Notice2026-00910
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the PHLX Pricing Schedule at Options 7, Section 2, Customer Rebate Program, and at Options 7, Section 4, Multiply Listed Options Fees
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
January 20, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 12 (Tuesday, January 20, 2026)</title>
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[Federal Register Volume 91, Number 12 (Tuesday, January 20, 2026)]
[Notices]
[Pages 2402-2406]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-00910]
[[Page 2402]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104597; File No. SR-PHLX-2026-01]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the PHLX
Pricing Schedule at Options 7, Section 2, Customer Rebate Program, and
at Options 7, Section 4, Multiply Listed Options Fees
January 14, 2026.
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 January 2, 2026, 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.
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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 the PHLX Pricing Schedule at Options
7, Section 2, Customer Rebate Program, and at Options 7, Section 4,
Multiply Listed Options Fees.
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 its Pricing Schedule at Options 7, Section 2
(Customer \3\ Rebate Program) and at Options 7, Section 4 (Multiply
Listed Options Fees).
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\3\ 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).
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A. Customer Rebate Program
The Exchange proposes to amend the Pricing Schedule at Options 7,
Section 2, Customer Rebate Program.
1. Current Status
Currently, the Exchange pays rebates on five Customer Rebate Tiers
according to four categories. The Customer Rebate Tiers below are
calculated by totaling Customer volume in Multiply Listed Options
(including SPY) that are electronically-delivered and executed, except
volume associated with electronic Qualified Contingent Cross Orders, as
defined in Options 3, Section 12. Rebates are paid on Customer Rebate
Tiers according to the below categories.\4\
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\4\ Members and member organizations under Common Ownership may
aggregate their Customer volume for purposes of calculating the
Customer Rebate Tiers and receiving rebates. Affiliated Entities may
aggregate their Customer volume for purposes of calculating the
Customer Rebate Tiers and receiving rebates. See Options 7, Section
2.
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Percentage thresholds of national
customer volume in Multiply-Listed
Customer rebate tiers Equity and ETF Options Classes, Category A Category B Category C Category D
excluding SPY Options (monthly)
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Tier 1......................................... 0.00%-0.60%............................ $0.00 $0.00 $0.00 $0.00
Tier 2......................................... Above 0.60%-1.30%...................... 0.10 0.10 0.16 0.21
Tier 3......................................... Above 1.30%-1.80%...................... 0.15 0.12 0.18 0.22
Tier 4......................................... Above 1.80%-2.50%...................... 0.20 0.16 0.22 0.26
Tier 5......................................... Above 2.50%............................ 0.21 0.17 0.22 0.27
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The Exchange pays a Category A Rebate to members who execute
electronically-delivered Customer Simple Orders in Penny Symbols and
Customer Simple Orders in Non-Penny Symbols in Options 7, Section 4
symbols.\5\
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\5\ Options 7, Section 4 describes pricing for 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).
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The Exchange pays a Category B Rebate on Customer PIXL Orders \6\
in Options 7, Section 4 symbols that execute against non-Initiating
Order interest. In the instance where member organizations qualify for
Tier 4 or higher in the Customer Rebate Program, Customer PIXL Orders
that execute against a PIXL Initiating Order are paid a rebate of $0.14
per contract. Rebates on Customer PIXL Orders are capped at 4,000
contracts per order for Simple PIXL Orders.
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\6\ PIXL Orders are entered into the Exchange's Price
Improvement XL (``PIXL'') Mechanism as described in Options 3,
Section 13.
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The Exchange pays a Category C Rebate to members executing
electronically-delivered Customer Complex Orders \7\ in Penny Symbols
in Options 7, Section 4 symbols. Rebates are paid on Customer PIXL
Complex Orders in Options 7, Section 4 symbols that execute against
non-Initiating Order interest. Customer Complex PIXL Orders that
execute against a Complex PIXL Initiating Order are not paid a rebate
under any circumstances. The Category C Rebate is not paid when an
electronically-delivered Customer Complex Order, including Customer
Complex PIXL Order, executes against another electronically-delivered
Customer Complex Order.
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\7\ Complex Orders are described in Options 3, Section 14.
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The Exchange pays a Category D Rebate to members executing
electronically-delivered Customer Complex Orders in Non-Penny Symbols
in Options 7, Section 4 symbols. Rebates are paid on Customer PIXL
Complex Orders in Options 7, Section 4 symbols that execute against
non-Initiating Order interest. Customer Complex PIXL Orders that
execute against a Complex PIXL Initiating Order are not paid a rebate
under any circumstances. The Category D Rebate is not paid when an
[[Page 2403]]
electronically-delivered Customer Complex Order, including Customer
Complex PIXL Order, executes against another electronically-delivered
Customer Complex Order.\8\
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\8\ Rebates are not paid on broad-based index options symbols
listed within Options 7, Section 5.A. in any Category, however
broad-based index options symbols listed within Options 7, Section
5.A. will count toward the volume requirement to qualify for a
Customer Rebate Tier. See Options 7, Section 2.
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Currently, under note ``*'', the Exchange pays a $0.02 per contract
Category A and B rebate and a $0.03 per contract Category C and D
rebate in addition to the applicable Tier 2 and 3 rebate, provided the
Lead Market Maker,\9\ Market Maker \10\ or Appointed MM \11\ has
reached the Monthly Market Maker Cap \12\ as defined in Options 7,
Section 4, to: (1) a Lead Market Maker or Market Maker who is not under
Common Ownership \13\ or is not a party of an Affiliated Entity; \14\
or (2) an Order Flow Provider or ``OFP'' member or member organization
affiliate under Common Ownership; or (3) an Appointed OFP \15\ of an
Affiliated Entity.
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\9\ The term ``Lead Market Maker'' applies to transactions for
the account of a Lead Market Maker (as defined in Options 2, Section
12(a)). A Lead Market Maker is an Exchange member who is registered
as an options Lead Market Maker pursuant to Options 2, Section
12(a). An options Lead Market Maker includes a Remote Lead Market
Maker which is defined as an options Lead Market Maker in one or
more classes that does not have a physical presence on an Exchange
floor and is approved by the Exchange pursuant to Options 2, Section
11. See Options 7, Section 1(c).
\10\ 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 term
``Streaming Quote Trader'' or ``SQT'' is defined in Options 1,
Section 1(b)(55) 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. 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
Options 7, Section 1(c).
\11\ The term ``Appointed MM'' is a Phlx Market Maker or Lead
Market Maker who has been appointed by an Order Flow Provider
(``OFP'') for purposes of qualifying as an Affiliated Entity. An OFP
is a member or member organization that submits orders, as agent or
principal, to the Exchange. See Options 7, Section 1(d).
\12\ Lead Market Makers and Market Makers are currently subject
to a ``Monthly Market Maker Cap'' of $500,000 for: (i) electronic
Option Transaction Charges, excluding surcharges and excluding
options overlying broad-based index options symbols listed within
Options 7, Section 5.A; and (ii) QCC Transaction Fees (as defined in
Exchange Options 3, Section 12 and Floor QCC Orders, as defined in
Options 8, Section 30(e)). See Options 7, Section 4.
\13\ The term ``Common Ownership'' shall mean members or member
organizations under 75% common ownership or control. See Options 7,
Section 1(c).
\14\ The term ``Affiliated Entity'' is a relationship between an
Appointed MM and an Appointed OFP for purposes of qualifying for
certain pricing specified in the Pricing Schedule. Market Makers or
Lead Market Makers, and OFPs are required to send an email to the
Exchange to appoint their counterpart, at least 3 business days
prior to the last day of the month to qualify for the next month.
The Exchange will acknowledge receipt of the emails and specify the
date the Affiliated Entity is eligible for applicable pricing, as
specified in the Pricing Schedule. Each Affiliated Entity
relationship will commence on the 1st of a month and may not be
terminated prior to the end of any month. An Affiliated Entity
relationship will automatically renew each month until or unless
either party terminates earlier in writing by sending an email to
the Exchange at least 3 business days prior to the last day of the
month to terminate for the next month. Members and member
organizations under Common Ownership may not qualify as a
counterparty comprising an Affiliated Entity. Each member or member
organization may qualify for only one (1) Affiliated Entity
relationship at any given time. See Options 7, Section 1(d).
\15\ The term ``Appointed OFP'' is an OFP who has been appointed
by a Phlx Market Maker or Lead Market Maker for purposes of
qualifying as an Affiliated Entity. See Options 7, Section 1(d).
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In addition, currently, under note ``#'', the Exchange pays a $0.04
per contract Category C rebate and a $0.02 per contract Category D
rebate in addition to the applicable Tier 2, 3, 4 and 5 rebates to
members or member organizations or member or member organization
affiliated under Common Ownership provided the member or member
organization qualified for any Market Access and Routing Subsidy
(``MARS'') Payments in Options 7, Section 6, Part E.
In the event that a member or member organization has qualified for
the rebates under both note * and note # in a given month, the Exchange
will only pay the higher of the two rebates.
Currently, note ``&'' provides that the Exchange will pay the
applicable Tier 2 rebates to qualifying members or member
organizations, qualifying affiliates under Common Ownership, or
qualifying Affiliated Entities, provided they: (1) execute a Percentage
Threshold of National Customer Volume in Multiply-Listed Equity and ETF
Options Classes, excluding SPY Options (monthly), of above 0.25%; (2)
reach the Monthly Firm Fee Cap as defined in Options 7, Section 4; and
(3) meet the MARS System Eligibility requirements as provided in
Options 7, Section 6, Part E.
2. Proposed Changes
The Exchange proposes to amend the Customer Rebate Program at
Options 7, Section 2, to modify the Percentage Thresholds of National
Customer Volume in Multiply-Listed Equity and ETF Options Classes,
excluding SPY Options (Monthly) (``Percentage Thresholds'') to qualify
for Tier 2, Tier 3, and Tier 4.
The Exchange proposes to amend the Tier 2 Percentage Thresholds
from above 0.60%-1.30% to above 0.60%-1.50%.
The Exchange proposes to amend the Tier 3 Percentage Thresholds
from above 1.30%-1.80% to above 1.50%-2.00%.
The Exchange proposes to amend the Tier 4 Percentage Thresholds
from above 1.80%-2.50% to above 2.00%-2.50%.
The Exchange also proposes to amend the Category B rebate.
Currently, member organizations that qualify for Tier 4 or higher in
the Customer Rebate Program are paid a rebate of $0.14 per contract for
Customer PIXL Orders that execute against a PIXL Initiating Order. The
Exchange proposes to instead pay a rebate of $0.13 per contract, and
only to member organizations that qualify for Tier 4. The Exchange also
proposes that for member organizations that qualify for Tier 5 in the
Customer Rebate Program, Customer PIXL Orders that execute against a
PIXL Initiating Order will be paid a rebate of $0.14 per contract. The
Exchange also proposes to clarify that, just as it currently caps
rebates on Customer PIXL orders at 4,000 contracts per order for Simple
PIXL Orders, this same cap will apply to member organizations,
regardless of whether they qualify for Tiers 4 or 5 in the Customer
Rebate Program.
The Exchange proposes to add a new requirement to qualify for Tier
5 under the Customer Rebate Program, under a new note labeled ``**''.
The Exchange proposes that it will pay the Tier 5 rebates to qualifying
members or member organizations, qualifying affiliates under Common
Ownership, or qualifying Affiliated Entities, provided their
electronically-delivered and executed Non-Penny Customer simple volume
(including Simple PIXL Orders) and Penny and Non-Penny Customer complex
volume (including Complex PIXL Orders), combined, represents more than
0.50% of all cleared customer volume at OCC in Multiply Listed Equity
Options and Exchange-Traded Products. Members or member organizations,
affiliates under Common Ownership, or Affiliated Entities who would
otherwise qualify for Tier 5, but
[[Page 2404]]
who fail to meet this volume requirement, will instead be paid rebates
according to the Tier 4 schedule.
The Exchange believes that the proposed amendments to the Customer
Rebate Program will encourage members and member organization to send a
greater amount of order flow to PHLX to earn additional rebates. All
members and member organizations would have the opportunity to interact
with such increased order flow.
B. Monthly Market Maker Cap
The Exchange also proposes to raise the Monthly Market Maker Cap in
Options 7, Section 4.
1. Current Status
Currently, Lead Market Makers and Market Makers are subject to a
Monthly Market Maker Cap of $500,000 for electronic Option Transaction
Charges (excluding: (i) surcharges; (ii) options overlying broad-based
index options symbols listed (as defined in Options 7, Section 5.A),
(iii) dividend, merger, short stock interest, reversal and conversion,
jelly roll and box spread strategy executions (as defined in Options 7,
Section 4); (iv) Crossing Order Fees (as defined in Options 7, Section
6, F); and (v) FLEX Electronic Transaction Fees (as defined in Options
7, Section 6, B)); and QCC Transaction Fees (as defined in Options 7,
Section 4 including Options 3, Section 12 and Floor QCC Orders, as
defined in Options 8, Section 30(e)).\16\
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\16\ The Exchange also proposes to delete a stray period in the
rulebook, which is currently found at the end of the first of the
two set of charges that are subject to the Monthly Market Mater Cap.
This is a purely ministerial change, with no substantive effect.
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2. Proposal
The Exchange proposes to raise this Monthly Market Maker Cap to
$650,000. The Exchange believes that this higher cap, in combination
with the institution of strategy rebates for, among others, Market
Makers and Lead Market Maters (as described immediately below), will
help attract more order flow to the Exchange. All members and member
organizations would have the opportunity to interact with such
increased order flow.
C. Strategy Fees and Rebates
The Exchange proposes to offer rebates for certain strategy
executions under Options 7, Section 4.
1. Current Status
Currently, the Exchange recognizes the following types of strategy
executions: (1) dividend strategy,\17\ merger strategy,\18\ short stock
interest strategy,\19\ reversal and conversion strategies,\20\ jelly
roll strategy,\21\ and a box spread strategy.\22\ To qualify for a
strategy fee or rebate, the buy and sell side of a transaction must
originate either from the Exchange Trading Floor or as a Floor
Qualified Contingent Cross Order.\23\ For a dividend strategy, a Lead
Market Maker, Market Maker, Professional,\24\ Firm,\25\ and Broker-
Dealer that executed on the same trading day in the same class of
options when such members are trading (1) in their own proprietary
accounts, or (2) on an agency basis, they are neither charged a fee nor
paid a rebate per contract. For a merger, short stock interest, and box
spread strategy, a Lead Market Maker, Market Maker, Professional, Firm,
and Broker-Dealer that executed on the same trading day for all classes
of options in the aggregate when such members are trading (1) in their
own proprietary accounts, or (2) on an agency basis, they are neither
charged a fee nor paid a rebate per contract.\26\ Finally, for reversal
and conversion and jelly roll strategies, a Lead Market Maker, Market
Maker, Professional, Firm and Broker-Dealer that executed on the same
trading day for all classes of options in the aggregate when such
members are trading (1) in their own proprietary accounts, or (2) on an
agency basis, are neither charged a fee nor paid a rebate per
contract.\27\
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\17\ A dividend strategy is defined as transactions done to
achieve a dividend arbitrage involving the purchase, sale and
exercise of in-the-money options of the same class, executed the
first business day prior to the date on which the underlying stock
goes ex-dividend. See Options 7, Section 4.
\18\ A merger strategy is defined as transactions done to
achieve a merger arbitrage involving the purchase, sale and exercise
of options of the same class and expiration date, executed the first
business day prior to the date on which shareholders of record are
required to elect their respective form of consideration, i.e., cash
or stock. See id.
\19\ A short stock interest strategy is defined as transactions
done to achieve a short stock interest arbitrage involving the
purchase, sale and exercise of in-the-money options of the same
class. See id.
\20\ Reversal and conversion strategies are transactions that
employ calls and puts of the same strike price and the underlying
stock. Reversals are established by combining a short stock position
with a short put and a long call position that shares the same
strike and expiration. Conversions employ long positions in the
underlying stock that accompany long puts and short calls sharing
the same strike and expiration. See id.
\21\ A jelly roll strategy is defined as transactions created by
entering into two separate positions simultaneously. One position
involves buying a put and selling a call with the same strike price
and expiration. The second position involves selling a put and
buying a call, with the same strike price, but with a different
expiration from the first position. See id.
\22\ A box spread strategy is a strategy that synthesizes long
and short stock positions to create a profit. Specifically, a long
call and short put at one strike is combined with a short call and
long put at a different strike to create synthetic long and
synthetic short stock positions, respectively. See id.
\23\ See Pricing Schedule at Options 7, Section 4. A Floor
Qualified Contingent Cross Order is comprised of an originating
order to buy or sell at least 1,000 contracts that is identified as
being part of a qualified contingent trade coupled with a contra-
side order or orders totaling an equal number of contracts. The term
``qualified contingent trade'' shall have the same meaning set forth
in Options 3, Section 12(a)(3). See Options 8, Section 30(e).
\24\ The term ``Professional'' is defined in Options 1, Section
1(b)(45) as 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).
\25\ 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).
\26\ See id.
\27\ See id.
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2. Proposal
The Exchange proposes to pay a $0.0025 rebate per contract on any
strategy execution that meets the qualifications noted in the table for
Strategy Fees and Rebates. Therefore, for a dividend strategy, a Lead
Market Maker, Market Maker, Professional, Firm and Broker-Dealer that
executed on the same trading day in the same class of options when such
members are trading: (1) in their own proprietary accounts; or (2) on
an agency basis, will be paid a $0.0025 rebate per contract. For a
merger, short stock interest and box spread strategy, a Lead Market
Maker, Market Maker, Professional, Firm and Broker-Dealer that executed
on the same trading day for all classes of options in the aggregate
when such members are trading (1) in their own proprietary accounts; or
(2) on an agency basis, they will be paid a $0.0025 rebate per
contract. Finally, for reversal and conversion and jelly roll
strategies, a Lead Market Maker, Market Maker, Professional, Firm and
Broker-Dealer that executed on the same trading day for all classes of
options in the aggregate when such members are trading (1) in their own
proprietary accounts; or (2) on an agency basis, will be paid a $0.0025
rebate per contract. Additionally, the Exchange proposes to cap these
strategy rebates so that any individual Lead Market Maker, Market
Maker, Professional, Firm, or Broker-Dealer can only earn a maximum of
$25,000 per day in strategy rebates, in the aggregate.\28\
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\28\ The Exchange also proposes to delete an obsolete sentence
regarding a prior ``Monthly Strategy Cap'' that was inadvertently
left in place in Equity 7, Section 4 when that cap was eliminated in
a prior filing. See Securities Exchange Act Release No. 104034
(Sept. 24, 2025), 90 FR 46674, 46676 (Sept. 29, 2025) (File No. SR-
Phlx-2025-49) (Self-Regulatory Organizations; Nasdaq PHLX LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
To Amend Options 7, Section 4) (``At this time, the Exchange
proposes to no longer apply a Strategy Cap to strategy executions
and instead pay certain rebates.'') The text of this obsolete
sentence that the Exchange proposes to delete reads as follows:
``Reversal and conversion, jelly roll and box spread strategy
executions will not be included in the Monthly Strategy Cap for a
Firm.'' This is a purely ministerial change, with no substantive
effect.
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[[Page 2405]]
The Exchange believes that its proposal will incentivize Lead
Market Makers, Market Makers, Professionals, Firms and Broker-Dealers
to transact a greater number of strategy executions on the Exchange.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\29\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\30\ 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.
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\29\ 15 U.S.C. 78f(b).
\30\ 15 U.S.C. 78f(b)(4) and (5).
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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.'' \31\
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\31\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Likewise, in NetCoalition v. Securities and Exchange Commission
\32\ (``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.\33\ 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.'' \34\
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\32\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\33\ See NetCoalition, at 534--535.
\34\ Id. at 537.
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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'. . . .'' \35\ 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.
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\35\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (Dec. 2, 2008), 73 FR 74770, 74782-83 (Dec. 9, 2008) (SR-
NYSEArca-2006-21)).
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The proposed amended fees and rebates are equitable and not
unfairly discriminatory because the Exchange would uniformly apply the
new fees and rebates to any member or member organization who meets the
criteria for the new fees and rebates.
The Exchange's proposed amendments to the Customer Rebate Program
and to the Strategy Fees and Rebates are equitable and not unfairly
discriminatory because they are designed to encourage members and
member organizations to send a greater amount of order flow to PHLX--
which would in turn benefit all market participants.
Specifically, the Exchange's proposal to make modifications to the
Customer Rebate Program to attract more Customer order flow is
equitable and not unfairly discriminatory because Customer liquidity
benefits all market participants by providing more trading
opportunities, which attracts market makers. An increase in the
activity of market makers--particularly in response to pricing--in turn
facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants.
Such developments would redound to the benefit of all market
participants.
Also, the Exchange's proposal to pay a $0.0025 rebate per contract
on qualifying strategy executions is equitable and not unfairly
discriminatory because the Exchange desires to attract qualifying
strategy transactions to PHLX, and this rebate is designed to encourage
Lead Market Makers, Market Makers, Professionals, Firms, and Broker-
Dealers to transact a greater number of strategies on PHLX. Such
increased activity would redound to the benefit of all market
participants. Furthermore, while Customers would not qualify for a
strategy rebate, they currently pay no Options Transaction Charges on
strategy executions, and would continue to pay no such charges.
Finally, the Exchange's proposed increase of the Monthly Market
Maker Cap is equitable and not unfairly discriminatory because this
higher cap--in combination with the institution of strategy rebates
for, among others, Market Makers and Lead Market Maters--is part of an
overall effort to help attract more order flow to the Exchange. All
members and member organizations would benefit from the opportunity to
interact with such increased order flow.
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 that is not necessary or appropriate in furtherance of the
purposes of the Act. 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 proposed amendments to the Customer Rebate Program
and to the Strategy Fees and Rebates, as well as the proposed increase
of the Monthly Market Maker Cap, would not impose an undue burden on
intra-market competition that is not necessary or appropriate in
furtherance of the purposes of the Act, because the Exchange would
uniformly apply the new and revised fees and rebates, and the revised
cap, to all
[[Page 2406]]
qualifying PHLX members and member organizations.
Specifically, the Exchange's proposal to make modifications to the
Customer Rebate Program would not impose an undue burden on intra-
market competition that is not necessary or appropriate in furtherance
of the purposes of the Act. First, the Customer Rebate Program will
continue to be available to all eligible Customers. Second, the
Exchange believes that the enhancements to the Customer Rebate Program
should help attract more Customer liquidity to the Exchange, which
would benefit all market participants by providing more trading
opportunities and by attracting more market makers. An increase in the
activity of these market participants--particularly in response to
pricing--in turn facilitates tighter spreads, which may cause an
additional corresponding increase in order flow from other market
participants.
Also, the Exchange's proposal to pay a $0.025 rebate per contract
on qualifying strategy executions would not impose an undue burden on
intra-market competition that is not necessary or appropriate in
furtherance of the purposes of the Act, because the Exchange would
uniformly pay the rebate to all qualifying Lead Market Makers, Market
Makers, Professionals, Firms, and Broker-Dealers. While Customers would
not qualify for a strategy rebate, they currently pay no Options
Transaction Charges on strategy executions, and would continue to pay
no such charges.
Finally, the Exchange's proposal to increase the Monthly Market
Maker Cap would not impose an undue burden on intra-market competition
that is not necessary or appropriate in furtherance of the purposes of
the Act, because the cap would continue to apply equally to all Market
Makers and Lead Market Makers. Also, the revised cap--in combination
with the institution of strategy rebates for, among others, Market
Makers and Lead Market Maters--is part of an overall effort to help
attract more order flow to the Exchange. All members and member
organizations would benefit from the opportunity to interact with such
increased order flow.
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.\36\
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\36\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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#691b1c050c440a0604040c071d1a291a0c0a470e061f"><span class="__cf_email__" data-cfemail="2153544d440c424e4c4c444f5552615244420f464e57">[email protected]</span></a>. Please include
file number SR-PHLX-2026-01 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-2026-01. 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-2026-01 and should be submitted on or
before February 10, 2026.
For the Commission, by the Division of Trading and Markets, pursuant
to delegated authority.\37\
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\37\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2026-00910 Filed 1-16-26; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on January 20, 2026.
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.