Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Pricing of a Technology Infrastructure Migration, 51705-51707 [2019-21099]

Download as PDF Federal Register / Vol. 84, No. 189 / Monday, September 30, 2019 / Notices For the Commission, pursuant to delegated authority.50 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–21100 Filed 9–27–19; 8:45 am] BILLING CODE 8011–01–P A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION [Release No. 34–87073; File No. SR–Phlx– 2019–37] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Pricing of a Technology Infrastructure Migration September 24, 2019. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 18, 2019, Nasdaq PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Phlx pricing at Options 7, Section 9 titled ‘‘Other Member Fees.’’ The amendment will describe the pricing with respect to a technology infrastructure migration. While the changes proposed herein are effective upon filing, the Exchange has designated the amendments become operative on October 1, 2019. 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. khammond on DSKJM1Z7X2PROD with NOTICES 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 50 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 19:16 Sep 27, 2019 Jkt 247001 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. 1. Purpose The Exchange proposes to amend Phlx pricing at Options 7, Section 9 titled ‘‘Other Member Fees.’’ The Exchange previously filed a fee proposal to not assess a fee for duplicative FIX Ports 3 and CTI Ports 4 to new FIX Ports and CTI Ports, during the month of September 2019, in connection with an upcoming technology infrastructure migration.5 With this rule change, the Exchange proposes to not assess a fee for duplicative FIX Ports and CTI Ports to new FIX Ports and CTI Ports, during the month of October 2019 to allow additional time for the Exchange to migrate its technology. Description of Migration and Pricing Impact In connection with this migration, members may request new FIX Ports and CTI Ports during the month of October 2019, which are duplicative of the type and quantity of their current ports, at no additional cost to allow for testing of the new ports and allow for continuous connection to the match engine during the transition period.6 For example, a Phlx member with 3 FIX Ports and 1 CTI Port on October 1, 2019 could request 3 new FIX Ports and 1 new CTI Port for the month of October 2019 at no additional cost. The Phlx 3 Financial Information eXchange or ‘‘FIX’’ is an interface that allows members and their Sponsored Customers to connect, send, and receive messages related to orders and auction orders and responses to and from the Exchange. Features include the following: (1) Execution messages; (2) order messages; and (3) risk protection triggers and cancel notifications. See Rule 1080(a)(i)(A). 4 Clearing Trade Interface or ‘‘CTI’’ is a real-time clearing trade update message that is sent to a member after an execution has occurred and contains trade details specific to that member. The information includes, among other things, the following: (i) The Clearing Member Trade Agreement or ‘‘CMTA’’ or ‘‘OCC’’ number; (ii) Exchange badge or house number; (iii) the Exchange internal firm identifier; (iv) an indicator which will distinguish electronic and non-electronically delivered orders; (v) liquidity indicators and transaction type for billing purposes; and (vi) capacity. See Rule 1070(b)(1). 5 See Securities and Exchange Act Release No. 86795 (August 28, 2019), 84 FR 46578 (September 4, 2019) (SR–Phlx–2019–30). 6 Members would contact Market Operations to acquire new duplicative FIX Ports and CTI Ports. See Options Technical Update #2019–3. PO 00000 Frm 00198 Fmt 4703 Sfmt 4703 51705 member would be assessed only for the legacy market ports, in this case 3 FIX Ports and 1 CTI Port for the month of October 2019 and would not be assessed for the new ports, which are duplicative of the current ports. A member may acquire any additional legacy ports during the month of October 2019 and would be assessed the charges indicated in the current Pricing Schedule. The migration does not require a member to acquire any additional ports, rather the migration requires a new port to replace any existing ports provided the member desired to maintain the same number of ports.7 A member desiring to enter orders into Phlx is required to obtain 1 FIX Port. A member may also obtain order and execution ports, such as a CTI Port, to receive clearing messages. The number of additional FIX or order and execution ports obtained by a member is dependent on the member’s business needs. Applicability to and Impact on Members 8 The proposal is not intended to impose any additional fees on any Phlx members. All members may enter orders on Phlx. As noted above, a Phlx member may enter all orders on Phlx through one FIX Port. The Exchange does not require a Phlx member to obtain more than one FIX Port, however, a member may obtain multiple FIX Ports or a CTI Port to meet its individual business needs. This proposal is intended to permit a Phlx member to migrate its current FIX Ports and CTI Ports at no additional costs during the month of October 2019 to allow for continuous connection to the Exchange. Members would only be assessed a fee for their current FIX Ports and CTI Ports and not be assessed a fee for any new duplicative ports they acquire in connection with the technology 7 The migration is 1:1 and therefore would not require a member to acquire new ports, nor would it reduce the number of ports needed to connect. 8 On May 21, 2019, the SEC Division of Trading and Markets (the ‘‘Division’’) issued fee filing guidance titled ‘‘Staff Guidance on SRO Rule Filings Relating to Fees’’ (‘‘Guidance’’). Within the Guidance, the Division noted, among other things, that the purpose discussion should address ‘‘how the fee may apply differently (e.g., additional cost vs. additional discount) to different types of market participants (e.g., market makers, institutional brokers, retail brokers, vendors, etc.) and different sizes of market participants.’’ See Guidance (available at https://www.sec.gov/tm/staff-guidancesro-rule-filings-fees). The Guidance also suggests that the purpose discussion should include numerical examples. Where possible, the Exchange is including numerical examples. In addition, the Exchange is providing data to the Commission in support of its arguments herein. The Guidance covers all aspects of a fee filing, which the Exchange has addressed throughout this filing. E:\FR\FM\30SEN1.SGM 30SEN1 51706 Federal Register / Vol. 84, No. 189 / Monday, September 30, 2019 / Notices infrastructure migration. This proposal is not intended to have a pricing impact. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,9 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,10 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. The proposal is also consistent with Section 11A of the Act relating to the establishment of the national market system for securities. Moreover, the Exchange believes that its proposal complies with Commission guidance on SRO fee filings that the Commission Staff issued on May 21, 2019.11 The Proposal is Reasonable The Exchange’s proposal is reasonable in several respects. As a threshold matter, the Exchange is subject to significant competitive forces in the market for options transaction services that constrain its pricing determinations in that market. The fact that this market is competitive has long been recognized by the courts. In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated as follows: ‘‘[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’. . . .’’ 12 Numerous indicia demonstrate the competitive nature of this market. For example, clear substitutes to the Exchange exist in the market for options transaction services. The Exchange is one of several options venues to which 9 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 11 See Guidance, supra note 8. Although the Exchange believes that this filing complies with the Guidance, the Exchange does not concede that the standards set forth in the Guidance are consistent with the Exchange Act and reserves its right to challenge those standards through administrative and judicial review, as appropriate. 12 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782– 83 (December 9, 2008) (SR–NYSEArca–2006–21)). khammond on DSKJM1Z7X2PROD with NOTICES 10 15 VerDate Sep<11>2014 19:16 Sep 27, 2019 Jkt 247001 market participants may direct their order flow, and it represents a small percentage of the overall market. The Exchange believes its proposal is reasonable because it will not cause a pricing impact on any Phlx member, rather the proposal is intended to permit Phlx members to migrate their FIX Ports and CTI Ports to new technology at no additional cost during the month of October 2019. This proposal, which offers duplicative ports to members at no cost, will allow members to test and maintain continuous connection to the Exchange during the month of October 2019. The Proposal Represents an Equitable Allocation and Is Not Unfairly Discriminatory The Exchange believes its proposal allocates its fees fairly among its market participants. The proposal is equitable and not unfairly discriminatory. All members may enter orders on Phlx. As noted above, a Phlx member may enter all orders on Phlx through one FIX Port. The Exchange does not require a Phlx member to obtain more than one FIX Port, however, a member may obtain multiple FIX Ports or a CTI Port to meet its individual business needs. This proposal is not intended to have a pricing impact to any Phlx member. 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. This proposal does not amend pricing or functionality. Rather, this technology migration will enable Phlx members to continue to connect to Phlx, as is the case today, for the entry of orders. Intra-Market Competition The proposal does not impose an undue burden on intra-market competition. All members may enter orders on Phlx. As noted above, a Phlx member may enter all orders on Phlx through one FIX Port. The Exchange does not require a Phlx member to obtain more than one FIX Port, however, a member may obtain multiple FIX Ports or a CTI Port to meet its individual business needs. This proposal is not intended to have a pricing impact to any Phlx member. PO 00000 Frm 00199 Fmt 4703 Sfmt 4703 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.13 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–2019–37 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–2019–37. 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 13 15 E:\FR\FM\30SEN1.SGM U.S.C. 78s(b)(3)(A)(ii). 30SEN1 Federal Register / Vol. 84, No. 189 / Monday, September 30, 2019 / Notices 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–2019–37 and should be submitted on or before October 21, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–21099 Filed 9–27–19; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Agency Information Collection Activities: Proposed Collection; Comment Request—Evaluation of Fees on SBA’s Surety Bond Guarantee Program U.S. Small Business Administration (SBA). ACTION: 60-Day Federal Register notice and request for comments. AGENCY: SBA intends to request approval from the Office of Management and Budget (OMB) for the collection of information described below. The Paperwork Reduction Act (PRA) of 1995 requires federal agencies to publish a notice in the Federal Register concerning each proposed collection of information before submission to OMB and to allow 60 days for public comment in response to the notice. This notice complies with that requirement. DATES: Written comments must be received on or before November 29, 2019. khammond on DSKJM1Z7X2PROD with NOTICES SUMMARY: 14 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:16 Sep 27, 2019 Jkt 247001 Comments are invited on (a) whether the collection of information is necessary for the agency to properly perform its functions; (b) whether the burden estimates are accurate; (c) whether there are ways to minimize the burden, including through the use of automated techniques or other forms of information technology; and (d) whether there are ways to enhance the quality, utility, and clarity of the information. Comments may be sent to Terrell Lasane (Lead Program Evaluator), U.S. Small Business Administration, 409 3rd Street SW, Washington, DC 20416. Comments will also be accepted through the Federal eRulemaking Portal. Go to https://www.regulations.gov, and follow the online instructions for submitting comments electronically. All responses to this notice will be summarized and included in the request for OMB approval. All comments will be a matter of public record. FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of this information collection should be directed to Terrell Lasane at 202–205–7111. SUPPLEMENTARY INFORMATION: Title: Evaluation of Fees on SBA’s Surety Bond Guarantee Program. Form Number: N/A. OMB Number: Not Yet Assigned. Expiration Date: Not Yet Determined. Type of Request: New Collection. Abstract: Under the Surety Bond Guarantee (SBG) Program, SBA guarantees bid, payment, and performance bonds for small and emerging contractors who cannot obtain surety bonds through regular commercial channels. SBA’s guarantee gives Sureties an incentive to provide bonding for small businesses and, thereby, assists small businesses in obtaining greater access to contracting opportunities. SBA’s guarantee is an agreement between a surety and SBA that SBA will assume a certain percentage of the Surety’s loss should a contractor default on the underlying contract. On July 30, 2018, SBA announced a change in the fee structure for its SBG Program (83 FR 36658, page 36658–36659). The fee reductions were implemented on October 1, 2018, decreasing the surety fee from a 26 percent to a 20 percent bond premium and decreasing the Principal fee from $7.29 per thousand dollars of the contract amount to $6.00 per thousand ADDRESSES: PO 00000 Frm 00200 Fmt 4703 Sfmt 4703 51707 dollars of the contract amount. Originally scheduled for 1 year, SBA extended the fee reduction until September 30, 2020 in effort to collect more data to fully evaluate the effect(s) of lower fees on the SBG Program (83 FR 40466, page 40466–40467). Given that the fee structure has not changed for the last 12 years, SBA would like to evaluate the quantitative impacts of the change on the SBG Program. To properly evaluate the impacts of the fee changes, a multimethod approach will be applied including two study components: (1) Statistical modeling and (2) a web-based survey. The statistical modeling portion of the study will evaluate possible impacts including changes in the utilization of the SBG Program (e.g., principals, surety firms, surety agents) and changes in the SBA’s portfolio of guaranteed bonds (e.g., size, duration, risk, cash flow, geographic location, industrial classification) which may, in turn, result in longer term outcomes such as business formations, employment, and opportunities for small and disadvantaged businesses. The web survey portion will evaluate surety firms’ and agents’ perceptions of the fee reductions and their explanations of how these reductions affected their bonding practices and processes. Data collection efforts are required for the survey portion of the study, while administrative data will be used for the statistical modeling analysis. Affected Public: Respondent groups identified include (1) surety firms participating in the SBG Program and (2) surety agents participating in the SBG Program. The universe of both respondent types will be surveyed. Estimated Number of Respondents: The total estimated number of respondents is 500. This includes 50 surety firms and 450 surety agents. Estimated Number of Responses per Respondent: Both participant types will be asked to participate in one survey. Estimated Total Annual Responses: 500. Estimated Time per Response: The estimated response time is 15 minutes for both the surety firm and surety agent populations. Estimated Total Annual Burden on Respondents: 7,500 minutes (125 hours). E:\FR\FM\30SEN1.SGM 30SEN1

Agencies

[Federal Register Volume 84, Number 189 (Monday, September 30, 2019)]
[Notices]
[Pages 51705-51707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21099]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87073; File No. SR-Phlx-2019-37]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change Relating to the 
Pricing of a Technology Infrastructure Migration

September 24, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 18, 2019, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``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 Phlx pricing at Options 7, Section 9 
titled ``Other Member Fees.'' The amendment will describe the pricing 
with respect to a technology infrastructure migration.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated the amendments become operative on October 1, 
2019.
    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 Phlx pricing at Options 7, Section 9 
titled ``Other Member Fees.'' The Exchange previously filed a fee 
proposal to not assess a fee for duplicative FIX Ports \3\ and CTI 
Ports \4\ to new FIX Ports and CTI Ports, during the month of September 
2019, in connection with an upcoming technology infrastructure 
migration.\5\ With this rule change, the Exchange proposes to not 
assess a fee for duplicative FIX Ports and CTI Ports to new FIX Ports 
and CTI Ports, during the month of October 2019 to allow additional 
time for the Exchange to migrate its technology.
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    \3\ Financial Information eXchange or ``FIX'' is an interface 
that allows members and their Sponsored Customers to connect, send, 
and receive messages related to orders and auction orders and 
responses to and from the Exchange. Features include the following: 
(1) Execution messages; (2) order messages; and (3) risk protection 
triggers and cancel notifications. See Rule 1080(a)(i)(A).
    \4\ Clearing Trade Interface or ``CTI'' is a real-time clearing 
trade update message that is sent to a member after an execution has 
occurred and contains trade details specific to that member. The 
information includes, among other things, the following: (i) The 
Clearing Member Trade Agreement or ``CMTA'' or ``OCC'' number; (ii) 
Exchange badge or house number; (iii) the Exchange internal firm 
identifier; (iv) an indicator which will distinguish electronic and 
non-electronically delivered orders; (v) liquidity indicators and 
transaction type for billing purposes; and (vi) capacity. See Rule 
1070(b)(1).
    \5\ See Securities and Exchange Act Release No. 86795 (August 
28, 2019), 84 FR 46578 (September 4, 2019) (SR-Phlx-2019-30).
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Description of Migration and Pricing Impact
    In connection with this migration, members may request new FIX 
Ports and CTI Ports during the month of October 2019, which are 
duplicative of the type and quantity of their current ports, at no 
additional cost to allow for testing of the new ports and allow for 
continuous connection to the match engine during the transition 
period.\6\ For example, a Phlx member with 3 FIX Ports and 1 CTI Port 
on October 1, 2019 could request 3 new FIX Ports and 1 new CTI Port for 
the month of October 2019 at no additional cost. The Phlx member would 
be assessed only for the legacy market ports, in this case 3 FIX Ports 
and 1 CTI Port for the month of October 2019 and would not be assessed 
for the new ports, which are duplicative of the current ports. A member 
may acquire any additional legacy ports during the month of October 
2019 and would be assessed the charges indicated in the current Pricing 
Schedule. The migration does not require a member to acquire any 
additional ports, rather the migration requires a new port to replace 
any existing ports provided the member desired to maintain the same 
number of ports.\7\ A member desiring to enter orders into Phlx is 
required to obtain 1 FIX Port. A member may also obtain order and 
execution ports, such as a CTI Port, to receive clearing messages. The 
number of additional FIX or order and execution ports obtained by a 
member is dependent on the member's business needs.
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    \6\ Members would contact Market Operations to acquire new 
duplicative FIX Ports and CTI Ports. See Options Technical Update 
#2019-3.
    \7\ The migration is 1:1 and therefore would not require a 
member to acquire new ports, nor would it reduce the number of ports 
needed to connect.
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Applicability to and Impact on Members \8\
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    \8\ On May 21, 2019, the SEC Division of Trading and Markets 
(the ``Division'') issued fee filing guidance titled ``Staff 
Guidance on SRO Rule Filings Relating to Fees'' (``Guidance''). 
Within the Guidance, the Division noted, among other things, that 
the purpose discussion should address ``how the fee may apply 
differently (e.g., additional cost vs. additional discount) to 
different types of market participants (e.g., market makers, 
institutional brokers, retail brokers, vendors, etc.) and different 
sizes of market participants.'' See Guidance (available at https://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees). The Guidance 
also suggests that the purpose discussion should include numerical 
examples. Where possible, the Exchange is including numerical 
examples. In addition, the Exchange is providing data to the 
Commission in support of its arguments herein. The Guidance covers 
all aspects of a fee filing, which the Exchange has addressed 
throughout this filing.
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    The proposal is not intended to impose any additional fees on any 
Phlx members. All members may enter orders on Phlx. As noted above, a 
Phlx member may enter all orders on Phlx through one FIX Port. The 
Exchange does not require a Phlx member to obtain more than one FIX 
Port, however, a member may obtain multiple FIX Ports or a CTI Port to 
meet its individual business needs. This proposal is intended to permit 
a Phlx member to migrate its current FIX Ports and CTI Ports at no 
additional costs during the month of October 2019 to allow for 
continuous connection to the Exchange. Members would only be assessed a 
fee for their current FIX Ports and CTI Ports and not be assessed a fee 
for any new duplicative ports they acquire in connection with the 
technology

[[Page 51706]]

infrastructure migration. This proposal is not intended to have a 
pricing impact.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\9\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\10\ 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. The proposal is also consistent with 
Section 11A of the Act relating to the establishment of the national 
market system for securities. Moreover, the Exchange believes that its 
proposal complies with Commission guidance on SRO fee filings that the 
Commission Staff issued on May 21, 2019.\11\
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and (5).
    \11\ See Guidance, supra note 8. Although the Exchange believes 
that this filing complies with the Guidance, the Exchange does not 
concede that the standards set forth in the Guidance are consistent 
with the Exchange Act and reserves its right to challenge those 
standards through administrative and judicial review, as 
appropriate.
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The Proposal is Reasonable
    The Exchange's proposal is reasonable in several respects. As a 
threshold matter, the Exchange is subject to significant competitive 
forces in the market for options transaction services that constrain 
its pricing determinations in that market. The fact that this market is 
competitive has long been recognized by the courts. In NetCoalition v. 
Securities and Exchange Commission, the D.C. Circuit stated as follows: 
``[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'. . . .'' \12\
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    \12\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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    Numerous indicia demonstrate the competitive nature of this market. 
For example, clear substitutes to the Exchange exist in the market for 
options transaction services. The Exchange is one of several options 
venues to which market participants may direct their order flow, and it 
represents a small percentage of the overall market. The Exchange 
believes its proposal is reasonable because it will not cause a pricing 
impact on any Phlx member, rather the proposal is intended to permit 
Phlx members to migrate their FIX Ports and CTI Ports to new technology 
at no additional cost during the month of October 2019. This proposal, 
which offers duplicative ports to members at no cost, will allow 
members to test and maintain continuous connection to the Exchange 
during the month of October 2019.
The Proposal Represents an Equitable Allocation and Is Not Unfairly 
Discriminatory
    The Exchange believes its proposal allocates its fees fairly among 
its market participants. The proposal is equitable and not unfairly 
discriminatory. All members may enter orders on Phlx. As noted above, a 
Phlx member may enter all orders on Phlx through one FIX Port. The 
Exchange does not require a Phlx member to obtain more than one FIX 
Port, however, a member may obtain multiple FIX Ports or a CTI Port to 
meet its individual business needs. This proposal is not intended to 
have a pricing impact to any Phlx member.

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. This proposal does not amend pricing or functionality. 
Rather, this technology migration will enable Phlx members to continue 
to connect to Phlx, as is the case today, for the entry of orders.
Intra-Market Competition
    The proposal does not impose an undue burden on intra-market 
competition. All members may enter orders on Phlx. As noted above, a 
Phlx member may enter all orders on Phlx through one FIX Port. The 
Exchange does not require a Phlx member to obtain more than one FIX 
Port, however, a member may obtain multiple FIX Ports or a CTI Port to 
meet its individual business needs. This proposal is not intended to 
have a pricing impact to any Phlx member.

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.\13\
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    \13\ 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 [email protected]. Please include 
File Number SR-Phlx-2019-37 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-2019-37. 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

[[Page 51707]]

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-2019-37 and should be 
submitted on or before October 21, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-21099 Filed 9-27-19; 8:45 am]
BILLING CODE 8011-01-P
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