Notice2024-29922
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Lower the Options Regulatory Fee (ORF) and Adopt a New Approach to ORF in 2025
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
December 18, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 243 (Wednesday, December 18, 2024)</title>
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[Federal Register Volume 89, Number 243 (Wednesday, December 18, 2024)]
[Notices]
[Pages 103003-103012]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-29922]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101893; File No. SR-Phlx-2024-66]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Lower the
Options Regulatory Fee (ORF) and Adopt a New Approach to ORF in 2025
December 12, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 27, 2024, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change as described in Items I and II 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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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 6D, Options Regulatory Fee.\3\
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\3\ On October 31, 2024, SR-Phlx-2024-50 was filed to amend ORF.
On November 27, 2024, SR-SR-Phlx-2024-50 was withdrawn and this rule
change was filed. The current proposal amends the ORF Rate for Local
Customer ``C'' Origin Code transactions executed on Phlx, Local Firm
``F'' Origin Code transactions executed on Phlx, and Away ORF Rate
Firm ``F'' Origin Code multi-list transactions executed on non-Phlx
exchanges.
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While the changes proposed herein are effective upon filing, the
Exchange has designated certain amendments to be operative on November
1, 2024, and other amendments to be operative on January 1, 2025, as
noted in the Exhibit 5 and herein.
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 current ORF in several respects. In
summary, first, Phlx proposes to reduce its ORF from $0.0034 to $0.0022
per contract side from November 1, 2024, through December 31, 2024.
Second, as of January 1, 2025, Phlx proposes to amend its methodology
of collection to: (1) specify that it is including options transactions
in Phlx proprietary products; and (2) assess ORF in all clearing ranges
except market makers who clear as ``M'' at The Options Clearing
Corporation (``OCC''). Additionally, Phlx will assess a different rate
for trades executed on Phlx (``Local ORF Rate'') and trades executed on
non-Phlx exchanges (``Away ORF Rate''). Each change will be described
below in greater detail.
Background on Current ORF
Today, Phlx assesses its ORF for each Customer \4\ option
transaction that is either: (1) executed by a member organization \5\
on Phlx; or (2) cleared by a Phlx member organization at OCC in the
Customer range,\6\ even if the transaction was executed by a non-member
organization of Phlx, regardless of the exchange on which the
transaction occurs.\7\ If the OCC clearing member is a Phlx member
organization, ORF is assessed and collected on all ultimately cleared
Customer contracts (after adjustment for CMTA \8\); and (2) if the OCC
clearing member is not a Phlx member organization, ORF is collected
only on the cleared Customer contracts executed at Phlx, taking into
account any CMTA instructions which may result in collecting the ORF
from a non-member organization.\9\
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\4\ Today, ORF is collected from Customers, Professionals and
broker-dealers that are not affiliated with a clearing member that
clear in the ``C'' range at OCC. See supra notes 18 and 19 for
descriptions of Customers and Professionals.
\5\ The term ``member organization'' means a corporation,
partnership (general or limited), limited liability partnership,
limited liability company, business trust or similar organization,
transacting business as a broker or a dealer in securities and which
has the status of a member organization by virtue of (i) admission
to membership given to it by the Membership Department pursuant to
the provisions of General 3, Sections 5 and 10 or the By-Laws or
(ii) the transitional rules adopted by the Exchange pursuant to
Section 6-4 of the By-Laws. References herein to officer or partner,
when used in the context of a member organization, shall include any
person holding a similar position in any organization other than a
corporation or partnership that has the status of a member
organization. See General 1, Section 1(17).
\6\ Market participants must record the appropriate account
origin code on all orders at the time of entry of the order. The
Exchange represents that it has surveillances in place to verify
that member organizations mark orders with the correct account
origin code.
\7\ The Exchange uses reports from OCC when assessing and
collecting the ORF.
\8\ CMTA or Clearing Member Trade Assignment is a form of
``give-up'' whereby the position will be assigned to a specific
clearing firm at OCC.
\9\ By way of example, if Broker A, a Phlx member organization,
routes a Customer order to CBOE and the transaction executes on CBOE
and clears in Broker A's OCC Clearing account, ORF will be collected
by Phlx from Broker A's clearing account at OCC via direct debit.
While this transaction was executed on a market other than Phlx, it
was cleared by a Phlx member organization in the member
organization's OCC clearing account in the Customer range, therefore
there is a regulatory nexus between Phlx and the transaction. If
Broker A was not a Phlx member organization, then no ORF should be
assessed and collected because there is no nexus; the transaction
did not execute on Phlx nor was it cleared by a Phlx member
organization.
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Today, in the case where a member organization both executes a
transaction and clears the transaction, the ORF will
[[Page 103004]]
be assessed to and collected from that member organization. Today, in
the case where a member organization executes a transaction and a
different member organization clears the transaction, the ORF will be
assessed to and collected from the member organization who clears the
transaction and not the member organization who executes the
transaction. Today, in the case where a non-member organization
executes a transaction at an away market and a member organization
clears the transaction, the ORF will be assessed to and collected from
the member organization who clears the transaction. Today, in the case
where a member organization executes a transaction on Phlx and a non-
member organization clears the transaction, the ORF will be assessed to
the member organization that executed the transaction on Phlx and
collected from the non-member organization who cleared the transaction.
Today, in the case where a member organization executes a transaction
at an away market and a non-member organization ultimately clears the
transaction, the ORF will not be assessed to the member organization
who executed the transaction or collected from the non-member
organization who cleared the transaction because the Exchange does not
have access to the data to make absolutely certain that ORF should
apply. Further, the data does not allow the Exchange to identify the
member organization executing the trade at an away market.
ORF Revenue and Monitoring of ORF
Today, the Exchange monitors the amount of revenue collected from
the ORF (``ORF Regulatory Revenue'') to ensure that it, in combination
with other regulatory fees and fines, does not exceed Options
Regulatory Costs.\10\ In determining whether an expense is considered
an Options Regulatory Cost, the Exchange reviews all costs and makes
determinations if there is a nexus between the expense and a regulatory
function. The Exchange notes that fines collected by the Exchange in
connection with a disciplinary matter offset Options Regulatory Cost.
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\10\ The regulatory costs for options comprise a subset of the
Exchange's regulatory budget that is specifically related to options
regulatory expenses and encompasses the cost to regulate all member
organizations' options activity (``Options Regulatory Cost'').
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ORF Regulatory Revenue, when combined with all of the Exchange's
other regulatory fees and fines, is designed to recover a material
portion of the Options Regulatory Costs to the Exchange of the
supervision and regulation of member Customer options business
including performing routine surveillances, investigations,
examinations, financial monitoring, and policy, rulemaking,
interpretive, and enforcement activities. Options Regulatory Costs
include direct regulatory expenses and certain indirect expenses in
support of the regulatory function. The direct expenses include in-
house and third-party service provider costs to support the day-to-day
regulatory work such as surveillances, investigations and examinations.
The indirect expenses are only those expenses that are in support of
the regulatory functions, such areas include Office of the General
Counsel, technology, finance, and internal audit. Indirect expenses
will not exceed 35% of the total Options Regulatory Costs. Thus, direct
expenses would be 65% of total Options Regulatory Costs for 2024.\11\
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\11\ Direct and indirect expenses are based on the Exchange's
2024 Regulatory Budget.
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The ORF is designed to recover a material portion of the Options
Regulatory Costs to the Exchange of the supervision and regulation of
its member organizations, including performing routine surveillances,
investigations, examinations, financial monitoring, and policy,
rulemaking, interpretive, and enforcement activities.
Proposal for November 1, 2024, Through December 31, 2024
Based on Phlx's most recent review of its ORF Regulatory Revenues
as compared to its ORF Regulatory Costs in light of recent fines, Phlx
proposes to reduce the amount of ORF that will be collected by the
Exchange from $0.0034 to $0.0022 per contract side from November 1,
2024, through December 31, 2024. The Exchange issued an Options Trader
Alert on September 16, 2024, that specified the proposed rate change
for November 1, 2024.\12\
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\12\ See <a href="https://www.nasdaqtrader.com/MicroNews.aspx?id=OTA2024-53">https://www.nasdaqtrader.com/MicroNews.aspx?id=OTA2024-53</a>. The Exchange plans on issuing a second Options Trader Alert
announcing changes for January 1, 2025.
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Phlx notes that there can be no assurance that the Options
Regulatory Costs for the remainder of 2024 will not differ materially
from these expectations and prior practice, nor can the Exchange
predict with certainty whether options volume will remain at the
current level going forward. The Exchange notes however, that when
combined with regulatory fees and fines, the Options Regulatory Revenue
that may be generated utilizing an ORF rate of $0.0034 per contract
side may result in Options Regulatory Revenue which exceeds the
Exchange's estimated Options Regulatory Costs for 2024 as a result of
fines. The Exchange therefore proposes to reduce its ORF to $0.0022 per
contract side to ensure that Options Regulatory Revenue does not exceed
the Exchange's estimated Options Regulatory Costs in 2024.
Particularly, the Exchange believes that reducing the ORF when combined
with all of the Exchange's other regulatory fees and fines, would allow
the Exchange to continue covering a material portion of its Options
Regulatory Costs, while lessening the potential for generating excess
revenue that may otherwise occur using the rate of $0.0034 per contract
side.\13\
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\13\ The Exchange notes that its regulatory responsibilities
with respect to member and member organization compliance with
options sales practice rules have largely been allocated to FINRA
under a 17d-2 agreement. The ORF is not designed to cover the cost
of that options sales practice regulation.
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The Exchange will continue to monitor the amount of Options
Regulatory Revenue collected from the ORF to ensure that Options
Regulatory Revenue, in combination with its other regulatory fees and
fines, does not exceed Options Regulatory Costs. If the Exchange
determines Options Regulatory Revenue exceed Options Regulatory Costs,
the Exchange will adjust the ORF by submitting a fee change filing to
the Commission and notifying \14\ its members and member organizations
via an Options Trader Alert.\15\
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\14\ The Exchange will provide members and member organizations
with such notice at least 30 calendar days prior to the effective
date of the change.
\15\ The Exchange notes that in connection with this proposal,
it provided the Commission confidential details regarding the
Exchange's projected regulatory revenue, including projected revenue
from ORF, along with a projected regulatory expense.
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Proposal for January 1, 2025
Phlx has been reviewing it methodologies for the assessment and
collection of ORF. As a result of this review, Phlx proposes to revamp
the current process of assessing and collecting ORF in various
ways.\16\ Below Phlx will explain the modelling it performed and the
outcomes of the modelling which have led the Exchange to propose the
below changes.
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\16\ The Exchange proposes to delete language in the Pricing
Schedule at Options 7, Section 6D that will be obsolete as of
November 1, 2024.
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Effective January 1, 2025, Phlx proposes to assess ORF to each Phlx
member organization for multi-listed options transactions and options
transactions in Phlx proprietary
[[Page 103005]]
products,\17\ cleared by OCC in all clearing ranges except market
makers who clear as ``M'' at OCC (``Market Makers'') \18\ where: (1)
the execution occurs on Phlx or (2) the execution occurs on another
exchange and is cleared by a Phlx member organization. With this
change, Phlx proposes to amend its current ORF to assess ORF on
Customer,\19\ Professional,\20\ Firm \21\ and Broker-Dealer \22\
transactions. All market participants, except Market Makers, would be
subject to ORF.
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\17\ Proprietary products are products with intellectual
property rights that are not multi-listed. Phlx lists several
proprietary products.
\18\ Capacity ``M'' covers Market Makers registered on Phlx and
market makers registered at non-Phlx exchanges.
\19\ 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 Options 7, Section 1(c).
\20\ 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 Options 7, Section 1(c).
\21\ 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 Options 7, Section 1(c).
\22\ 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 Options 7, Section 1(c). A Broker-
Dealer clears in the ``F'' range at OCC.
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The ORF would be collected by OCC on behalf of Phlx from (1) Phlx
clearing members for all Customer, Professional, Firm and Broker-Dealer
transactions they clear or (2) non-members for all Customer,
Professional, Firm and Broker-Dealer transactions they clear that were
executed on Phlx. This model collects ORF where there is a nexus with
Phlx and does not collect ORF from a non-member organization where the
transaction takes place away from the Exchange.
Further, effective January 1, 2025, the Exchange proposes to
establish a different ORF for trades executed on Phlx (``Local ORF
Rate'') and trades executed on non-Phlx exchanges (``Away ORF Rate'')
by market participants. For Customer, Professional, and broker-dealer
(not affiliated with a clearing member) transactions that clear in the
``C'' range at OCC (collectively ``Customers'') the Exchange proposes
to assess a Local ORF Rate of $0.0190 per contract and an Away ORF Rate
of $0.00 per contract. For Firm and Broker-Dealer transactions that
clear in the ``F'' range at OCC (collectively ``Firm and Broker-Dealer
Transactions'') the Exchange proposes to assess a Local ORF Rate of
$0.00022 per contract and an Away ORF Rate of $0.00022 per contract.
The combined amount of Local ORF and Away ORF collected may not exceed
88% of Options Regulatory Cost. Phlx will ensure that ORF Regulatory
Revenue does not exceed Options Regulatory Cost. As is the case today,
the Exchange will notify member organizations via an Options Trader
Alert of these changes at least 30 calendar days prior to January 1,
2025.
The Exchange utilized historical and current data from its
affiliated options exchanges to create a new regression model that
would tie expenses attributable to regulation to a respective
source.\23\ To that end, the Exchange plotted Customer volumes from
each exchange \24\ against Options Regulatory Cost from each exchange
for the Time Period. Specifically, the Exchange utilized standard
charting functionality to create a linear regression. The charting
functionality yields a ``slope'' of the line, representing the marginal
cost of regulation, as well as an ``intercept,'' representing the fixed
cost of regulation.\25\ The Exchange considered using non-linear
models, but concluded that the best R[supcaret]2 (``R-Squared'') \26\
results came from a standard y = Mx + B format for regulatory expense.
The R-Squared for the below charting method ranged from 85% to 95%
historically. As noted, the plots below represent the Time Period. The
X-axis reflects Customer volumes by exchange, by quarter and the Y-axis
reflects regulatory expense by exchange.
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\23\ This new model seeks to provide a new approach to
attributing Options Regulatory Cost to Options Regulatory Expense.
In creating this model, the exchange did not rely on data from a
single SRO as it had in the past.
\24\ The Exchange utilized data from all Nasdaq affiliated
options exchanges to create this model from 2023 Q3 through 2024 Q2
(``Time Period'').
\25\ The Exchange utilized data from 2023 Q1 to 2024 Q3 to
calculate the slope and intercept.
\26\ R-Squared is a statistical measure that indicates how much
of the variation of a dependent variable is explained by an
independent variable in a regression model. The formula for
calculating R-squared is: R2 = 1-Unexplained Variation/Total
Variation.
[GRAPHIC] [TIFF OMITTED] TN18DE24.067
The results of this modelling indicated a high correlation and
intercept for the baseline cost of regulating the options market as a
whole. Specifically, the regression model indicated that (1) the
marginal
[[Page 103006]]
cost of regulation is easily measurable, and significantly attributable
to Customer activity; and (2) the fixed cost of setting up a regulatory
regime should arguably be dispersed across the industry so that all
options exchanges have substantially similar revenue streams to satisfy
the ``intercept'' element of cost. When seeking to offset the ``set-
up'' cost of regulation, the Exchange attempted several levels of
attribution. The most successful attribution was related to industry
wide Firm and Broker-Dealer Transaction volume. Of note, through
analysis of the results of this regression model, there was no positive
correlation that could be established between Customer away volume and
regulatory expense. This led the Exchange to utilize a model with a
two-factor regression on a quarterly basis for the last four quarters
of volumes relative to the pool of expense data for the six Nasdaq
affiliated options exchanges. Once again, standard spreadsheet
functionality (including the Data Analysis Packet) was used to
determine the mathematics for this model. The results of this two-
factor model, which resulted in the attribution of Customer Local ORF
and Firm and Broker-Dealer Transaction Local and Away ORF, typically
increased the R-Squared (goodness of fit) to >97% across multiple
historical periods.\27\
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\27\ The Exchange notes that various exchanges negotiate their
respective contracts independently with FINRA creating some
variability. Additionally, an exchange with a floor component would
create some variability.
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Utilizing the new regression model, and assumptions in the
proposal, the model demonstrates that Customer volumes are directly
attributable to marginal cost, and also shows that Firm and Broker-
Dealer Transaction volumes industry-wide are a valid method (given the
goodness of fit) to offset the fixed cost of regulation. Applying the
regression coefficient values historically, the Exchange established a
``normalization'' by per options exchange. This ``normalization''
encompassed idiosyncratic exchange expense-volume relationships which
served to tighten the attributions further while not deviating by more
than 30% from the mean for any single options exchange in the model.
The primary driver of this need for ``normalization'' are negotiated
regulatory contracts that were negotiated at different points in time,
yielding some differences in per contract regulatory costs by exchange.
Normalization is therefore the average of a given exchange's historical
(prior 4 quarters) ratio of regulatory expense to revenue when using
the regressed values (for Customer Local ORF and Firm and Broker-Dealer
Transaction Local and Away ORF) that yields an effective rate by
exchange. The ``normalization'' was then multiplied to a ``targeted
collection rate'' of approximately 88% to arrive at ORF rates for
Customer, Firm and Broker-Dealer Transactions. Of note, when comparing
the ORF rates generated from this method, historically, there appears
to be a very tight relationship between the estimated modeled
collection and actual expense and the regulatory expenses for that same
period. In summary, the model does not appear to increase marginal
returns.
One other important aspect of this modeling is the input of Options
Regulatory Costs. The Exchange notes that in defining Options
Regulatory Costs it accounts for the nexus between the expense and
options regulation. By way of example, the Exchange excludes certain
indirect expenses such as payroll expenses, accounts receivable,
accounts payable, marketing, executive level expenses and corporate
systems.
The Exchange would continue to monitor the amount of Options
Regulatory Revenue collected from the ORF to ensure that it, in
combination with other regulatory fees and fines, does not exceed
Options Regulatory Costs. In determining whether an expense is
considered an Options Regulatory Cost, the Exchange would continue to
review all costs and makes determinations if there is a nexus between
the expense and a regulatory function. The Exchange notes that fines
collected by the Exchange in connection with a disciplinary matter will
continue to offset Options Regulatory Cost. Members will continue to be
provided with 30 calendar day notice of any change to ORF.
As is the case today, ORF Regulatory Revenue, when combined with
all of the Exchange's other regulatory fees and fines, is designed to
recover a material portion of the Options Regulatory Costs to the
Exchange for the supervision and regulation of member organizations'
transactions, including performing routine surveillances,
investigations, examinations, financial monitoring, and policy,
rulemaking, interpretive, and enforcement activities. As discussed
above, Options Regulatory Costs include direct regulatory expenses \28\
and certain indirect expenses in support of the regulatory
function.\29\
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\28\ The direct expenses include in-house and third-party
service provider costs to support the day-to-day regulatory work
such as surveillances, investigations and examinations.
\29\ The indirect expenses include support from such areas as
Office of the General Counsel, technology, finance and internal
audit.
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Finally, the Exchange notes that this proposal will be sunset on
July 1, 2025, at which point the Exchange would revert back to the ORF
methodology and rate ($0.0034 per contract side) that was in effect
prior to this rule change.\30\
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\30\ The Exchange proposes to reconsider the sunset date in 2025
and determine whether to proceed with the proposed ORF structure at
that time.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\31\ Specifically, the
Exchange believes the proposed rule change is consistent with Section
6(b)(4) of the Act,\32\ which provides that Exchange rules may provide
for the equitable allocation of reasonable dues, fees, and other
charges among its members, and other persons using its facilities.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \33\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\31\ 15 U.S.C. 78f(b).
\32\ 15 U.S.C. 78f(b)(4).
\33\ 15 U.S.C. 78f(b)(5).
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Proposal for November 1, 2024, Through December 31, 2024
The Exchange believes the proposed reduction of ORF is reasonable
because it would help ensure that ORF Regulatory Revenue does not
exceed a material portion of the Exchange's ORF Regulatory Costs. As
noted above, the ORF is designed to recover a material portion, but not
all, of the Exchange's ORF Regulatory Costs. Further, the Exchange
believes the proposed fee change is reasonable because Customer
transactions will be subject to a lower ORF than the rate that would
otherwise be in effect on November 1, 2024.
The Exchange had designed the ORF to generate ORF Regulatory
Revenue that would be less than the amount of the Exchange's ORF
Regulatory Costs to ensure that it, in combination with its other
regulatory fees and fines, does not exceed ORF Regulatory Costs, which
is consistent with the view of the Commission that regulatory fees be
used for regulatory purposes and not to support the Exchange's business
[[Page 103007]]
operations. As discussed above, however, after review of its ORF
Regulatory Costs and ORF Regulatory Revenue which includes revenues
from ORF and other regulatory fees and fines, the Exchange determined
that absent a reduction in ORF, it may collect ORF Regulatory Revenue
which would exceed its ORF Regulatory Costs. Indeed, the Exchange notes
that when taking into account the potential that recent options volume
persists, it estimates the ORF may generate ORF Regulatory Revenue that
would cover more than the approximated Exchange's projected ORF
Regulatory Costs due to fines. As such, the Exchange believes it's
reasonable and appropriate to reduce the ORF amount from $0.0034 to
$0.0022 per contract side.
The Exchange also believes the proposed fee change is equitable and
not unfairly discriminatory in that it is charged to all member
organizations on all their transactions that clear in the Customer
range at OCC.\34\ The Exchange believes the ORF ensures fairness by
assessing higher fees to those member organizations that require more
Exchange regulatory services based on the amount of Customer options
business they conduct. Regulating Customer trading activity is much
more labor intensive and requires greater expenditure of human and
technical resources than regulating non-Customer trading activity,
which tends to be more automated and less labor-intensive. For example,
there are costs associated with main office and branch office
examinations (e.g., staff expenses), as well as investigations into
Customer complaints and the terminations of registered persons. As a
result, the costs associated with administering the Customer component
of the Exchange's overall regulatory program are materially higher than
the costs associated with administering the non-Customer component of
its regulatory program. Moreover, the Exchange notes that it has broad
regulatory responsibilities with respect to activities of its members
and member organizations, a small portion of which takes place on away
exchanges. Indeed, the Exchange cannot effectively review for such
conduct without looking at and evaluating activity regardless of where
it transpires. In addition to its own surveillance programs, the
Exchange also works with other SROs and exchanges on intermarket
surveillance related issues. Through its participation in the
Intermarket Surveillance Group (``ISG'') \35\ the Exchange shares
information and coordinates inquiries and investigations with other
exchanges designed to address potential intermarket manipulation and
trading abuses. Accordingly, there is a strong nexus between the ORF
and the Exchange's regulatory activities with respect to Customer
trading activity of its members and member organizations.
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\34\ If the OCC clearing member is a Phlx member organization,
ORF will be assessed and collected on all cleared Customer contracts
(after adjustment for CMTA); and (2) if the OCC clearing member is
not a Phlx member organization, ORF will be collected only on the
cleared Customer contracts executed at Phlx, taking into account any
CMTA instructions which may result in collecting the ORF from a non-
member organization.
\35\ ISG is an industry organization formed in 1983 to
coordinate intermarket surveillance among the SROs by cooperatively
sharing regulatory information pursuant to a written agreement
between the parties. The goal of the ISG's information sharing is to
coordinate regulatory efforts to address potential intermarket
trading abuses and manipulations.
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Proposal for January 1, 2025
The Exchange believes the proposed ORF to be assessed on January 1,
2025, is reasonable, equitable and not unfairly discriminatory for
various reasons. First, as of January 1, 2025, the Exchange would
expand the collection of ORF to all clearing ranges, except Market
Makers, provided the transaction was executed by an Phlx member
organization or cleared by an Phlx member organization. With this
amendment, Phlx would begin to assess Firm and Broker-Dealer
Transactions an ORF, provided the transactions were executed by a Phlx
member organization or cleared by a Phlx member organization.
Additionally, the Exchange would assess an ORF for options transactions
in Phlx proprietary products. Second, as of January 1, 2025, the
Exchange would assess different rates to Customer transactions for the
Local ORF Rate and Away ORF Rate as compared to Firms and Broker-Dealer
Transactions. Third, as of January 1, 2025, the combined amount of
Local ORF and Away ORF collected would not exceed 88% of Options
Regulatory Cost as all member organizations, except Market Makers,
would be assessed ORF.
The Exchange believes that assessing all member organizations,
except Market Makers, an ORF is reasonable, equitable and not unfairly
discriminatory. While the Exchange acknowledges that there is a cost to
regulate Market Makers, unlike other market participants, Market Makers
have various regulatory requirements with respect to quoting as
provided for in Options 2, Section 4. Specifically, Market Makers have
certain quoting requirements with respect to their assigned options
series as provided in Options 2, Section 5. Lead Market Makers are
obligated to quote in the Opening Process and intra-day.\36\
Additionally, Market Makers may enter quotes in the Opening Process to
open an option series and they are required to quote intra-day.\37\
Further, unlike other market participants, Lead Market Makers and
Market Makers have obligations to compete with other Market Makers to
improve the market in all series of options classes to which the Market
Maker is appointed and to update market quotations in response to
changed market conditions in all series of options classes to which the
Market Maker is appointed.\38\ Also, Lead Market Makers and Market
Makers incur other costs imposed by the Exchange related to their
quoting obligations in addition to other fees paid by other market
participants. Market Makers are subject to a number of fees, unlike
other market participants. Market Makers pay Streaming Quote Trader
Fees,\39\ Remote Market Maker Organization (RMO) Fee,\40\ and Remote
Lead Market Maker Fee \41\ in addition to other fees paid by other
market participants. These liquidity providers are critical market
participants in that they are the only market participants that are
required to provide liquidity to Phlx and are necessary for opening the
market. Excluding Market Maker transactions from ORF allows these
market participants to manage their costs and consequently their
business model more effectively thus enabling them to better allocate
resources to other technologies that are necessary to manage risk and
capacity to ensure that these market participants continue to compete
effectively on Phlx in providing tight displayed quotes which in turn
benefits markets generally and market participants specifically.
Finally, the Exchange notes that Market Makers may transact orders in
addition to submitting quotes on the Exchange. This proposal would
except orders submitted by Market Makers, in addition to quotes, for
purposes of ORF. Market Makers utilize orders in their assigned options
series to sweep the order book. The Exchange believes the quantity of
orders utilized by Market Makers in their assigned series is de
minimis. In their unassigned options series, Market Makers utilize
orders to hedge their risk or respond to auction. The Exchange notes
that the number of orders
[[Page 103008]]
submitted by Market Makers in their unassigned options series are far
below the cap \42\ and therefore de minimis.
---------------------------------------------------------------------------
\36\ See Phlx Options 3, Section 8 and Options 2, Section 5.
\37\ Id.
\38\ See Phlx Options 2, Section 5(a)(3) and (5).
\39\ See Phlx Options 7, Section 8, B.
\40\ See Phlx Options 7, Section 8, C.
\41\ See Phlx Options 7, Section 8, D.
\42\ See Phlx Options 2, Section 6(a). The total number of
contracts executed during a quarter by a Market Maker and Lead
Market Maker in options series to which it is not appointed may not
exceed twenty-five percent (25%) of the total number of contracts
executed by the Market Maker and Lead Market Maker in options
series.
---------------------------------------------------------------------------
The Exchange believes including options transactions in Phlx
proprietary products is reasonable, equitable and not unfairly
discriminatory because Phlx lists various proprietary products for
which the Exchange incurs Options Regulatory Costs. The Exchange
believes that only exchanges that list proprietary products should be
able to collect a Local ORF on their products. Phlx notes that there
are a small number of Phlx proprietary products transacted as compared
to multi-list options. Also, Phlx would only collect an ORF for
proprietary products transacted on its market. As such, the Exchange
believes that only a Local ORF should be applied to a Phlx proprietary
product.
The Exchange believes that assessing different rates to Customer
transactions for the Local ORF Rate and Away ORF Rate as compared to
Firm and Broker-Dealer Transactions and collecting no more than 88% of
Options Regulatory Cost is reasonable, equitable and not unfairly
discriminatory. Customer transactions account for a material portion of
Phlx's Options Regulatory Cost.\43\ Customer transactions in
combination with Firm and Broker-Dealer Transactions account for a
large portion of the Exchange's surveillance expense. Therefore, the
Exchange believes that 88% of Options Regulatory Cost is appropriate
and correlates to the degree of regulatory responsibility and Options
Regulatory Cost borne by the Exchange. With respect to Customer
transactions, options volume continues to surpass volume from other
options participants. Additionally, there are rules in the Exchange's
Rulebook that deal exclusively with Customer transactions, such as
rules involving doing business with a Customer, which would not apply
to Firm and Broker-Dealer Transactions.\44\ For these reasons,
regulating Customer trading activity is ``much more labor-intensive''
and therefore, more costly. The Exchange believes that a large portion
of the Options Regulatory Cost relates to Customer allocation because
obtaining Customer information may be more time intensive. For example,
non-Customer market participants are subject to various regulatory and
reporting requirements which provides the Exchange certain data with
respect to these market participants. In contrast, Customer information
is known by member organizations of the Exchange and is not readily
available to Phlx.\45\ The Exchange may have to take additional steps
to understand the facts surrounding particular trades involving a
Customer which may require requesting such information from a broker-
dealer. Further, Customers require more Exchange regulatory services
based on the amount of options business they conduct. For example,
there are Options Regulatory Costs associated with main office and
branch office examinations (e.g., staff expenses), as well as
investigations into Customer complaints and the terminations of
registered persons. As a result, the Options Regulatory Costs
associated with administering the Customer component of the Exchange's
overall regulatory program are materially higher than the Options
Regulatory Costs associated with administering the non-Customer
component when coupled with the amount of volume attributed to such
Customer transactions. Utilizing the new regression model, and
assumptions in the proposal, it appears that Phlx's Customer regulation
occurs to a large extent on Exchange. Utilizing the new regression
model, and assumptions in the proposal, the Exchange does not believe
that significant Options Regulatory Costs should be attributed to
Customers for activity that may occur across options markets. To that
end, with this proposal, the Exchange would assess Customers a Local
ORF, but not an Away ORF rate.
---------------------------------------------------------------------------
\43\ The Exchange notes that the regulatory costs relating to
monitoring member organizations with respect to Customer trading
activity are generally higher than the regulatory costs associated
with member organizations that do not engage in Customer trading
activity, which tends to be more automated and less labor-intensive.
By contrast, regulating member organizations that engage in Customer
trading activity is generally more labor intensive and requires a
greater expenditure of human and technical resources as the Exchange
needs to review not only the trading activity on behalf of
Customers, but also the member organization's relationship with its
Customers via more labor-intensive exam-based programs. As a result,
the costs associated with administering the Customer component of
the Exchange's overall regulatory program are materially higher than
the costs associated with administering the non-Customer component
of the regulatory program.
\44\ See Phlx Options 10 Rules.
\45\ The Know Your Customer or ``KYC'' provision is the
obligation of the broker-dealer.
---------------------------------------------------------------------------
In contrast, the Options Regulatory Cost of regulating Firm and
Broker-Dealer Transactions is materially less than the Options
Regulatory Costs of regulating Customer transactions, as explained
above. The below chart derived from OCC data reflects the percentage of
transactions by market participant.
[[Page 103009]]
[GRAPHIC] [TIFF OMITTED] TN18DE24.068
With this model, the addition of Firm and Broker-Dealer
Transactions to the collection of ORF does not entail significant
volume when compared to Customer transactions. As these market
participants are more sophisticated, the Exchange notes that there are
not the same protections in place for Firm and Broker-Dealer
Transactions as compared to Customer transactions. Therefore, with the
proposed model, the regulation of Firm and Broker-Dealer Transactions
is less resource intensive than the regulation of Customer
transactions. However, the Exchange notes that it appears from the new
regression model and assumptions in the proposal, that unlike Customer
transactions, the regulation of Firm and Broker-Dealer Transactions
occurs both on the Exchange and across options markets. To that end,
the Exchange proposes to assess Firm Range Transactions both a Local
ORF and an Away ORF in contrast to Customer transactions that would
only be assessed a Local ORF. The Exchange believes that not assessing
Market Maker transactions an ORF permits these market participants to
utilize their resources to quote tighter in the market. Tighter quotes
benefits Customers as well as other market participants who interact
with that liquidity.
The Exchange's proposal to establish both a Local ORF Rate and an
Away ORF Rate and allocate the portion of Options Regulatory Cost
differently between the two separate rates, by market participant,
ensures that the Local ORF Rate and Away ORF Rate reflect the amount of
Options Regulatory Costs associated with different types of
surveillances and are reasonable, equitable and not unfairly
discriminatory. The Exchange is responsible for regulating activity on
its market as well as activity that may occur across options markets.
The Exchange believes that it is reasonable, equitable and not unfairly
discriminatory to assess only Firm and Broker-Dealer Transactions an
Away ORF. With this model, while the regulation of Firm and Broker-
Dealer Transactions is less resource intensive than the regulation of
Customer transactions, it occurs both on the Exchange and across
options markets.\46\ The Exchange believes that assessing the Firm and
Broker-Dealer Transactions the same rate for Local ORF and Away ORF is
appropriate given the lower volume that is attributed to these member
organizations combined with the activity that is required to be
regulated both on the Exchange and across options markets. The Exchange
notes that there are Exchange rules that involve cross market
surveillances that relate to activities conducted by Firm and Broker-
Dealer Members.\47\ While not large in number, when compared to the
overall number of Exchange rules that are surveilled by Phlx for on-
Exchange activity, the Away ORF that would be assessed to Firm and
Broker-Dealer regulation would account for those costs. Additionally,
the Exchange believes that limiting the amount of ORF assessed for
activity that occurs on non-Phlx exchanges avoids overlapping ORFs that
would otherwise be assessed by Phlx and other options exchanges that
also assess an ORF. Also, the Exchange's proposal continues to ensure
that Options Regulatory Revenue, in combination with other regulatory
fees and fines, does not exceed Options Regulatory Costs. Fines
collected by the Exchange in connection with a disciplinary matter will
continue to offset Options Regulatory Cost.
---------------------------------------------------------------------------
\46\ Phlx pays the Financial Industry Regulatory Authority
(``FINRA'') to perform certain cross-market surveillances on its
behalf. In order to perform cross-market surveillances, Consolidated
Audit Trail (``CAT'') data is utilized to match options transactions
to underlying equity transactions. This review is data intensive
given the volumes of information that are being reviewed and
analyzed.
\47\ Phlx conducts surveillances and enforces Phlx Rules,
however only a subset of those rules is subject to cross-market
surveillance, such as margin and position limits. Of note, some Phlx
trading rules are automatically enforced by Phlx's System.
---------------------------------------------------------------------------
Capping the combined amount of Local ORF and Away ORF collected at
88% of Options Regulatory Cost commencing January 1, 2025, is
reasonable, equitable and not unfairly discriminatory as given these
factors. The Exchange will review the ORF Regulatory Revenue at the end
of January 2025 and would amend the ORF if it finds that its ORF
Regulatory Revenue exceeds its projections.\48\
---------------------------------------------------------------------------
\48\ Phlx would submit a rule change to the Commission to amend
ORF rates.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose
[[Page 103010]]
any burden on intra-market competition not necessary or appropriate in
furtherance of the purposes of the Act.
The proposed changes to ORF do not impose an undue burden on inter-
market competition because ORF is a regulatory fee that supports
regulation in furtherance of the purposes of the Act. The Exchange
notes, however, the proposed change is not designed to address any
competitive issues. The Exchange is obligated to ensure that the amount
of ORF Regulatory Revenue, in combination with its other regulatory
fees and fines, does not exceed ORF Regulatory Cost.
Proposal for November 1, 2024, Through December 31, 2024
The Exchange's proposal to reduce its ORF from $0.0034 to $0.0022
per contract side from November 1, 2024, through December 31, 2024,
does not create an unnecessary or inappropriate burden on intra-market
competition because the ORF applies to all Customer activity, thereby
raising regulatory revenue to offset regulatory expenses. It also
supplements the regulatory revenue derived from non-customer activity.
Proposal for January 1, 2025
Excluding Market Makers does not impose an undue burden on intra-
market competition because, unlike other market participants, Market
Makers have various regulatory requirements with respect to quoting as
provided for in Options 2, Section 4. Specifically, Market Makers have
certain quoting requirements with respect to their assigned options
series as provided in Options 2, Section 5. Lead Market Makers are
obligated to quote in the Opening Process and intra-day.\49\
Additionally, Market Makers may enter quotes in the Opening Process to
open an option series and they are required to quote intra-day.\50\
Further, unlike other market participants, Lead Market Makers and
Market Makers have obligations to compete with other Market Makers to
improve the market in all series of options classes to which the Market
Maker is appointed and to update market quotations in response to
changed market conditions in all series of options classes to which the
Market Maker is appointed.\51\ Also, Lead Market Makers and Market
Makers incur other costs imposed by the Exchange related to their
quoting obligations in addition to other fees paid by other market
participants. Market Makers are subject to a number of fees, unlike
other market participants. Market Makers pay Streaming Quote Trader
Fees,\52\ Remote Market Maker Organization (RMO) Fee,\53\ and Remote
Lead Market Maker Fee \54\ in addition to other fees paid by other
market participants. These liquidity providers are critical market
participants in that they are the only market participants that are
required to provide liquidity to Phlx and are necessary for opening the
market. Excluding Market Maker transactions from ORF does not impose an
intra-market burden on competition, rather it allows these market
participants to manage their costs and consequently their business
model more effectively thus enabling them to better allocate resources
to other technologies that are necessary to manage risk and capacity to
ensure that these market participants continue to compete effectively
on Phlx in providing tight displayed quotes which in turn benefits
markets generally and market participants specifically. Finally, the
Exchange notes that Market Makers may transact orders on the Exchange,
in addition to submitting quotes. The Exchange's proposal to except
orders submitted by Market Makers, in addition to quotes, for purposes
of ORF does not impose an undue burden on intra-market competition
because Market Makers utilize orders in their assigned options series
to sweep the order book. Further, the Exchange believes the quantity of
orders utilized by Market Makers in their assigned series is de
minimis. In their unassigned options series, Market Makers utilize
orders to hedge their risk or respond to auction. The Exchange notes
that the number of orders submitted by Market Makers in their
unassigned options series are far below the cap \55\ and therefore de
minimis.
---------------------------------------------------------------------------
\49\ See Phlx Options 3, Section 8 and Options 2, Section 5.
\50\ Id.
\51\ See Phlx Options 2, Section 5(a)(3) and (5).
\52\ See Phlx Options 7, Section 8, B.
\53\ See Phlx Options 7, Section 8, C.
\54\ See Phlx Options 7, Section 8, D.
\55\ See Phlx Options 2, Section 6. The total number of
contracts executed during a quarter by a Market Maker in options
classes to which it is not appointed may not exceed twenty-five
percent (25%) of the total number of contracts traded. In the
Exchange's experience, Market Maker's are generally below the 25%
cap.
---------------------------------------------------------------------------
Uniformly including options transactions in Phlx proprietary
products in ORF for all Phlx member organizations does not impose an
undue burden on intra-market competition. The Exchange believes that
only exchanges that list proprietary products should be able to collect
a Local ORF on their products. Phlx notes that there are a small number
of Phlx proprietary products transacted as compared to multi-list
options. Also, Phlx would only collect an ORF for proprietary products
transacted on its market.
The Exchange's proposal to expand the clearing ranges to
specifically include Firm and Broker-Dealer Transactions, in addition
to Customer and Professional transactions, as of January 1, 2025, does
not impose an undue burden on intra-market competition as Customer
transactions account for a material portion of Phlx's Options
Regulatory Cost.\56\ Customer transactions in combination with Firm and
Broker-Dealer Transactions account for a large portion of the
Exchange's surveillance expense. With respect to Customer transactions,
options volume continues to surpass volume from other options
participants. Additionally, there are rules in the Exchange's Rulebook
that deal exclusively with Customer transactions, such as rules
involving doing business with a Customer, which would not apply to Firm
and Broker-Dealer Transactions.\57\ For these reasons, regulating
Customer trading activity is ``much more labor-intensive'' and
therefore, more costly. Further, the Exchange believes that a large
portion of the Options Regulatory Cost relates to Customer allocation
because obtaining Customer information may be more time intensive. For
example, non-Customer market participants are subject to various
regulatory and reporting requirements which provides the Exchange
certain data with respect to these market participants. In contrast,
Customer information is known by member organizations of the Exchange
and is not readily available to Phlx.\58\ The Exchange may have to take
additional steps to understand the facts surrounding particular trades
involving a Customer which may require requesting such information from
a broker-dealer. Further, Customers require more Exchange regulatory
services based on the amount of options business they conduct. For
example,
[[Page 103011]]
there are Options Regulatory Costs associated with main office and
branch office examinations (e.g., staff expenses), as well as
investigations into Customer complaints and the terminations of
registered persons. As a result, the Options Regulatory Costs
associated with administering the Customer component of the Exchange's
overall regulatory program are materially higher than the Options
Regulatory Costs associated with administering the non-Customer
component when coupled with the amount of volume attributed to such
Customer transactions. Not attributing significant Options Regulatory
Costs to Customers for activity that may occur across options markets
does not impose an undue burden on intra-market competition because the
data in the regression model demonstrates that Phlx's Customer
regulation occurs to a large extent on Exchange.
---------------------------------------------------------------------------
\56\ The Exchange notes that the regulatory costs relating to
monitoring Members with respect to customer trading activity are
generally higher than the regulatory costs associated with Members
that do not engage in customer trading activity, which tends to be
more automated and less labor-intensive. By contrast, regulating
Members that engage in customer trading activity is generally more
labor intensive and requires a greater expenditure of human and
technical resources as the Exchange needs to review not only the
trading activity on behalf of customers, but also the Member's
relationship with its customers via more labor-intensive exam-based
programs. As a result, the costs associated with administering the
customer component of the Exchange's overall regulatory program are
materially higher than the costs associated with administering the
non-customer component of the regulatory program.
\57\ See Phlx Options 10 Rules.
\58\ The Know Your Customer or ``KYC'' provision is the
obligation of the broker-dealer.
---------------------------------------------------------------------------
The Exchange believes that assessing Firm and Broker-Dealer
Transactions a different ORF and assessing both a Local ORF and an Away
ORF to these transactions does not impose an undue burden on intra-
market competition because the regulation of Firm and Broker-Dealer
Transactions is less resource intensive than the regulation of Customer
transactions. With this model, the addition of Firm and Broker-Dealer
Transactions to the collection of ORF does not entail significant
volume when compared to Customer transactions. Unlike Customer
transactions, the regulation of Firm and Broker-Dealer Transactions
occurs both on the Exchange and across options markets. To that end,
the Exchange proposes to assess Firm and Broker-Dealer Transactions
both a Local ORF and an Away ORF.
The Exchange's proposal to allocate the portion of costs
differently between the Local ORF and Away ORF does not create an undue
burden on intra-market competition. The Exchange believes that each
rate reflects the amount of Options Regulatory Costs associated with
different types of surveillances and does not create an undue burden on
competition as Phlx member organizations, excluding except Market
Makers, would be uniformly assessed either a Local ORF Rate or an Away
ORF Rate depending on where the transaction occurred and whether the
transaction was executed or cleared by an Phlx member organization.
Also, the Exchange would uniformly assess the Local ORF Rate and an
Away ORF Rate by market participant. The Exchange is responsible for
regulating activity on its market as well as activity that may occur
across options markets.
The Exchange believes that assessing only Firm and Broker-Dealer
Transactions an Away ORF does not create an undue burden on intra-
market competition because while the regulation of Firm and Broker-
Dealer Transactions is less resource intensive than the regulation of
Customer transactions, the regulation of Firm and Broker-Dealer
transactions occurs both on the Exchange and across options
markets.\59\ The Exchange believes that assessing Firm and Broker-
Dealer Transactions the same rate for Local ORF and Away ORF is
appropriate given the lower volume that is attributed to these member
organizations combined with the activity that is required to be
regulated both on the Exchange and across options markets. There are
Exchange rules that involve cross market surveillances that relate to
activities conducted by Firm and Broker-Dealer member
organizations.\60\ While not large in number, when compared to the
overall number of Exchange rules that are surveilled by Phlx for on-
Exchange activity, the Away ORF that would be assessed to Firm and
Broker-Dealer Transactions would account for those Options Regulatory
Costs. Additionally, the Exchange believes that limiting the amount of
ORF assessed for activity that occurs on non-Phlx exchanges does not
impose a burden on intra-market competition, rather it avoids
overlapping ORFs that would otherwise be assessed by Phlx and other
options exchanges that also assess an ORF. With this model, Customer
transactions would be assessed a higher Local ORF, while not being
assessed an Away ORF as compared to Firm and Broker-Dealer
Transactions. The Exchange believes that this difference in allocation
is appropriate and correlates to the degree of regulatory
responsibility and Options Regulatory Costs borne by different member
organizations of the Exchange in light of the volume different member
organizations transact on the Exchange.
---------------------------------------------------------------------------
\59\ Phlx pays the Financial Industry Regulatory Authority
(``FINRA'') to perform certain cross-market surveillances on its
behalf. In order to perform cross-market surveillances, Consolidated
Audit Trail (``CAT'') data is utilized to match options transactions
to underlying equity transactions. This review is data intensive
given the volumes of information that are being reviewed and
analyzed.
\60\ Phlx conducts surveillances and enforces Phlx Rules,
however only a subset of those rules is subject to cross-market
surveillance, such as margin and position limits. Of note, some Phlx
trading rules are automatically enforced by Phlx's System.
---------------------------------------------------------------------------
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 \61\ and Rule 19b-4(f)(2) \62\ thereunder.
---------------------------------------------------------------------------
\61\ 15 U.S.C. 78s(b)(3)(A)(ii).
\62\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
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 necessary or
appropriate in the public interest, for the protection of investors, or
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 change 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f587809990d8969a9898909b8186b5869096db929a83"><span class="__cf_email__" data-cfemail="f082859c95dd939f9d9d959e8483b0839593de979f86">[email protected]</span></a>. Please include
file number SR-Phlx-2024-66 on the subject line.
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-2024-66. 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="https://www.sec.gov/rules/sro.shtml">https://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
[[Page 103012]]
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 a.m. and 3 p.m. Copies of the
filing also will be available for inspection and copying at the
principal office of the Exchange. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to file number
SR-Phlx-2024-66 and should be submitted on or before January 8, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\63\
---------------------------------------------------------------------------
\63\ 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-29922 Filed 12-17-24; 8:45 am]
BILLING CODE 8011-01-P
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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.