Notice2026-03706
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Add Liquidity Orders
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
February 25, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 37 (Wednesday, February 25, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 37 (Wednesday, February 25, 2026)]
[Notices]
[Pages 9320-9321]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03706]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104872; File No. SR-Phlx-2026-07]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Add
Liquidity Orders
February 20, 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 February 12, 2026, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``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.
---------------------------------------------------------------------------
\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 Add Liquidity Orders.
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
The Exchange's proposal amends Options 3, Section 7, Types of Order
and Quote Protocols. Specifically, the Exchange proposes to amend Add
Liquidity Orders at Options 3, Section 7(n) which currently states,
An Add Liquidity Order is a limit order that is to be executed
in whole or in part on the Exchange (i) only after being displayed
on the Exchange's limit order book; and (ii) without routing any
portion of the order to another market center. Member organizations
may specify whether an Add Liquidity Order shall be cancelled or re-
priced to the minimum price variation above the national best bid
price (for sell orders) or below the national best offer price (for
buy orders) if, at the time of entry, the order (i) is executable on
the Exchange; or (ii) the order is not executable on the Exchange,
but would lock or cross the national best bid or offer. If at the
time of entry, an Add Liquidity Order would lock or cross one or
more non-displayed orders or quotes on the Exchange, the Add
Liquidity Order shall be cancelled or re-priced to the minimum price
variation above the best non-displayed bid price (for sell orders)
or below the best non-displayed offer price (for buy orders).
Notwithstanding the aforementioned, if an Add Liquidity Order would
not lock or cross an order or quote on the System but would lock or
cross the NBBO, the order will be handled pursuant to Options 3,
Section 5(d). An Add Liquidity Order will be ranked in the
Exchange's limit order book in accordance with Options 3, Section
10. Add Liquidity Orders may only be submitted when an options
series is open for trading.
The Exchange proposes to add the following sentence to the end of
the order type description: ``Add Liquidity Orders may only have a
time-in-force designation of Day.'' The proposed text represents
current System functionality.
Today, Add Liquidity Orders may only have a time-in-force
designation of Day,\3\ so they would rest on the order book in the
event that the order could not execute. An Add Liquidity Order may not
remove liquidity from the order book. The Add Liquidity Order is
designed to encourage displayed liquidity and offer member
organizations greater flexibility to post liquidity on the Exchange, as
a result, an Add Liquidity Order may not have a Time-in-Force of
Immediate-or-Cancel.\4\ Additionally, Options 3, Section 7(n) states
that Add Liquidity Orders may only be submitted when an options series
is open for trading.\5\ Add Liquidity Orders may not have a Time-in-
Force of Good-Till-Date \6\ or Good-Till-Cancel \7\ because these
designations persist into the next trading day and participate in the
Opening Process if the orders do not execute. The Exchange's proposal
adds clarity and transparency
[[Page 9321]]
to the Exchange's rules and is a non-substantive amendment.
---------------------------------------------------------------------------
\3\ A Time in Force designation of Day is described as an order
to buy or sell entered with a TIF of ``DAY,'' which, if not
executed, expires at the end of the day on which it was entered. All
orders by their terms are Day orders unless otherwise specified. Day
orders may be entered through FIX or OTTO. See Supplementary
Material .02(a) to Options 3, Section 7.
\4\ A Time in Force designation of Immediate-or-Cancel is
described as an order entered with a TIF of ``IOC'' that is to be
executed in whole or in part upon receipt. Any portion not so
executed is to be treated as cancelled. See Supplementary Material
.02(d) to Options 3, Section 7.
\5\ A Time-In-Force of ``OPG'' is not permissible. An Opening
Only (``OPG'') order is entered with a TIF of ``OPG.'' This order
can only be executed in the Opening Process pursuant to Options 3,
Section 8. Any portion of the order that is not executed during the
Opening Process is cancelled. OPG orders may not route. This order
type is not subject to any protections listed in Options 3, Section
15, except Size Limitation and Market Wide Risk Protection. See
Supplementary Material .02(e) to Options 3, Section 7.
\6\ An order to buy or sell entered with a TIF of ``GTD,''
which, if not executed, will be cancelled at the sooner of the end
of the expiration date assigned to the order, or the expiration of
the series; provided, however, that GTD orders will be canceled in
the event of a corporate action that results in an adjustment to the
terms of an option contract. GTD orders may be entered through FIX.
See Supplementary Material .02(c) to Options 3, Section 7.
\7\ An order to buy or sell entered with a TIF of ``GTC''
remains in force until the order is filled, canceled or the option
contract expires; provided, however, that GTC orders will be
canceled in the event of a corporate action that results in an
adjustment to the terms of an option contract. GTC orders may be
entered through FIX. See Supplementary Material .02(b) to Options 3,
Section 7.
---------------------------------------------------------------------------
OTTO
The Exchange proposes to amend Supplementary Material .03(B) of
Options 3, Section 7, related to ``Ouch to Trade Options'' or ``OTTO,''
to note that the interface allows member organizations and their
Sponsored Customers to connect, send, and receive messages related to
orders, auction orders, and auction responses to and from the Exchange.
The proposed rule text makes clear that member organizations and their
Sponsored Customers may both send and receive messages to and from the
Exchange. This amendment reflects current System functionality.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\9\ in particular, in that it
is designed to promote just and equitable principles of trade, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general to protect
investors and the public interest.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange's proposal, which specifies that Add Liquidity Orders
may only be entered as Day Orders, is consistent with the Act because
the Exchange's proposal brings clarity, transparency, and readability
to its rules without making any substantive changes.
OTTO
The Exchange's proposal to amend Supplementary Material .03(B) of
Options 3, Section 7, related to OTTO, is consistent with the Act
because the proposed rule text clarifies the rule text by making clear
that member organizations and their Sponsored Customers may both send
and receive messages to and from the Exchange. This amendment reflects
current System functionality.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act.
Add Liquidity Order
The Exchange's proposal to restrict the Add Liquidity Order to a
Time-in-Force of Day does not impose an intra-market burden on
competition because no member organization will be able to enter an Add
Liquidity Order with a Time-in-Force other than Day.
The Exchange's proposal to restrict the Add Liquidity Order to a
Time-in-Force of Day does not impose an inter-market burden on
competition because the proposal is non-substantive.
OTTO
The Exchange's proposal to amend Supplementary Material .03(B) of
Options 3, Section 7, related to OTTO, does not impose an undue burden
on intra-market competition because all member organizations and their
Sponsored Customers may utilize OTTO.
The Exchange's proposal to amend Supplementary Material .03(B) of
Options 3, Section 7, related to OTTO, does not impose an undue burden
on inter-market competition because the proposal harmonizes Phlx's rule
text with Nasdaq GEMX, LLC (``GEMX'') Supplementary Material .03(B) of
Options 3, Section 7.
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) \11\ thereunder.
Because the foregoing proposed rule change does not: (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) \13\
thereunder.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------
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 will 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#fc8e899099d19f9391919992888fbc8f999fd29b938a"><span class="__cf_email__" data-cfemail="89fbfce5eca4eae6e4e4ece7fdfac9faeceaa7eee6ff">[email protected]</span></a>. Please include
file number SR-Phlx-2026-07 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-2026-07. 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-2026-07 and
should be submitted on or before March 18, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-03706 Filed 2-24-26; 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 February 25, 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.