Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Phlx's Pricing Schedule at Options 7, Section 8, “Membership Fees”, 19064-19066 [2021-07384]
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19064
Federal Register / Vol. 86, No. 68 / Monday, April 12, 2021 / Notices
The meeting will be held via
remote means and/or at the
Commission’s headquarters, 100 F
Street NE, Washington, DC 20549.
PLACE:
SECURITIES AND EXCHANGE
COMMISSION
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the public.
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Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B)
and (10) and 17 CFR 200.402(a)(3),
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Dated: April 8, 2021.
Eduardo A. Aleman,
Deputy Secretary.
khammond on DSKJM1Z7X2PROD with NOTICES
[FR Doc. 2021–07573 Filed 4–8–21; 4:15 pm]
BILLING CODE 8011–01–P
[Release No. 34–91481; File No. SR–Phlx–
2021–19]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Phlx’s Pricing
Schedule at Options 7, Section 8,
‘‘Membership Fees’’
April 6, 2021.
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 March 25,
2021, 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 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Phlx’s Pricing Schedule at Options 7,
Section 8, ‘‘Membership Fees.’’
While the changes proposed herein
are effective upon filing, the Exchange
has designated the amendments become
operative on April 1, 2021.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/phlx/rules, 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.
1 15
2 17
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PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Fmt 4703
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Phlx proposes to amend its pricing
within Options 7, Section 8,
‘‘Membership Fees’’ to (1) waive the
Inactive Nominee Fee for a six month
period; and (2) remove obsolete
language. Each change is described
below.
Options 7, Section 8
First, Phlx proposes to amend Options
7, Section 8, ‘‘Membership Fees,’’ at Part
A, ‘‘Permit and Registration Fees,’’ to
waive the Inactive Nominee 3 Fee which
is a fee of $600 for 6 months.4 Phlx
proposes to waive the Inactive Nominee
Fee from April 1, 2021 through
September 30, 2021. The Exchange
notes that the Clerk Fee 5 of $100 per
month will continue to be assessed.
By way of background, on March 17,
2019 [sic],6 Phlx suspended open outcry
trading as a result of precautions taken
with respect to COVID–19. When the
Trading Floor reopened on June 3,
2020,7 the Exchange permitted each
Trading Floor member organization to
3 The term ‘‘inactive nominee’’ shall mean a
natural person associated with and designated as
such by a member organization and who has been
approved for such status and is registered as such
with the Membership Department. An inactive
nominee shall have no rights or privileges under a
permit unless and until said inactive nominee
becomes admitted as a member of the Exchange
pursuant to the By-Laws and Rules of the Exchange.
An inactive nominee merely stands ready to
exercise rights under a permit upon notice by the
member organization to the Membership
Department on an expedited basis. See Options 8,
Section 2(a)(3). An Inactive Nominee shall be
deemed a Clerk pursuant to Options 8, Section
12(a). An inactive nominee’s status expires after six
months unless it has been reaffirmed in writing by
the member organization or is sooner terminated. A
member organization is assessed the Inactive
Nominee Fee every time the status is reaffirmed. An
inactive nominee is also assessed Application and
Initiation Fees when such person applies to be an
inactive nominee. Such fees are reassessed if there
is a lapse in their inactive nominee status. However,
an inactive nominee is not assessed Application
and Initiation Fees if such inactive nominee applied
for membership without any lapse in that
individual’s association with a particular member
organization. An Inactive Nominee is also assessed
the Clerk Fee.
4 The member organization is assessed $100 per
month for the applicable six month period unless
the member organization provides proper notice of
its intent to terminate an inactive nominee prior to
the first day of the next billing month.
5 The Clerk Fee is imposed on any registered onfloor person employed by or associated with a
member or member organization pursuant to
Options 3, Section 19, including Inactive Nominees
pursuant to Options 8, Section 7. The Clerk Fee is
not imposed on permit holders. See Phlx Rules at
Options 7, Section 8A.
6 See Options Trader Alert #2020—07.
7 See Options Trader Alert #2020—13.
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Federal Register / Vol. 86, No. 68 / Monday, April 12, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
be represented on the Trading Floor.
However, due to the social distancing
measures that were put in place to
comply with Commonwealth of
Pennsylvania health standards as well
as Nasdaq’s safety measures designed to
prevent the spread of COVID–19, not all
members and employees associated
with a Phlx member organization were
able to return to the Trading Floor.
Certain floor members have utilized
Inactive Nominees to staff the Trading
Floor due to illness or other
circumstances which necessitated a
change in staff.
An Inactive Nominee allows a floor
member to have additional flexibility in
obtaining coverage on the trading floor.
An Inactive Nominee stands ready to
assume a membership upon notice by
the member requesting that a specific
permit be transferred intra-firm on an
expedited and temporary basis. By way
of example, an Inactive Nominee would
be activated in the event of an
emergency due to illness or other
factors. An Inactive Nominee allows a
member organization to have a full staff
available to conduct business on the
Exchange trading floor in the event of
unplanned circumstances.
At this time, with COVID–19
precautions still in place on Phlx’s
trading floor, the Exchange proposes
this waiver to provide floor members
with greater flexibility in registering
Inactive Nominees to be activated in the
event of illness or other factors without
a fee. The Exchange believes that this
waiver will enable floor members to
plan staffing more efficiently in the
upcoming months, including staffing
needs during the summer, while the
Trading Floor remains socially
distanced. With this waiver, member
organizations may choose to register
Inactive Nominees so that they have
back-ups available if they require
coverage on the Trading Floor.
Second, Phlx proposes to remove the
following obsolete rule text from
Options 7, Section 8:
Phlx waives the Floor Lead Market Maker
and Floor Market Maker Permit Fee, for the
months of July and August 2020, provided a
member or member organization (1) paid the
Floor Lead Market Maker or Floor Market
Maker Permit Fee in March 2020; and (2) was
not otherwise registered as a Streaming
Quote Trader or as a Remote Streaming
Quote Trader in March 2020.
The above rule text is no longer relevant
as the timeframe for which the waiver
was in effect for certain fees has passed.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
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of the Act,8 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,9 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 Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 10
Likewise, in NetCoalition v. Securities
and Exchange Commission 11
(‘‘NetCoalition’’) the D.C. Circuit upheld
the Commission’s use of a market-based
approach in evaluating the fairness of
market data fees against a challenge
claiming that Congress mandated a costbased approach.12 As the court
emphasized, the Commission ‘‘intended
in Regulation NMS that ‘market forces,
rather than regulatory requirements’
play a role in determining the market
data . . . to be made available to
investors and at what cost.’’ 13
Further, ‘‘[n]o one disputes that
competition for order flow is ‘fierce.’
. . . As the SEC explained, ‘[i]n the U.S.
national market system, buyers and
sellers of securities, and the brokerdealers 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’. . . .’’ 14 Although the court
and the SEC were discussing the cash
equities markets, the Exchange believes
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
10 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
11 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010).
12 See NetCoalition, at 534–535.
13 Id. at 537.
14 Id. at 539 (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca–2006–21)).
9 15
PO 00000
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19065
that these views apply with equal force
to the options markets.
Options 7, Section 8
Phlx’s proposal to amend Options 7,
Section 8, ‘‘Membership Fees,’’ at Part
A, ‘‘Permit and Registration Fees,’’ to
waive the Inactive Nominee Fee from
April 1, 2021 through September 30,
2021 is reasonable. An Inactive
Nominee allows a floor member to have
additional flexibility in obtaining
coverage on the trading floor. An
Inactive Nominee stands ready to
assume a membership upon notice by
the member requesting that a specific
permit be transferred intra-firm on an
expedited and temporary basis. An
Inactive Nominee allows a member
organization to have a full staff available
to conduct business on the Exchange
trading floor in the event of unplanned
circumstances. At this time, with
COVID–19 precautions still in place on
Phlx’s trading floor, the Exchange
proposes this waiver to provide floor
members with greater flexibility in
registering Inactive Nominees to be
activated in the event of illness or other
factors without a fee.
Phlx’s proposal to amend Options 7,
Section 8, ‘‘Membership Fees,’’ at Part
A, ‘‘Permit and Registration Fees,’’ to
waive the Inactive Nominee Fee from
April 1, 2021 through September 30,
2021 is equitable and not unfairly
discriminatory. All member
organizations may register an Inactive
Nominee and therefore take advantage
of the fee waiver.
The Exchange’s proposal to remove
obsolete rule text from Options 7,
Section 8 is reasonable, equitable and
not unfairly discriminatory. The rule
text is no longer relevant as the
timeframe for which the waiver was in
effect for certain fees has passed.
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. The Exchange believes its
proposal remains competitive with
other options markets and will offer
market participants with another choice
of where to transact options. The
Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
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19066
Federal Register / Vol. 86, No. 68 / Monday, April 12, 2021 / Notices
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges. Because competitors are free
to modify their own fees in response to
a proposal, the Exchange believes that
the degree to which fee changes in this
market may impose any burden on
competition is extremely limited.
Intra-Market Competition
Options 7, Section 8
Phlx’s proposal to amend Options 7,
Section 8, ‘‘Membership Fees,’’ at Part
A, ‘‘Permit and Registration Fees,’’ to
waive the Inactive Nominee Fee from
April 1, 2021 through September 30,
2021 does not impose an undue burden
on competition. All member
organizations may register an Inactive
Nominee and therefore take advantage
of the fee waiver.
The Exchange’s proposal to remove
obsolete rule text from Options 7,
Section 8 does not impose an undue
burden on competition. The rule text is
no longer relevant as the timeframe for
which the waiver was in effect for
certain fees has passed.
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.
khammond on DSKJM1Z7X2PROD with NOTICES
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 15 and
paragraph (f) of Rule 19b–4
thereunder.16
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
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Designation of Longer Period for
Commission Action on Proposed Rule
Change To Establish OCC’s Persistent
Minimum Skin-in-the-Game
Paper Comments
April 6, 2021.
• 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–2021–19. 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–2021–19 and should
be submitted on or before May 3, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–07384 Filed 4–9–21; 8:45 am]
15 15
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21:37 Apr 09, 2021
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Jkt 253001
[Release No. 34–91483; File No. SR–OCC–
2021–003]
• 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 SRPhlx-2021–19 on the subject line.
BILLING CODE 8011–01–P
U.S.C. 78s(b)(3)(A)(ii).
16 17 CFR 240.19b–4(f)(2).
SECURITIES AND EXCHANGE
COMMISSION
PO 00000
CFR 200.30–3(a)(12).
Frm 00131
Fmt 4703
Sfmt 4703
On February 10, 2021, the Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change SR–OCC–2021–
003 (‘‘Proposed Rule Change’’) pursuant
to Section 19(b) of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 1 and Rule 19b–4 2 thereunder to
establish a persistent minimum level of
skin-in-the-game that OCC would
contribute to cover default losses or
liquidity shortfalls.3 The Proposed Rule
Change was published for public
comment in the Federal Register on
March 2, 2021.4 The Commission has
received comments regarding the
proposal described in the Proposed Rule
Change.5
Section 19(b)(2) of the Exchange Act 6
provides that, within 45 days of the
publication of notice of the filing of a
proposed rule change, or within such
longer period up to 90 days as the
Commission may designate if it finds
such longer period to be appropriate
and publishes its reasons for so finding,
or as to which the self-regulatory
organization consents, the Commission
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Notice of Filing infra note 4, 86 FR at 12237.
4 Securities Exchange Act Release No. 91199 (Feb.
24, 2021), 86 FR 12237 (Mar. 2, 2021) (File No. SR–
OCC–2021–003) (‘‘Notice of Filing’’). OCC also filed
a related advance notice, SR–OCC–2021–801,
(‘‘Advance Notice’’) with the Commission pursuant
to Section 806(e)(1) of Title VIII of the Dodd-Frank
Wall Street Reform and Consumer Protection Act,
entitled the Payment, Clearing, and Settlement
Supervision Act of 2010 and Rule 19b–4(n)(1)(i)
under the Exchange Act. 12 U.S.C. 5465(e)(1). 15
U.S.C. 78s(b)(1) and 17 CFR 240.19b–4,
respectively. The Advance Notice was published in
the Federal Register on March 1, 2021. Securities
Exchange Act Release No. 91184 (Feb. 23, 2021), 86
FR 12057 (Mar. 1, 2021) (File No. SR–OCC–2021–
801).
5 Comments on the Proposed Rule Change are
available at https://www.sec.gov/comments/sr-occ2021-003/srocc2021003.htm.
Since the proposal contained in the Proposed
Rule Change was also filed as an advance notice,
all public comments received on the proposal are
considered regardless of whether the comments are
submitted on the Proposed Rule Change or the
Advance Notice. Comments on the Advance Notice
are available at https://www.sec.gov/comments/srocc-2021-801/occ2021801.htm.
6 15 U.S.C. 78s(b)(2).
2 17
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]]>Agencies
[Federal Register Volume 86, Number 68 (Monday, April 12, 2021)]
[Notices]
[Pages 19064-19066]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07384]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91481; File No. SR-Phlx-2021-19]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Phlx's
Pricing Schedule at Options 7, Section 8, ``Membership Fees''
April 6, 2021.
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 March 25, 2021, 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 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 Phlx's Pricing Schedule at Options
7, Section 8, ``Membership Fees.''
While the changes proposed herein are effective upon filing, the
Exchange has designated the amendments become operative on April 1,
2021.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, 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
Phlx proposes to amend its pricing within Options 7, Section 8,
``Membership Fees'' to (1) waive the Inactive Nominee Fee for a six
month period; and (2) remove obsolete language. Each change is
described below.
Options 7, Section 8
First, Phlx proposes to amend Options 7, Section 8, ``Membership
Fees,'' at Part A, ``Permit and Registration Fees,'' to waive the
Inactive Nominee \3\ Fee which is a fee of $600 for 6 months.\4\ Phlx
proposes to waive the Inactive Nominee Fee from April 1, 2021 through
September 30, 2021. The Exchange notes that the Clerk Fee \5\ of $100
per month will continue to be assessed.
---------------------------------------------------------------------------
\3\ The term ``inactive nominee'' shall mean a natural person
associated with and designated as such by a member organization and
who has been approved for such status and is registered as such with
the Membership Department. An inactive nominee shall have no rights
or privileges under a permit unless and until said inactive nominee
becomes admitted as a member of the Exchange pursuant to the By-Laws
and Rules of the Exchange. An inactive nominee merely stands ready
to exercise rights under a permit upon notice by the member
organization to the Membership Department on an expedited basis. See
Options 8, Section 2(a)(3). An Inactive Nominee shall be deemed a
Clerk pursuant to Options 8, Section 12(a). An inactive nominee's
status expires after six months unless it has been reaffirmed in
writing by the member organization or is sooner terminated. A member
organization is assessed the Inactive Nominee Fee every time the
status is reaffirmed. An inactive nominee is also assessed
Application and Initiation Fees when such person applies to be an
inactive nominee. Such fees are reassessed if there is a lapse in
their inactive nominee status. However, an inactive nominee is not
assessed Application and Initiation Fees if such inactive nominee
applied for membership without any lapse in that individual's
association with a particular member organization. An Inactive
Nominee is also assessed the Clerk Fee.
\4\ The member organization is assessed $100 per month for the
applicable six month period unless the member organization provides
proper notice of its intent to terminate an inactive nominee prior
to the first day of the next billing month.
\5\ The Clerk Fee is imposed on any registered on-floor person
employed by or associated with a member or member organization
pursuant to Options 3, Section 19, including Inactive Nominees
pursuant to Options 8, Section 7. The Clerk Fee is not imposed on
permit holders. See Phlx Rules at Options 7, Section 8A.
---------------------------------------------------------------------------
By way of background, on March 17, 2019 [sic],\6\ Phlx suspended
open outcry trading as a result of precautions taken with respect to
COVID-19. When the Trading Floor reopened on June 3, 2020,\7\ the
Exchange permitted each Trading Floor member organization to
[[Page 19065]]
be represented on the Trading Floor. However, due to the social
distancing measures that were put in place to comply with Commonwealth
of Pennsylvania health standards as well as Nasdaq's safety measures
designed to prevent the spread of COVID-19, not all members and
employees associated with a Phlx member organization were able to
return to the Trading Floor. Certain floor members have utilized
Inactive Nominees to staff the Trading Floor due to illness or other
circumstances which necessitated a change in staff.
---------------------------------------------------------------------------
\6\ See Options Trader Alert #2020--07.
\7\ See Options Trader Alert #2020--13.
---------------------------------------------------------------------------
An Inactive Nominee allows a floor member to have additional
flexibility in obtaining coverage on the trading floor. An Inactive
Nominee stands ready to assume a membership upon notice by the member
requesting that a specific permit be transferred intra-firm on an
expedited and temporary basis. By way of example, an Inactive Nominee
would be activated in the event of an emergency due to illness or other
factors. An Inactive Nominee allows a member organization to have a
full staff available to conduct business on the Exchange trading floor
in the event of unplanned circumstances.
At this time, with COVID-19 precautions still in place on Phlx's
trading floor, the Exchange proposes this waiver to provide floor
members with greater flexibility in registering Inactive Nominees to be
activated in the event of illness or other factors without a fee. The
Exchange believes that this waiver will enable floor members to plan
staffing more efficiently in the upcoming months, including staffing
needs during the summer, while the Trading Floor remains socially
distanced. With this waiver, member organizations may choose to
register Inactive Nominees so that they have back-ups available if they
require coverage on the Trading Floor.
Second, Phlx proposes to remove the following obsolete rule text
from Options 7, Section 8:
Phlx waives the Floor Lead Market Maker and Floor Market Maker
Permit Fee, for the months of July and August 2020, provided a
member or member organization (1) paid the Floor Lead Market Maker
or Floor Market Maker Permit Fee in March 2020; and (2) was not
otherwise registered as a Streaming Quote Trader or as a Remote
Streaming Quote Trader in March 2020.
The above rule text is no longer relevant as the timeframe for which
the waiver was in effect for certain fees has passed.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\9\ 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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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4) and (5).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \10\
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\10\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Likewise, in NetCoalition v. Securities and Exchange Commission
\11\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of
a market-based approach in evaluating the fairness of market data fees
against a challenge claiming that Congress mandated a cost-based
approach.\12\ As the court emphasized, the Commission ``intended in
Regulation NMS that `market forces, rather than regulatory
requirements' play a role in determining the market data . . . to be
made available to investors and at what cost.'' \13\
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\11\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\12\ See NetCoalition, at 534-535.
\13\ Id. at 537.
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Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \14\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
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\14\ Id. at 539 (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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Options 7, Section 8
Phlx's proposal to amend Options 7, Section 8, ``Membership Fees,''
at Part A, ``Permit and Registration Fees,'' to waive the Inactive
Nominee Fee from April 1, 2021 through September 30, 2021 is
reasonable. An Inactive Nominee allows a floor member to have
additional flexibility in obtaining coverage on the trading floor. An
Inactive Nominee stands ready to assume a membership upon notice by the
member requesting that a specific permit be transferred intra-firm on
an expedited and temporary basis. An Inactive Nominee allows a member
organization to have a full staff available to conduct business on the
Exchange trading floor in the event of unplanned circumstances. At this
time, with COVID-19 precautions still in place on Phlx's trading floor,
the Exchange proposes this waiver to provide floor members with greater
flexibility in registering Inactive Nominees to be activated in the
event of illness or other factors without a fee.
Phlx's proposal to amend Options 7, Section 8, ``Membership Fees,''
at Part A, ``Permit and Registration Fees,'' to waive the Inactive
Nominee Fee from April 1, 2021 through September 30, 2021 is equitable
and not unfairly discriminatory. All member organizations may register
an Inactive Nominee and therefore take advantage of the fee waiver.
The Exchange's proposal to remove obsolete rule text from Options
7, Section 8 is reasonable, equitable and not unfairly discriminatory.
The rule text is no longer relevant as the timeframe for which the
waiver was in effect for certain fees has passed.
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. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants with
another choice of where to transact options. The Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be
[[Page 19066]]
excessive, or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges. Because
competitors are free to modify their own fees in response to a
proposal, the Exchange believes that the degree to which fee changes in
this market may impose any burden on competition is extremely limited.
Intra-Market Competition
Options 7, Section 8
Phlx's proposal to amend Options 7, Section 8, ``Membership Fees,''
at Part A, ``Permit and Registration Fees,'' to waive the Inactive
Nominee Fee from April 1, 2021 through September 30, 2021 does not
impose an undue burden on competition. All member organizations may
register an Inactive Nominee and therefore take advantage of the fee
waiver.
The Exchange's proposal to remove obsolete rule text from Options
7, Section 8 does not impose an undue burden on competition. The rule
text is no longer relevant as the timeframe for which the waiver was in
effect for certain fees has passed.
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 \15\ and paragraph (f) of Rule 19b-4
thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
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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-2021-19 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-2021-19. 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-2021-19 and should be submitted on
or before May 3, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-07384 Filed 4-9-21; 8:45 am]
BILLING CODE 8011-01-P
