Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 3, 861-862 [2019-00477]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 84, Number 21 (Thursday, January 31, 2019)]
[Notices]
[Pages 861-862]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-00477]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84967; File No. SR-Phlx-2018-83]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, 
Section 3

December 26, 2018.
    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 December 20, 2018, 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 Exchange's port fee schedule at 
Equity 7, Section 3, as described further below.
    The text of the proposed rule change is available on the Exchange's 
website at https://nasdaqphlx.cchwallstreet.com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its fee schedule, at Equity 7, 
Section 3, to clarify its existing practice for assessing port fees.
    Presently, the Exchange assigns ports to customers that request 
them using the customers' Market Participant Identifiers or ``MPIDs.'' 
The Exchange assesses ports fees in two ways.
    First, for certain port types--i.e., Multicast TotalView-ITCH, TCP 
ITCH data feed, DROP, and their corresponding disaster recovery ports--
the Exchange assigns a port only to the MPID of the customer that 
requested it. Even if, as a practical matter, others also utilize the 
port, the Exchange will only bill the MPID of the customer that 
requested the port. The requesting customer may then, at its 
discretion, subsequently bill any other users for their shared usage of 
the port.
    Second, for other port types--i.e., OUCH, FIX Trading Ports (FIX 
and FIX Lite), RASH, and their corresponding disaster recovery ports--
the Exchange assigns the port to the MPID of the customer that 
requested it as well as to any other MPIDs that the requester had 
specified. In these instances, the Exchange does not only bill the 
port-requesting MPID. Instead, the Exchange assesses a separate monthly 
fee to each of the MPIDs it assigned to the port.
    The existing port fee schedule, at Section 3, does not explain 
these nuances of Exchange's port billing practices. Instead, Section 3 
states simply, for all port types, that the Exchange will assess fees 
of certain stated amounts on a per port, per month basis. Although this 
existing language is accurate, the Exchange believes that it should be 
more descriptive so as to avoid confusion as to the circumstances in 
which a customer will incur port fees. The Exchange now proposes to 
amend Section 3 to provide a more fulsome explanation of its billing 
practices.
    To accomplish this, the Exchange proposes to reorganize its chart 
of ports and associated fees in the second paragraph of Section 3. 
Specifically, the Exchange proposes to split this chart into two parts.
    The first part of the proposed amended chart will comprise port 
types for which the Exchange will charge a separate monthly fee to each 
MPID that it has assigned to a port, i.e., OUCH, FIX Trading Port (FIX 
and FIX Lite (FLITE), RASH, and disaster recovery ports for OUCH, FIX 
Trading Port, and RASH. The first part of the chart will include the 
following preface to explain the Exchange's pertinent billing practice:

    For the port types listed immediately below, where a customer 
has requested that the Exchange assign more than one MPID to a 
particular port, then the Exchange will assess a separate monthly 
fee to each MPID assigned to the port.

The Exchange also proposes to revise its description of the price 
formula for each port type therein from ``$X/port/month'' to ``$X/each 
MPID assigned to port/month.''
    The second part of the proposed amended chart will comprise port 
types for which the Exchange will charge a monthly fee only to the MPID 
that requested the port, i.e., Multicast TotalView-ITCH (software 
based), TCP ITCH data feed, DROP, Trading Ports used in Test Mode, and 
the disaster recover port for DROP.\3\ This part will include the 
following preface describing the applicable billing practice:
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    \3\ It also includes ports for which the exchange charges no 
fee--Data Retransmission Ports and other disaster recover ports. The 
Exchange proposes to add a parenthetical with the word ``Glimpse'' 
next to Data Retransmission Ports to clarify that that such Ports 
include access to the ``Glimpse'' product, which allows a subscriber 
to replay market data from the current trading day.

    For the port types listed immediately below, the Exchange will 
assess the monthly fee to the single MPID that requested that 
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particular port.


[[Page 862]]


For the ports in this part, the Exchange will maintain its existing 
price formula: ``$X/port/month.''
    The Exchange emphasizes that the foregoing proposal does not make 
any change to the Exchange's existing port fees other than to clarify 
its existing practices for assessing them.\4\
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    \4\ In addition to the above, the Exchange proposes to delete 
the following paragraph from the Rule insofar as it will become 
obsolete and will no longer apply after December 31, 2018: ``New PSX 
Participants will not be assessed the above listed Port Fees through 
December 31, 2018. A New PSX Participant will be defined as a PSX 
Participant that was not a PSX Participant before September 1, 
2017.''
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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.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposal is reasonable because it 
clarifies the Exchange's port fee schedule, at Section 3. Although 
existing Section 3 is an accurate description of the fees that the 
Exchange charges for ports, it does not describe the nuances of the 
Exchange's existing practices for assessing port fees in different 
situations. The proposal will convey these nuances in order to avoid 
potential confusion among customers as to the circumstances in which 
they will incur port fees. In particular, the proposal will amend 
Section 3 to state that, for certain enumerated port types, the 
Exchange will assess a monthly fee only on the MPID that requested the 
port, whereas in other enumerated port types, the Exchange will assess 
a separate fee to the requesting MPID as well as to each additional 
MPID that the requester asked the Exchange to assign to the same port.
    The Exchange believes that this proposal is also equitable in that 
a more fulsome description of the Exchange's port fee practices will 
help to avoid any potential confusion as to when and under what 
circumstances the Exchange will assess a monthly port fee to a 
customer. The Exchange notes that the proposal merely codifies the 
existing practices of the Exchange with respect to port fees and will 
not involve any substantive changes to the fees that the Exchange's 
customers are paying now.
    The Exchange believes that its proposal is not unfairly 
discriminatory because, again, the proposal will merely make non-
substantive clarifications to Section 3 that will codify the Exchange's 
existing practices for assessing port fees in different situations. The 
proposal will not make any changes to the fees that port users pay 
presently.
    Finally, the Exchange believes that it is consistent with the Act 
to delete a paragraph from the Rules that refers to a port fee waiver 
that has expired, as of January 1, 2019. It is in the interest of the 
public and investors for the Exchange to maintain a rulebook that is 
current and accurate.

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. Insofar as the proposal merely 
codifies existing practice and makes no changes to the fees that the 
Exchange charges presently, the Exchange does not expect that the 
proposal will have any impact on competition whatsoever.

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.\7\
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    \7\ 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

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2018-83 on the subject line.

Paper Comments

     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-2018-83. 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 (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-Phlx-2018-83, and should be submitted on 
or before February 21, 2019.
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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-00477 Filed 1-30-19; 8:45 am]
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