Notice2025-19184
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 4
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
October 1, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 188 (Wednesday, October 1, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 188 (Wednesday, October 1, 2025)]
[Notices]
[Pages 47441-47443]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19184]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104128; File No. SR-Phlx-2025-55]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7,
Section 4
September 29, 2025.
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 September 26, 2025, 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. 78s(b)(1).
\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. Specifically, Phlx proposes to amend the Floor
Transaction (Open Outcry) Floor Broker Incentive Program.
While the changes proposed herein are effective upon filing, the
Exchange has designated the amendments become operative on October 1,
2025.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/phlx/rulefilings">https://listingcenter.nasdaq.com/rulebook/phlx/rulefilings</a>,
and at the principal office of the Exchange.
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 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 and broad-based index options symbols listed within Options 7,
Section 5.A). Specifically, Phlx proposes to amend the Floor
Transaction (Open Outcry) Floor Broker Incentive Program.
The Exchange proposes to amend its Floor Transaction (Open Outcry)
Floor Broker Incentive Program at Options 7, Section 4. This incentive
program for Floor Brokers \3\ is designed to attract order flow to
Phlx's trading floor for execution in open outcry. Currently, the
Exchange pays Floor Broker certain rebates for transaction they execute
on Phlx's trading floor in open outcry. Today, the following floor
transactions are excluded from the rebates offered within the Floor
Transaction (Open Outcry) Floor Broker Incentive Program: (1) dividend,
merger, short stock interest, reversal and conversion, jelly roll, and
box spread strategy executions as defined in this Options 7, Section 4;
(2) Firm Floor Options Transactions for members executing facilitation
orders pursuant to Options 8, Section 30 when such members are trading
in their own proprietary account (including Cabinet Options Transaction
Charges); and (3) Customer-to-Customer transactions.
---------------------------------------------------------------------------
\3\ The term ``Floor Broker'' means an individual who is
registered with the Exchange for the purpose, while on the Options
Floor, of accepting and handling options orders. See Phlx Options 7,
Section 1(c).
---------------------------------------------------------------------------
Today, rebates are paid on qualifying volume at each threshold
level based on a four-tier rebate schedule. Floor QCC Orders, as
defined in Options 8, Section 30(e),\4\ and electronic QCC Orders, as
defined in Options 3, Section 12, are considered qualifying volume but
are not paid rebates based on the rebate schedule, rather Floor QCC
Orders and electronic QCC Orders are paid the QCC Rebates noted in
Options 7, Section 4. The Exchange pays rebates based on the below
schedule.
---------------------------------------------------------------------------
\4\ Today, Floor QCC Orders are not transacted in open outcry.
[[Page 47442]]
----------------------------------------------------------------------------------------------------------------
Per contract Per contract
rebate rebate (non-
Qualifying contracts (customer on customer on
one side) both sides)
----------------------------------------------------------------------------------------------------------------
Tier 1........................................ 0-500,000....................... $0.02 $0.08
Tier 2........................................ 500,001-5,000,000............... 0.05 0.16
Tier 3........................................ 5,000,001-10,000,000............ 0.07 0.16
Tier 4........................................ Greater than 10,000,000......... 0.08 0.20
----------------------------------------------------------------------------------------------------------------
Finally, today, rebates for the Floor Transaction (Open Outcry)
Floor Broker Incentive Program are capped at $2,000,000 per member or
member organization in a given month.
Proposal
At this time, the Exchange proposes to increase the rebates in all
tiers by $0.02 per contract. The Exchange proposes to offer a per
contract rebate if a Customer is on one side of $0.04 per contract for
Tier 1 (0-500,000 qualifying contracts), a $0.07 per contract rebate
for Tier 2 (500,001-5,000,000 qualifying contracts), a $0.09 per
contract rebate for Tier 3 (5,000,001-10,000,000 qualifying contracts)
and a $0.10 per contract rebate for Tier 4 (Greater than 10,000,000
qualifying contracts). The Exchange proposes to offer a per contract
rebate if a Non-Customer is on both sides of $0.10 per contract for
Tier 1 (0-500,000 qualifying contracts), a $0.18 per contract rebate
for Tier 2 (500,001-5,000,000 qualifying contracts), a $0.18 per
contract rebate for Tier 3 (5,000,001-10,000,000 qualifying contracts)
and a $0.22 per contract rebate for Tier 4 (Greater than 10,000,000
qualifying contracts).
The Exchange believes that the increased rebates will attract
greater order flow to Phlx's trading floor.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\5\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\6\ 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.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 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.'' \7\
---------------------------------------------------------------------------
\7\ 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 \8\
(``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.\9\ 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.'' \10\
---------------------------------------------------------------------------
\8\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\9\ See NetCoalition, at 534-535.
\10\ 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'. . . .'' \11\ 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.
---------------------------------------------------------------------------
\11\ 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)).
---------------------------------------------------------------------------
The Exchange's proposal to increase rebates in the Floor
Transaction (Open Outcry) Floor Broker Incentive Program is reasonable
because offering greater rebates should attract additional order flow
to Phlx's trading floor for execution in open outcry. Other Phlx floor
members \12\ may interact with the orders exposed in open outcry on the
Exchange's trading floor. Rebates will continue to be paid on all
qualifying volume but the rebate will continue to vary depending on
whether a Customer is on one side of the trade or both sides of the
trade are Non-Customers. The rebate is meant to assist Floor Brokers to
recruit business on an agency basis. The Floor Broker may use all or
part of the rebate to offset its fees. The Exchange expects that the
rebate offered to executing Floor Brokers will allow them to price
their services at a level that will enable them to attract order flow
from market participants who would otherwise enter these orders
electronically from off the floor. To the extent that Floor Brokers are
able to attract these qualifying volume, other floor participants may
interact with this order flow in open outcry. The Exchange believes
that it is equitable and not unfairly discriminatory to pay rebates on
qualifying volume for transactions executed on the trading floor,
because Floor Brokers would be uniformly paid the rebates based on
qualifying volume and the parties to the transaction.
---------------------------------------------------------------------------
\12\ Floor members include all members who have acquired a
permit to trade on Phlx's trading floor.
---------------------------------------------------------------------------
The Exchange's proposal to increase rebates in the Floor
Transaction (Open Outcry) Floor Broker Incentive Program is equitable
and not unfairly discriminatory because all Floor Brokers are eligible
for rebates and would be uniformly paid a rebate based on their
Qualifying Contracts and whether a Customer is on one side of the trade
or both sides of the trade are Non-Customers. The Exchange's proposal
to pay the rebate provided one side of the transaction is Customer or
both sides are Non-Customer is equitable and not unfairly
discriminatory because the Exchange would uniformly calculate all
qualifying volume and uniformly pay rebates associated with the Floor
Transaction (Open Outcry) Floor Broker Incentive Program. Further, the
Exchange believes its proposed floor transaction rebates for Customer
on one side and Non-Customer on both sides are equitable and not
unfairly
[[Page 47443]]
discriminatory because, today, Customers are not assessed a Floor
Options Transaction Charge for Penny and Non-Penny Symbols. In
contrast, the Exchange notes that Non-Customers, except
Professionals,\13\ are assessed Floor Options Transaction Charges in
Penny and Non-Penny Symbols.\14\ The Exchange proposes to pay higher
rebates where there is a Non-Customer on both sides of a trade because
a Floor Broker attracting Customer order flow can more easily attract
Customer orders which are not assessed a floor transaction fee as
compared to attracting a Non-Customer order which would pay a
transaction fee to execute on Phlx's trading floor.
---------------------------------------------------------------------------
\13\ 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 1, Section 1(c).
\14\ See Options 7, Section 4. Lead Market Makers and Market
Makers are assessed a $0.50 per contract Floor Options Transaction
Charge for Penny and Non-Penny Symbols. Broker-Dealers and Firms are
assessed a $0.25 per contract Floor Options Transaction Charge for
Penny and Non-Penny Symbols.
---------------------------------------------------------------------------
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. 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.
Intra-Market Competition
The Exchange's proposal to increase rebates in the Floor
Transaction (Open Outcry) Floor Broker Incentive Program does not
impose an undue burden on competition because all Floor Brokers are
eligible for rebates and would be uniformly paid a rebate based on
their Qualifying Contracts and whether a Customer is on one side of the
trade or both sides of the trade are Non-Customers. The Exchange's
proposal to pay the rebate provided one side of the transaction is
Customer or both sides are Non-Customer does not impose an undue burden
on competition because the Exchange would uniformly calculate all
qualifying volume and uniformly pay rebates associated with the Floor
Transaction (Open Outcry) Floor Broker Incentive Program. Further, the
Exchange believes its proposed floor transaction rebates for Customer
on one side and Non-Customer on both sides do not impose an undue
burden on competition because, today, Customers are not assessed a
Floor Options Transaction Charge for Penny and Non-Penny Symbols. In
contrast, the Exchange notes that Non-Customers, except Professionals,
are assessed Floor Options Transaction Charges in Penny and Non-Penny
Symbols.\15\ The Exchange proposes to pay higher rebates where there is
a Non-Customer on both sides of a trade because a Floor Broker
attracting Customer order flow can more easily attract Customer orders
which are not assessed a floor transaction fee as compared to
attracting a Non-Customer order which would pay a transaction fee to
execute on Phlx's trading floor.
---------------------------------------------------------------------------
\15\ See Options 7, Section 4. Lead Market Makers and Market
Makers are assessed a $0.50 per contract Floor Options Transaction
Charge for Penny and Non-Penny Symbols. Broker-Dealers and Firms are
assessed a $0.25 per contract Floor Options Transaction Charge for
Penny and Non-Penny Symbols.
---------------------------------------------------------------------------
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.\16\
---------------------------------------------------------------------------
\16\ 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="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#f381869f96de909c9e9e969d8780b3809690dd949c85"><span class="__cf_email__" data-cfemail="b4c6c1d8d199d7dbd9d9d1dac0c7f4c7d1d79ad3dbc2">[email protected]</span></a>. Please include
file number SR-Phlx-2025-55 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-2025-55. 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 filing 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-2025-55 and should be submitted on
or before October 22, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-19184 Filed 9-30-25; 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 October 1, 2025.
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.