Notice2022-07340
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 4 of the Pricing Schedule
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 7, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 67 (Thursday, April 7, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 67 (Thursday, April 7, 2022)]
[Notices]
[Pages 20475-20479]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-07340]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94573; File No. SR-Phlx-2022-14]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7,
Section 4 of the Pricing Schedule
April 1, 2022.
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 March 22, 2022, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78a.
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Phlx's Pricing Schedule at Options
7, Section 4, ``Multiply Listed Options Fees (Includes options
overlying equities, ETFs, ETNs and indexes which are Multiply Listed)
(Excludes SPY).''
Additionally, the Exchange proposes to make a technical amendment
and add descriptions of three additional terms within Options 7,
Section 1, General Provisions.
The Exchange originally filed SR-Phlx-2022-08 on March 1, 2022. On
March 10, 2022, the Exchange withdrew SR-Phlx-2022-08 and submitted SR-
Phlx-2022-12. On March 22, 2022, the Exchange withdrew SR-Phlx-2022-12
and submitted this filing.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/phlx/rules">https://listingcenter.nasdaq.com/rulebook/phlx/rules</a>, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
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
Phlx proposes to amend its Pricing Schedule within Options 7,
Section 4, ``Multiply Listed Options Fees (Includes options overlying
equities, ETFs, ETNs and indexes which are Multiply Listed) (Excludes
SPY).'' Specifically, Phlx proposes to decrease the Professional \3\
Floor \4\ Options Transaction Charges \5\ in multiply-listed Penny and
non-Penny Symbols. Additionally, the Exchange proposes amendments to
Options 7, Section 1, General Provisions. Each change is described
below.
---------------------------------------------------------------------------
\3\ The term ``Professional'' applies to transactions for the
accounts of Professionals, as defined in Options 1, Section 1(b)(45)
means any person or entity that (i) is not a broker or dealer in
securities, and (ii) places more than 390 orders in listed options
per day on average during a calendar month for its own beneficial
account(s). See Phlx's Pricing Schedule at Options 7, Section 1(c).
\4\ The term ``floor transaction'' is a transaction that is
effected in open outcry on the Exchange's Trading Floor. See Phlx's
Pricing Schedule at Options 7, Section 1(c).
\5\ Floor transaction fees apply to any ``as of'' or
``reversal'' adjustments for manually processed trades originally
submitted electronically or through FBMS. See Phlx's Pricing
Schedule at Options 7, Section 4, footnote 8.
---------------------------------------------------------------------------
Options 7, Section 4
Today, the Exchange assesses Options Transaction Charges in
Multiply Listed options, including options overlying equities, ETFs,
ETNs and indexes and excluding options in SPY. The Exchange currently
assesses the following Floor Options Transaction Charges in multiply-
listed Penny and non-Penny Symbols: $0.25 per contract for a
Professional, $0.35 per contract for a Floor Lead Market Maker \6\ and
Floor Market Maker,\7\ and $0.25 per contract for a Broker-Dealer \8\
and Firm.\9\ Customers \10\ are not assessed an Options Transaction
Charge in multiply-listed Penny or non-Penny Symbols.
---------------------------------------------------------------------------
\6\ The term ``Floor Lead Market Maker'' is a member who is
registered as an options Lead Market Maker pursuant to Options 2,
Section 12(a) and has a physical presence on the Exchange's trading
floor. See Options 8, Section 2(a)(3).
\7\ A Floor Market Maker is a Market Maker who is neither an SQT
or an RSQT. A Floor Market Maker may provide a quote in open outcry.
See Options 8, Section 2(a)(4).
The term ``Streaming Quote Trader'' or ``SQT'' is defined in
Options 1, Section 1(b)(54) as a Market Maker who has received
permission from the Exchange to generate and submit option
quotations electronically in options to which such SQT is assigned.
See Phlx's Pricing Schedule at Options 7, Section 1(c). The term
``Remote Streaming Quote Trader'' or ``RSQT'' is defined in Options
1, Section 1(b)(49) as a Market Maker that is a member affiliated
with an RSQTO with no physical trading floor presence who has
received permission from the Exchange to generate and submit option
quotations electronically in options to which such RSQT has been
assigned. A Remote Streaming Quote Trader Organization or ``RSQTO,''
which may also be referred to as a Remote Market Making Organization
(``RMO''), is a member organization in good standing that satisfies
the RSQTO readiness requirements in Options 2, Section 1(a). See
Phlx's Pricing Schedule at Options 7, Section 1(c).
\8\ The term ``Broker-Dealer'' applies to any transaction which
is not subject to any of the other transaction fees applicable
within a particular category. See Phlx's Pricing Schedule at Options
7, Section 1(c).
\9\ The term ``Firm'' applies to any transaction that is
identified by a member or member organization for clearing in the
Firm range at OCC. See Phlx's Pricing Schedule at Options 7, Section
1(c).
\10\ The term ``Customer'' applies to any transaction that is
identified by a member or member organization for clearing in the
Customer range at The Options Clearing Corporation (``OCC'') which
is not for the account of a broker or dealer or for the account of a
``Professional'' (as that term is defined in Options 1, Section
1(b)(45)). See Phlx's Pricing Schedule at Options 7, Section 1(c).
---------------------------------------------------------------------------
The Exchange proposes to decrease the Floor Options Transaction
Charges for Professionals in multiply-listed Penny and non-Penny
Symbols from $0.25 to $0.05 per contract. The Exchange believes the
decreased Options Transaction Charges will attract a greater amount of
Professional orders to Phlx's Trading Floor.
Options 7, Section 1
The Exchange proposes to make a technical amendment within Options
7, Section 1, General Provisions. The Exchange proposes to remove the
words ``on and'' from description of ``Market Maker'' within Options 7,
Section 1(c). Those words are not necessary. The amended description of
Market Maker would state, ``The term `Market Maker' is defined in
Options 1, Section 1(b)(28) as a member of the Exchange who is
registered as an options Market Maker pursuant to Options 2, Section
12(a). A Market Maker includes SQTs and RSQTs as well as Floor Market
Makers.''
The Exchange proposes to add three additional descriptions to
Options 7, Section 1(c). Specifically, the Exchange
[[Page 20476]]
proposes to define the terms ``Floor Broker,'' ``Floor Lead Market
Maker,'' and ``Floor Market Maker.'' These terms are currently defined
within Options 8, Section 2(a)(2)-(4). The Exchange proposes to add
these terms to Options 7, Section 1(c) for greater transparency when
referencing the Pricing Schedule.
<bullet> The Exchange proposes to define a ``Floor Broker'' to mean
an individual who is registered with the Exchange for the purpose,
while on the Options Floor, of accepting and handling options orders.
<bullet> The Exchange proposes to define a ``Floor Lead Market
Maker'' to mean a member who is registered as an options Lead Market
Maker pursuant to Options 2, Section 12(a) and has a physical presence
on the Exchange's Trading Floor.
<bullet> The Exchange propose to define a ``Floor Market Maker'' to
mean a Market Maker who is neither an SQT or an RSQT. A Floor Market
Maker may provide a quote in open outcry.
The Exchange believes that these amendments to Options 7, Section 1
will bring greater clarity to the Pricing Schedule.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\11\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \13\
---------------------------------------------------------------------------
\13\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
Likewise, in NetCoalition v. Securities and Exchange Commission
\14\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of
a market-based approach in evaluating the fairness of market data fees
against a challenge claiming that Congress mandated a cost-based
approach.\15\ As the court emphasized, the Commission ``intended in
Regulation NMS that `market forces, rather than regulatory
requirements' play a role in determining the market data . . . to be
made available to investors and at what cost.'' \16\
---------------------------------------------------------------------------
\14\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\15\ See NetCoalition, at 534-535.
\16\ Id. at 537.
---------------------------------------------------------------------------
Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \17\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
---------------------------------------------------------------------------
\17\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------
Options 7, Section 4
The Exchange's proposal to decrease the Floor Options Transaction
Charges for Professionals in multiply-listed Penny and non-Penny
Symbols from $0.25 to $0.05 per contract is reasonable because the
decreased fee should attract a greater amount of Professional orders to
Phlx's Trading Floor. Today, BOX Exchange LLC (``BOX'') assesses a
Professional Customer Fee of $0.10 per contract in Penny and Non-Penny
Symbols for manual transactions.\18\ By decreasing its Professional
Floor Options Transaction Charge, the Exchange believes it will be able
to compete more effectively with BOX for options order flow because of
the lower Professional fee.
---------------------------------------------------------------------------
\18\ In addition to the Professional fee of $0.10 per contract,
BOX assesses the following Penny and Non-Penny Interval Classes
manual transactions fees: $0.25 per contract to Broker Dealers and
$0.35 per contract to Market Makers. BOX does not assess Public
Customers or Broker Dealers facilitating a Public Customer a Penny
and Non-Penny Interval Classes manual transactions fee. See BOX's
Fee Schedule at Section II.
---------------------------------------------------------------------------
The Exchange's proposal to decrease the current Floor Options
Transaction Charges for Professionals in multiply-listed Penny and non-
Penny Symbols from $0.25 to $0.05 per contract is equitable and not
unfairly discriminatory. Today, Customers are not assessed an Options
Transaction Charge in multiply-listed Penny or non-Penny Symbols
because Customer order flow is unique. Customer liquidity benefits all
market participants by providing more trading opportunities, which
attracts Floor Lead Marker Makers and Floor Market Makers. An increase
in the activity of these market participants in turn facilitates
tighter spreads, which may cause an additional corresponding increase
in order flow from other market participants. The Exchange believes
that lowering the Professional Floor Options Transaction Charges is
similarly beneficial as the lower fees may cause market participants to
select Phlx's Trading Floor as a venue to send Professional order flow,
which benefits all market participants by attracting valuable liquidity
to the market and thereby enhancing the trading quality and efficiency
for all market participants.
Today, Floor Lead Market Makers and Floor Market Makers are
assessed the highest Penny and non-Penny Options Transaction Charges.
Customers are not assessed a Penny or non-Penny Options Transaction
Charge. Today, Professionals, Broker-Dealers and Firms pay a Floor
Options Transaction Charge of $0.25 per contract. With this proposal,
Professionals would continue to be assessed a lower Options Transaction
Charges in multiply-listed Penny and non-Penny Symbols as compared to
Floor Lead Market Makers and Floor Market Makers. Floor Lead Market
Makers and Floor Market Makers have a time and place advantage on the
Trading Floor with respect to orders, unlike other market participants.
A Professional, Broker-Dealer or a Firm would necessarily require a
Floor Broker to represent their trading interest on the Trading Floor
as compared to a Floor Lead Market Maker or Floor Market Maker that
could directly transact such orders on the Trading Floor. Further, the
Exchange believes that in order to attract orders from a Professionals,
Broker-Dealers or a Firm, via a Floor Broker, the rates must be
competitive with rates at other trading floors. With respect to Firms,
the Exchange notes that Firms are subject to a Monthly Firm Fee Cap of
$75,000. Firm Floor Option Transaction Charges along with Qualified
Contingent Cross Transaction Fees, in the aggregate, for one billing
month may not exceed the Monthly Firm Fee Cap per member organization
when such members are trading in their own proprietary
[[Page 20477]]
account.\19\ Finally, with respect to Broker-Dealers, today the
Exchange waives the Floor Options Transaction Charge for Broker-Dealers
executing facilitation orders pursuant to Options 8, Section 30 when
such members would otherwise incur this charge for trading in their own
proprietary account contra to a Customer (``BD-Customer
Facilitation''), if the member's BD-Customer Facilitation average daily
volume (including both FLEX and non-FLEX transactions) exceeds 10,000
contracts per day in a given month.\20\ The Exchange notes that both
Firms and Broker-Dealers have the ability to reduce their Options
Transaction Charges as compared to Professionals.
---------------------------------------------------------------------------
\19\ See Options 7, Section 4, which states, ``Firms are subject
to a maximum fee of $75,000 (`Monthly Firm Fee Cap'). Firm Floor
Option Transaction Charges and QCC Transaction Fees, as defined in
this section above, in the aggregate, for one billing month will not
exceed the Monthly Firm Fee Cap per member organization when such
members are trading in their own proprietary account. All dividend,
merger, and short stock interest strategy executions (as defined in
this Options 7, Section 4) will be excluded from the Monthly Firm
Fee Cap. NDX, NDXP, and XND Options Transactions will be excluded
from the Monthly Firm Fee Cap. Reversal and conversion, jelly roll
and box spread strategy executions (as defined in this Options 7,
Section 4) will be included in the Monthly Firm Fee Cap. QCC
Transaction Fees are included in the calculation of the Monthly Firm
Fee Cap. Member organizations must notify the Exchange in writing of
all accounts in which the member is not trading in its own
proprietary account. The Exchange will not make adjustments to
billing invoices where transactions are commingled in accounts which
are not subject to the Monthly Firm Fee Cap.''
\20\ See Options 7, Section 4, which states, ``. . . In
addition, the Broker-Dealer Floor Options Transaction Charge
(including Cabinet Options Transaction Charges) will be waived for
members executing facilitation orders pursuant to Options 8, Section
30 when such members would otherwise incur this charge for trading
in their own proprietary account contra to a Customer (`BD-Customer
Facilitation'), if the member's BD-Customer Facilitation average
daily volume (including both FLEX and non-FLEX transactions) exceeds
10,000 contracts per day in a given month. NDX, NDXP, and XND
Options Transactions will be excluded from each of the waivers set
forth in the above paragraph.''
---------------------------------------------------------------------------
The Exchange believes it is equitable and not unfairly
discriminatory to assess a Professional Floor Options Transaction
Charge that is less favorable than Customers but more favorable than
Firms, and Broker-Dealers and continue to assess a lower fee as
compared to Floor Lead Market Makers, Floor Market Makers.
Professionals have access to more information than Customers and
therefore are being assessed a less favorable Options Transaction
Charge \21\ as compared to Customers. While Professionals may have the
same technological and informational advantages as Broker-Dealers
trading for their own account,\22\ the Exchange believes that lowering
the current Professional Floor Options Transaction Charges to range
between that of a Customer and other non-Customer participants (Floor
Lead Market Makers, Floor Market Makers, Firms, and Broker-Dealers) is
equitable and not unfairly discriminatory because the potential
increased volume would create better trading opportunities that benefit
all market participants.\23\ Specifically, greater volume and liquidity
from increased order flow could create more trading opportunities and
tighter spreads. Finally, assessing lower fees for Professional
Customers compared to Floor Lead Market Makers, Floor Market Makers,
Firms, and Broker-Dealers is not novel as BOX currently assesses lower
fees for Professional Customers as compared to Broker Dealers and
Market Makers.\24\ Additionally, with respect to Qualified Contingent
Cross Fees, Phlx currently assesses Customers and Professional no fee,
while a Lead Market Maker, Market Maker, Firm and Broker-Dealer are
assessed $0.20 per contract.\25\
---------------------------------------------------------------------------
\21\ Customers are not assessed Options Transaction Charges for
multiply-listed options in Penny and non-Penny Symbols.
\22\ A Professional by definition enters 390 orders per day on
average over a calendar month which the Exchange believes exceeds
the number of retail Customer orders in a single day.
\23\ The Exchange notes that BOX assesses the same fees for
Professionals and Broker-Dealers for non-auction transactions within
Section I, A of BOX's Fee Schedule, PIP and COPIP transactions
within Section I, B of BOX's Fee Schedule, Facilitation and
Solicitation transactions within Section I, C of BOX's Fee Schedule,
and Complex Orders within Section III, A of BOX's Fee Schedule. See
BOX's Fee Schedule. BOX has stated in prior rule changes that,
``Professional Customers, while Public Customers by virtue of not
being Broker Dealers, generally engage in trading activity more
similar to Broker Dealer proprietary trading accounts (submitting
more than 390 standard orders per day on average).'' See Securities
Exchange Act Release No. 73547 (November 6, 2014), 79 FR 67520 at
67523 (November 13, 2014) (SR-BOX-2014-25) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the Fee
Schedule on the BOX Market LLC (``BOX'') Options Facility).
Notwithstanding this justification, BOX assesses lower Professional
manual transactions as compared to Broker-Dealers and Market Makers.
\24\ BOX assess a Professional a manual fee of $0.10 per
contract in Penny and Non-Penny Interval Classes, while assessing
$0.25 per contract to Broker Dealers and $0.35 per contract to
Market Makers for manual transactions in Penny and Non-Penny
Interval Classes. See BOX's Fee Schedule at Section II.
\25\ See Options 7, Section 4 which states, ``QCC Transaction
Fees for a Lead Market Maker, Market Maker, Firm and Broker-Dealer
are $0.20 per contract. Customers and Professionals are not assessed
a QCC Transaction Fee. QCC Transaction Fees apply to electronic QCC
Orders, as defined in Options 3, Section 12, and Floor QCC Orders,
as defined in Options 8, Section 30(e).''
---------------------------------------------------------------------------
Options 7, Section 1
The Exchange's proposal to amend the description of ``Market
Maker'' within Options 7, Section 1(c) is consistent with the Act. The
proposed non-substantive amendment removes unnecessary words.
The Exchange's proposal to define the terms ``Floor Broker,''
``Floor Lead Market Maker,'' and ``Floor Market Maker'' within Options
7, Section 1(c) is consistent with the Act. The addition of these
terms, which are currently defined within Options 8, Section 2(a)(2)-
(4), will bring greater transparency to the Pricing Schedule.
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 not necessary or appropriate in
furtherance of the purposes of the Act.
Inter-Market Competition
The proposal does not impose an undue burden on inter-market
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants with
another choice of where to transact options. The Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges that have been exempted from compliance with the statutory
standards applicable to exchanges. Because competitors are free to
modify their own fees in response, and because market participants may
readily adjust their order routing practices, the Exchange believes
that the degree to which fee changes in this market may impose any
burden on competition is extremely limited.
Moreover, the proposal is designed to encourage market participants
to execute a greater amount of Professional orders on Phlx's Trading
Floor. To the extent that the proposed change attracts additional
Professional orders to Phlx's Trading Floor, this increased order flow
would continue to make the Exchange a more competitive venue for order
execution.
Intra-Market Competition
The proposed amendments do not impose an undue burden on intra-
market competition.
The Exchange's proposal to decrease the Floor Options Transaction
Charges for Professionals in multiply-listed Penny and non-Penny
Symbols from
[[Page 20478]]
$0.25 to $0.05 per contract does not create an undue burden on
competition. Today, Customers are not assessed an Options Transaction
Charge in multiply-listed Penny or non-Penny Symbols because Customer
order flow is unique. Customer liquidity benefits all market
participants by providing more trading opportunities, which attracts
Floor Lead Marker Makers and Floor Market Makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. The Exchange believes that
lowering the Professional Floor Options Transaction Charges is
similarly beneficial as the lower fees may cause market participants to
select Phlx's Trading Floor as a venue to send Professional order flow,
which benefits all market participants by attracting valuable liquidity
to the market and thereby enhancing the trading quality and efficiency
for all market participants.
Today, Floor Lead Market Makers and Floor Market Makers are
assessed the highest Penny and non-Penny Options Transaction Charges.
Customers are not assessed a Penny or non-Penny Options Transaction
Charge. Today, Professionals, Broker-Dealers and Firms pay a Floor
Options Transaction Charge of $0.25 per contract. With this proposal,
Professionals would continue to be assessed a lower Options Transaction
Charges in multiply-listed Penny and non-Penny Symbols as compared to
Floor Lead Market Makers and Floor Market Makers. Floor Lead Market
Makers and Floor Market Makers have a time and place advantage on the
Trading Floor with respect to orders, unlike other market participants.
A Professional, Broker-Dealer or a Firm would necessarily require a
Floor Broker to represent their trading interest on the Trading Floor
as compared to a Floor Lead Market Maker or Floor Market Maker that
could directly transact such orders on the Trading Floor. Further, the
Exchange believes that in order to attract orders from a Professionals,
Broker-Dealers or a Firm, via a Floor Broker, the rates must be
competitive with rates at other trading floors. With respect to Firms,
the Exchange notes that Firms are subject to a Monthly Firm Fee Cap of
$75,000. Firm Floor Option Transaction Charges along with Qualified
Contingent Cross Transaction Fees, in the aggregate, for one billing
month may not exceed the Monthly Firm Fee Cap per member organization
when such members are trading in their own proprietary account.\26\
Finally, with respect to Broker-Dealers, today the Exchange waives the
Floor Options Transaction Charge for Broker-Dealers executing
facilitation orders pursuant to Options 8, Section 30 when such members
would otherwise incur this charge for trading in their own proprietary
account contra to a Customer (``BD-Customer Facilitation''), if the
member's BD-Customer Facilitation average daily volume (including both
FLEX and non-FLEX transactions) exceeds 10,000 contracts per day in a
given month.\27\ The Exchange notes that both Firms and Broker-Dealers
have the ability to reduce their Options Transaction Charges as
compared to Professionals.
---------------------------------------------------------------------------
\26\ See note 20 above.
\27\ See note 21 above.
---------------------------------------------------------------------------
Assessing a Professional Floor Options Transaction Charge that is
less favorable than Customers but more favorable than Firms, and
Broker-Dealers and continuing to assess a lower fee as compared to
Floor Lead Market Makers, Floor Market Makers does not impose an undue
burden on competition. Professionals have access to more information
than Customers and therefore are being assessed a less favorable
Options Transaction Charge \28\ as compared to Customers. While
Professionals may have the similar technological and informational
advantages as Broker-Dealers trading for their own account,\29\ the
Exchange believes that lowering the current Professional Floor Options
Transaction Charges to range between that of a Customer and other non-
Customer participants (Floor Lead Market Makers, Floor Market Makers,
Firms, and Broker-Dealers) does not impose an undue burden on
competition because the potential increased volume would create better
trading opportunities that benefit all market participants.\30\
Specifically, greater volume and liquidity from increased order flow
could create more trading opportunities and tighter spreads. Finally,
assessing lower fees for Professional Customers compared to Floor Lead
Market Makers, Floor Market Makers, Firms, and Broker-Dealers is not
novel as BOX currently assesses lower fees for Professional Customers
as compared to Broker Dealers and Market Makers.\31\ Additionally, with
respect to Qualified Contingent Cross Fees, Phlx currently assesses
Customers and Professional no fee, while a Lead Market Maker, Market
Maker, Firm and Broker- Dealer are assessed $0.20 per contract.\32\
---------------------------------------------------------------------------
\28\ See note 22 above.
\29\ See note 23 above.
\30\ See note 24 above.
\31\ See note 25 above.
\32\ See note 26 above.
---------------------------------------------------------------------------
Options 7, Section 1
The Exchange's proposal to amend the description of ``Market
Maker'' within Options 7, Section 1 does not impose an undue burden on
competition. The proposed non-substantive amendment removes unnecessary
words.
The Exchange's proposal to define the terms ``Floor Broker,''
``Floor Lead Market Maker,'' and ``Floor Market Maker'' within Options
7, Section 1(c) does not impose an undue burden on competition. The
addition of these terms, which are currently defined within Options 8,
Section 2(a)(2)-(4), will bring greater transparency to the Pricing
Schedule.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\33\
---------------------------------------------------------------------------
\33\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#0173746d642c626e6c6c646f7572417264622f666e77"><span class="__cf_email__" data-cfemail="c4b6b1a8a1e9a7aba9a9a1aab0b784b7a1a7eaa3abb2">[email protected]</span></a>. Please include
File Number SR-Phlx-2022-14 on the subject line.
[[Page 20479]]
Paper Comments
<bullet> 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-Phlx-2022-14. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-Phlx-2022-14, and should be submitted on
or before April 28, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
---------------------------------------------------------------------------
\34\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-07340 Filed 4-6-22; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on April 7, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.