Notice2026-07594
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Fees for Certain Connectivity Services
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 20, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 75 (Monday, April 20, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 75 (Monday, April 20, 2026)]
[Notices]
[Pages 21058-21061]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07594]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105245; File No. SR-PHLX-2026-23]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Fees for
Certain Connectivity Services
April 15, 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 April 10, 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.
---------------------------------------------------------------------------
\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 the Exchange's fees for connectivity
services, as described further below. 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 purpose of the proposed rule change is to amend Rule Options 7,
Section 9 to increase the Exchange's fees relating to its Testing
Facilities \3\ by 10%.\4\ Rule Options 7, Section 9 provides that
subscribers to the Testing Facility located in Carteret, New Jersey
shall pay a fee of $1,000 per hand-off, per month for connection to the
Testing Facility. The hand-off fee includes either a 1Gb or 10Gb switch
port and a cross connect to the Testing Facility. In addition, Options
7, Section 9 provides that subscribers shall also pay a one-time
installation fee of $1,000 per hand-off. The Exchange proposes to
increase these aforementioned fees by 10% to require that subscribers
to the Testing Facility shall pay a fee of $1,100 per hand-off, per
month for connection to the Testing Facility and a one-time
installation fee of $1,100 per hand-off.
---------------------------------------------------------------------------
\3\ The Exchange operates a test environment in Carteret, New
Jersey. References to the ``Testing Facility'' refers to this test
environment. See Rule Options 7, Section 9.E.
\4\ The Exchange in 2024 filed a proposed rule change to amend,
among other rules, Rule Equity 7 (``Pricing Schedule''), to increase
certain fees for its Testing Facilities by 10 percent (10%). See
Securities Exchange Act Release No. 101691 (Nov. 21, 2024), 89 FR
93697 (Nov. 27, 2024) (SR-Phlx-2024-57) (``2024 Proposal''). The
Exchange now proposes a corresponding increase to the Testing
Facility fees under Options 7, consistent with the basis for and
rationale supporting the 2024 Proposal as it regards the Rule Equity
7 adjustments. As proposed, the proposal would thus align the
Testing Facility fees under the Exchange's Options 7 Rule with those
for the same services under its Equity Rules 7 as adjusted in the
2024 Proposal. The Exchange is proposing no other changes to its
rules.
---------------------------------------------------------------------------
The proposed increases in fees would enable the Exchange to
maintain and improve its market technology and services to remain
competitive with its peers. Over the years, customer demand for more
sophisticated, higher-throughput, lower-latency, and higher-power
connectivity solutions has increased. The Exchange continues to invest
in maintaining, improving, and enhancing its connectivity products,
services, and facilities for the benefit and often at the behest of its
customers. Nevertheless, the Exchange has not increased the Testing
Facility fees included in this proposal since before 2017. In this
proposal, the Exchange proposes to increase such Testing Facility fees
by 10%, consistent with the adjustments made to analogous services in
the 2024 Proposal.\5\
---------------------------------------------------------------------------
\5\ See supra note 4 and accompanying text (discussing the 2024
Proposal in part and noting that this proposal would align the
Testing Facility fees under the Exchange's Options 7 Rule with those
for the corresponding services under its Equity Rule 7 as adjusted
in the 2024 Proposal).
---------------------------------------------------------------------------
As discussed below, the Exchange proposes to adjust its fees by an
industry- and product-specific inflationary measure. It is reasonable
and consistent with the Act for the Exchange to recoup its investments,
at least in part, by adjusting its fees.
[[Page 21059]]
Continuing to operate at current fee levels impacts the Exchange's
ability to enhance its offerings and the interests of market
participants and investors.
The fee increases the Exchange proposes are based on an industry-
specific Producer Price Index (``PPI''), which is a tailored measure of
inflation.\6\ As a general matter, the Producer Price Index is a family
of indexes that measures the average change over time in selling prices
received by domestic producers of goods and services. PPI measures
price change from the perspective of the seller. This contrasts with
other metrics, such as the Consumer Price Index (``CPI''), that measure
price change from the purchaser's perspective.\7\ About 10,000 PPIs for
individual products and groups of products are tracked and released
each month.\8\ PPIs are available for the output of nearly all
industries in the goods-producing sectors of the U.S. economy--mining,
manufacturing, agriculture, fishing, and forestry--as well as natural
gas, electricity, and construction, among others. The PPI program
covers approximately 69 percent of the service sector's output, as
measured by revenue reported in the 2017 Economic Census.
---------------------------------------------------------------------------
\6\ See <a href="https://fred.stlouisfed.org/series/PCU518210518210">https://fred.stlouisfed.org/series/PCU518210518210</a>.
\7\ See <a href="https://www.bls.gov/ppi/overview.htm">https://www.bls.gov/ppi/overview.htm</a>.
\8\ See Id.
---------------------------------------------------------------------------
For purposes of this proposal, the relevant industry-specific PPI
is the Data Processing and Related Services PPI (``Data PPI''), which
is an industry net-output PPI that measures the average change in
selling prices received by companies that provide data processing
services.
The Data PPI was introduced in January 2002 by the Bureau of Labor
Statistics (``BLS'') as part of an ongoing effort to expand Producer
Price Index coverage of the services sector of the U.S. economy and is
identified as NAICS-518210 in the North American Industry
Classification System.\9\ According to the BLS ``[t]he primary output
of NAICS 518210 is the provision of electronic data processing
services. In the broadest sense, computer services companies help their
customers efficiently use technology. The processing services market
consists of vendors who use their own computer systems--often utilizing
proprietary software--to process customers' transactions and data.
Companies that offer processing services collect, organize, and store a
customer's transactions and other data for record-keeping purposes.
Price movements for the NAICS 518210 index are based on changes in the
revenue received by companies that provide data processing services.
Each month, companies provide net transaction prices for a specified
service. The transaction is an actual contract selected by probability,
where the price-determining characteristics are held constant while the
service is repriced. The prices used in index calculation are the
actual prices billed for the selected service contract.'' \10\
---------------------------------------------------------------------------
\9\ NAICS appears in table 5 of the PPI Detailed Report and is
available at <a href="https://data.bls.gov/timeseries/PCU518210518210">https://data.bls.gov/timeseries/PCU518210518210</a>.
\10\ See <a href="https://www.bls.gov/ppi/factsheets/producer-price-index-for-the-data-processing-and-related-servicesindustry-naics-518210.htm">https://www.bls.gov/ppi/factsheets/producer-price-index-for-the-data-processing-and-related-servicesindustry-naics-518210.htm</a>.
---------------------------------------------------------------------------
The Exchange believes the Data PPI is an appropriate measure to be
considered in the context of the proposed rule change to modify the fee
for its connectivity products because the Exchange uses its ``own
computer systems'' and ``proprietary software,'' i.e., its own data
center and proprietary matching engine software, respectively, to
collect, organize, store and report customers' transactions in U.S.
equity securities on the Exchange's proprietary trading platform. In
other words, the Exchange is in the business of data processing and
related services.
For purposes of this proposed rule change, the Exchange examined
the Data PPI value for the period from January 2017 through February
2026, the most recent month for which data is available at the time of
this filing.\11\ The Data PPI had a starting value of 109 in January
2017 and an ending value of 123.670 in February 2026, representing an
increase of approximately 13.59% over this period. This indicates that
companies who are also in the data storage and processing business have
generally increased prices for a specified service covered under NAICS
518210 by an average of 13.59% during this period. Based on that
percentage change, the Exchange proposes to make a one-time fee
increase of 10%, which reflects only a portion of the cumulative
inflation experienced since the most recent adjustments to these fees
on or about 2017.\12\ The Exchange further believes the Data PPI is an
appropriate measure for purposes of the proposed rule change on the
basis that it is a stable metric with limited volatility, unlike other
consumer-side inflation metrics. In fact, the Data PPI has not
experienced a greater than 3.09% increase year over year since Data PPI
was introduced into the PPI in January 2002. The average calendar year
change from January 2002 to January 2026 was 0.70%, with a cumulative
increase of 20.32% over this 24-year period. The Exchange believes the
Data PPI is considerably less volatile than other inflation metrics
such as CPI, which has had individual calendar-year increases of more
than 6.5%, and a cumulative increase of over 81% over the same
period.\13\
---------------------------------------------------------------------------
\11\ See 2024 Proposal, supra note 4.
\12\ See 2024 Proposal, supra note 4. The proposed adjustments
would thus align the fees for the Testing Facility under Rule
Options 7 with fees for the corresponding Testing Facility service
under Equity Rule 7 as adjusted pursuant to the 2024 Proposal.
\13\ See <a href="https://www.usinflationcalculator.com/">https://www.usinflationcalculator.com/</a>.
---------------------------------------------------------------------------
The Exchange believes the Data PPI, and significant investments
into, and enhanced performance of, the Exchange support the
reasonableness of the proposed fee increases.\14\ As the Exchange notes
above, the Exchange has relied on Data PPI, as well as its investments
into and enhanced performance of the Exchange to support the
reasonableness of proposed fees for a substantively identical service
or product under Rule Equity 7.\15\
---------------------------------------------------------------------------
\14\ See supra discussion of connectivity product and facility
improvements. Additionally, other exchanges have filed for increases
in certain fees, based in part on comparisons to inflation. See,
e.g., Securities Exchange Act Release Nos. 34-100004 (April 22,
2024), 89 FR 32465 (April 26, 2024) (SR-CboeBYX-2024-012); and 34-
100398 (June 21, 2024), 89 FR 53676 (June 27, 2024) (SR-BOX-2024-
16); Securities Exchange Act Release No. 34-100994 (September 10,
2024), 89 FR 75612 (September 16, 2024) (SR-NYSEARCA-2024-79). See
also supra note 4 and accompanying text.
\15\ See 2024 Proposal, supra note 4.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\16\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\17\ 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.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
This belief is based on two factors. First, the current fees do not
properly reflect the quality of the services and products, as fees for
the services and products in question have been static in nominal
terms, and therefore falling in real terms due to inflation. Second,
the Exchange believes that investments made in enhancing the capacity
and speed of Exchange systems increase the performance of the services
and products.
[[Page 21060]]
The Proposed Rule Change Is Reasonable
As noted above, the Exchange has not increased any of the fees
included in this proposal since 2017 or earlier. However, in the years
following the most recent fee increases, the Exchange has made
significant investments in upgrades to its connectivity products,
services, and facilities, enhancing the quality of its services.
Between 2017 and 2026, the period under consideration in this proposal,
the inflation rate was 3.25% per year, on average, producing a
cumulative inflation rate of 33.32%.\18\ Using the more targeted
inflation number of Data PPI, the cumulative inflation rate was 13.59%.
The exchange believes the Data PPI is a reasonable metric to base this
fee increase on because it is targeted to producer-side increases in
the data processing industry.
---------------------------------------------------------------------------
\18\ See <a href="https://www.officialdata.org/us/inflation/2017?amount=1">https://www.officialdata.org/us/inflation/2017?amount=1</a>.
---------------------------------------------------------------------------
Notwithstanding inflation, as noted above, the Exchange has not
increased its fees for the subject service. The proposed fee changes
represent a modest increase from the current fees. As discussed above,
the Exchange is limiting its proposed fee increases to 10% of the
current fees, which as discussed above reflects only a portion of the
cumulative inflation experienced since the most recent adjustments to
these fees on or about 2017. The Exchange believes the proposed fee
increase is reasonable in light of the Exchange's continued expenditure
in maintaining a robust technology ecosystem. Furthermore, the Exchange
continues to invest in maintaining and enhancing its connectivity
products for the benefit and often at the behest of its customers and
global investors.\19\ The goal of the enhancements discussed above,
among other things, is to provide faster, higher-capacity, and more
modern connectivity products and services. Accordingly, the Exchange
continues to expend resources to innovate and modernize technology so
that it may benefit its members in offering its connectivity products
and services.
---------------------------------------------------------------------------
\19\ See 2024 Proposal, supra note 4 (describing such continued
maintenance enhancements).
---------------------------------------------------------------------------
Moreover, as discussed above, the Exchange in 2024 filed a proposed
rule change to amend, among other rules, Rule Equity 7 (``Pricing
Schedule''), to increase certain fees for its Testing Facilities by
10%.\20\ In this proposal, the Exchange is merely proposing a
corresponding increase to the analogous Testing Facility fees under
Options 7, consistent with the basis for and rationale supporting the
analogous Rule Equity 7 adjustments in the 2024 Proposal. The Exchange
is proposing no other changes to its rules.
---------------------------------------------------------------------------
\20\ See 2024 Proposal, supra note 4.
---------------------------------------------------------------------------
The Proposed Fees Are Equitably Allocated and Not Unfairly
Discriminatory
The Exchange believes that the proposed fee increases are equitably
allocated and not unfairly discriminatory because they would apply to
all market participants that choose to purchase connectivity products
and services from the Exchange. Any participant that chooses to
purchase the Exchange's connectivity products and services would be
subject to the same fee schedule, regardless of what type of business
they operate or the use they plan to make use of the products and
services. Additionally, the fee increase would be applied uniformly to
market participants without regard to Exchange membership status or the
extent of any other business with the Exchange or affiliated entities.
Finally, the Exchange believes that the proposed fee changes are not
unfairly discriminatory because the fees would be assessed uniformly
across all market participants, in the same manner they are today, that
voluntarily purchase the Exchange's connectivity products and services,
which would remain available for purchase by all market participants.
Moreover, as discussed above, the Exchange is merely proposing a 10
percent increase to the Testing Facility fees under Options 7,
consistent with basis for and rationale supporting the fee increase
adopted in the 2024 Proposal for the analogous Testing Facility under
Rule Equity 7. The Exchange is proposing no other changes to its rules.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed fees will impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Intramarket Competition
The Exchange believes that the proposed fees do not put any market
participants at a relative disadvantage compared to other market
participants. As noted above, the fee schedule would continue to apply
to all purchasers of the Exchange's connectivity products and services
in the same manner as it does today, albeit at inflation-adjusted rates
for certain fees, and customers may choose whether to purchase these
products and services at all. The Exchange also believes that the level
of the proposed fees neither favor nor penalize one or more categories
of market participants in a manner that would impose an undue burden on
competition.
Intermarket Competition
The Exchange believes that the proposed fees do not impose a burden
on competition or on other SROs that is not necessary or appropriate.
In determining the proposed fees, the Exchange relied on an objective
and stable metric with limited volatility. Utilizing Data PPI over a
specified period of time is a reasonable means of recouping the
Exchange's investment in maintaining and enhancing its connectivity
products, services, and facilities. Thus, the Exchange believes
utilizing Data PPI, a tailored measure of inflation, to increase
certain fees for connectivity products and services to recoup the
Exchange's investment in maintaining and enhancing such products,
services, and its facilities would not impose a burden on competition.
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.\21\
---------------------------------------------------------------------------
\21\ 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:
[[Page 21061]]
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#b5c7c0d9d098d6dad8d8d0dbc1c6f5c6d0d69bd2dac3"><span class="__cf_email__" data-cfemail="c7b5b2aba2eaa4a8aaaaa2a9b3b487b4a2a4e9a0a8b1">[email protected]</span></a>. Please include
file number SR-PHLX-2026-23 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-2026-23. 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-2026-23 and should be submitted on
or before May 11, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
---------------------------------------------------------------------------
\22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07594 Filed 4-17-26; 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 April 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.