Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange proposed to amend ISE Rules 504 (Series of Options Contracts Open for Trading) and 2009 (Terms of Index Options Contracts) to indicate that, during the expiration week, the strike price intervals for the Related non-STOS Option shall be the same as the strike price interval for the STOS Option. The Exchange also proposed to adopt a rule that would permit ISE to list Short Term Option Series at $0.50 strike price intervals for Eligible Option Classes.
In the Notice, the Exchange stated that the principal reason for the proposed expansion is in response to market and customer demand to list actively traded products in more granular strike price intervals and to provide Exchange members and their customers increased trading opportunities in the STOS Program.
The Exchange stated that it has analyzed its capacity, and represented that it and the Options Price Reporting Authority ("OPRA") have the necessary systems capacity to handle the potential additional traffic associated with trading the Eligible Option Classes in narrower strike price intervals.
After careful review of the proposed rule change and the CBOE Letter, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.
In approving this proposal, the Commission notes that the Exchange has represented that it and OPRA have the necessary systems capacity to handle the potential additional traffic associated with trading the expanded number of strike price intervals available to the Eligible Option Classes and Related non-STO Options. The Commission expects the Exchange to monitor the trading volume associated with the additional options series listed as a result of this proposal and the effect of these additional series on market fragmentation and on the capacity of the Exchange's, OPRA's, and vendors' automated systems.