Notice of Filing of Amendment No.1 to a Proposed Rule Change to Allow for Extended Trading of Multi-Listed Equity Options

Summary

SIFMA provided comments to the U.S. Securities and Exchange Commission (SEC) in response to the amended proposal by Cboe Exchange, Inc. (Cboe) to amend Rule 5.1 to allow for trading of multi-listed equity options that meet certain eligibility criteria during Global Trading Hours (GTH) from 7:30 a.m. ET to 9:25 a.m. ET and during Curb Trading Hours (Curb) from 4:00 p.m. ET to 4:15 p.m. ET or as permitted as a GTH session on another exchange. ¹

Excerpt

SIFMA’s initial comment letter ² acknowledged that the Proposal ³ would only expand trading by a few hours for select equity options but also discussed the potential future state of equity options trading outside of regular hours. We also raised broader questions regarding the impacts of expanding options exchange hours that regulators, including the Commission and exchanges acting in their capacity as self-regulatory organizations (“SROs”), should address more holistically than in the context of individual exchange applications to expand trading hours. In particular, our comment letter urged harmonization in regulatory approaches to expanding trading hours across options exchanges to ensure consistency, avoid creating disjointed options markets, and reduce complexity and potential investor confusion. As such, we continue to request that the Commission undertake a broader market-wide review of the possible benefits and risks of expanding equity options trading outside of regular hours.

Since SIFMA’s first comment letter, a second options exchange has filed to extend its trading hours in certain equity and index options. ⁴ The Nasdaq MRX application proposes eligibility criteria for multi-listed equity options and extended trading session times that mirror the Cboe Proposal (i.e., 7:30 a.m. to 9:25 a.m. and 4:00 p.m. to 4:15 p.m. ET). However, there are some differences between the approaches, including the treatment of the 4:00 to 4:15 p.m. trading session (Cboe is designating this time as a Curb session, while Nasdaq will treat the time as an Extended Close session), the exchanges’ approaches to linking to other available markets (Cboe will enable routing to other markets while Nasdaq will not), and the products available to trade during the new sessions (Cboe’s sessions will not include ETFs, while Nasdaq’s will include them).