 4, Section 3(h) (defining “Exchange-Traded Fund Shares”). </FTNT> <FTNT> <SU>12</SU>  The Exchange states that the closing price and the opening price shall be that of the primary exchange where the security is listed. <E T="03">See</E> Amendment No. 1, <E T="03">supra</E> note 6, 90 FR at 31717, n.10. </FTNT> <FTNT> <SU>13</SU>   <E T="03">See</E> Supplementary Material .01 to Options 3, Section 3. </FTNT> <FTNT> <SU>14</SU>  The Exchange has noted the additional expiries in a proposed Table 2 in Supplementary Material .03 to Options 4, Section 5, along with the Qualifying Securities Criteria. </FTNT> Each calendar quarter, the Exchange would apply the Qualifying Securities Criteria to individual stocks and Exchange-Traded Fund Shares to determine eligibility for the following quarter as a Qualifying Security. <SU>15</SU> <FTREF/> Beginning on the second trading day in the first month of each calendar quarter, the market capitalization of individual stocks shall be calculated based on the closing price established on the primary exchange on the last trading day of the prior calendar quarter and the AUM for Exchange-Traded Fund Shares shall be calculated based on the NAV established on the primary exchange on the last trading day of the prior calendar quarter. <SU>16</SU> <FTREF/> The data establishing the volume thresholds would be established by using data from the last month of the prior calendar quarter from The Options Clearing Corporation (“OCC”). <SU>17</SU> <FTREF/> For options listed on the first trading day of a given calendar quarter, the volume would be calculated using the last month of the quarter prior to that calendar quarter. <SU>18</SU> <FTREF/> The Exchange would make the list of Qualifying Securities available by close of business on the first trading day of the quarter. <SU>19</SU> <FTREF/> <FTNT> <SU>15</SU>   <E T="03">See</E> proposed Supplementary Material .03 to Options 4, Section 5. The Exchange states that the number of individual stocks currently meeting all four criteria for a Qualifying Security is eight and, as of June 27, 2025, one Exchange-Traded Fund Share currently meets all four criteria for a Qualifying Security that does not already have Monday and Wednesday expirations. <E T="03">See</E> Amendment No. 1, <E T="03">supra</E> note 6, 90 FR at 31729. </FTNT> <FTNT> <SU>16</SU>   <E T="03">See</E> proposed Supplementary Material .03 to Options 4, Section 5. </FTNT> <FTNT> <SU>17</SU>   <E T="03">See id.</E> </FTNT> <FTNT> <SU>18</SU>   <E T="03">Id.</E> The Exchange states that OCC data becomes available for the end of a quarter on the first trading day of a new quarter. <E T="03">See</E> Amendment No. 1, <E T="03">supra</E> note 6, 90 FR at 31718, n.11. </FTNT> <FTNT> <SU>19</SU>   <E T="03">See id.</E> at 31718. The Exchange states that it would make this information freely accessible to the public on ISE's website. <E T="03">See id.</E> at 31718, n.12. </FTNT> For Qualifying Securities, the Exchange would be permitted to list two Short Term Option Daily Expiration Dates beyond the current week for each Monday and Wednesday expiration at one time. The Exchange would not list an expiry on a day when there will be an earnings announcement that takes place after market close. Earnings announcements would include official public quarterly or yearly earnings filed with the Commission (“Earnings Announcement”). <SU>20</SU> <FTREF/> The Exchange states that Qualifying Securities that do not continue to meet the above criteria would no longer be permitted to be listed as Monday and Wednesday expirations beginning on the second day of the following quarter. <SU>21</SU> <FTREF/> <FTNT> <SU>20</SU>   <E T="03">See</E> proposed Supplementary Material .03 to Options 4, Section 5. The Exchange states that pre-announcements or “guidance” shall not be c ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 39k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━