Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Port-Related Fees, at Equity 7, Section 3, and Options 7, Section 9, 56717-56719 [2022-19916]

Download as PDF Federal Register / Vol. 87, No. 178 / Thursday, September 15, 2022 / Notices lotter on DSK11XQN23PROD with NOTICES1 management investment companies and business development companies under certain circumstances. On March 8, 2022, the Exchange filed Amendment No. 1 to the proposed rule change, which amended and replaced the proposed rule change in its entirety. The proposed rule change, as modified by Amendment No. 1, was published for comment in the Federal Register on March 15, 2022.3 The Commission has received no comment letters on the proposed rule change, as modified by Amendment No. 1. On April 26, 2022, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 On June 13, 2022, the Commission instituted proceedings under Section 19(b)(2)(B) of Act 6 to determine whether to approve or disapprove the proposed rule change.7 Section 19(b)(2) of the Act 8 provides that, after initiating proceedings, the Commission shall issue an order approving or disapproving the proposed rule change not later than 180 days after the date of publication of notice of filing of the proposed rule change. The Commission may extend the period for issuing an order approving or disapproving the proposed rule change, however, by not more than 60 days if the Commission determines that a longer period is appropriate and publishes the reasons for such determination. The proposed rule change was published for comment in the Federal Register on March 15, 2022.9 The 180th day after publication of the proposed rule change is September 11, 2022. The Commission is extending the time period for approving or disapproving the proposed rule change, as modified by Amendment No. 1, for an additional 60 days. The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change, 3 See Securities Exchange Act Release No. 94388 (March 9, 2022), 87 FR 14589. 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 94795, 87 FR 25689 (May 2, 2022). The Commission designated June 13, 2022, as the date by which the Commission shall approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change, as modified by Amendment No. 1. 6 15 U.S.C. 78s(b)(2)(B). 7 See Securities Exchange Act Release No. 95093, 87 FR 36548 (June 17, 2022). 8 15 U.S.C. 78s(b)(2). 9 See supra note 3. VerDate Sep<11>2014 16:56 Sep 14, 2022 Jkt 256001 as modified by Amendment No. 1, so that it has sufficient time to consider the proposed rule change, as modified by Amendment No. 1. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,10 designates November 10, 2022, as the date by which the Commission shall either approve or disapprove the proposed rule change, as modified by Amendment No. 1 (File No. SR–NYSE–2022–11). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–19920 Filed 9–14–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95722; File No. SR–PHLX– 2022–34] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its PortRelated Fees, at Equity 7, Section 3, and Options 7, Section 9 September 9, 2022. 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 1, 2022, 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. 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-related fees, at Equity 7, Section 3, and Options 7, Section 9, as described further below. 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. 10 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(57). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 11 17 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 56717 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 (i) amend Equity 7, Section 3, and Options 7, Section 9, to prorate port fees for the first month of service, (ii) add language to Equity 7, Section 3, and Options 7, Section 9, to clarify that port fees for cancelled services will continue to be charged for the remainder of month, and (iii) clarify that Nasdaq Testing Facility (‘‘NTF’’) ports are provided at no cost in Options 7, Section 9. Currently, the Exchange does not prorate port connectivity fees under either its equity or options rules. Thus, participants are assessed a full month’s fee if they direct the Exchange to make the subscribed connectivity live on any day of the month, including the last day thereof. Participants are also assessed a full month’s port fee if they cancel service during the month. The Exchange proposes to provide prorated port fees for the first month of service for new requests. By prorating the first month’s fees, the Exchange would charge participants port fees only for the days in which the participants are connected to the Exchange during the first month of service. The Exchange proposes to continue the current practice of charging port fees for the remainder of the month upon cancellation. If a participant starts and cancels service in the same month, the participant would not be billed for those days prior to the service start date but would be billed for the remainder of the month, including after the service is cancelled.3 3 For example, if a participant orders a port on September 4, 2022 and cancels the port on September 16, 2022, the participant would be charged the prorated port fee for September 5, 2022 through September 30, 2022. E:\FR\FM\15SEN1.SGM 15SEN1 56718 Federal Register / Vol. 87, No. 178 / Thursday, September 15, 2022 / Notices Currently, the SQF Port Fee in Options 7, Section 9B(i)(2) is only assessed for SQF ports that receive inbound quotes at any time within that month. The Exchange is not proposing to change this practice. Participants would continue to be assessed the SQF Port Fee only during months where the SQF port is active.4 During the first month of service, assuming the SQF port is active at any point during the month, the SQF Port Fee would be prorated based on the connectivity date.5 The proposal would not impact the fee assessed for existing ports. Rather, the proposed change would only impact market participants that acquire a new port going forward. The Exchange believes it is important for participants to have the option to establish new connections to the Exchange at any time during the month without being hampered by a full month charge irrespective of when during the month service begins. Moreover, other exchanges also charge new ports on a prorated basis for the first month of service.6 The Exchange also proposes to add language to Options 7, Section 9B(iv) to clarify the Exchange’s existing practice that NTF Ports are provided at no cost. The NTF provides subscribers with a virtual System test environment that closely approximates the production environment on which they may test their automated systems that integrate with the Exchange. For example, the NTF provides subscribers a virtual System environment for testing upcoming releases and product enhancements, as well as testing firm software prior to implementation. The Exchange proposes adding express language in the options Rules to provide increased clarity to market participants. lotter on DSK11XQN23PROD with NOTICES1 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,7 in general, and furthers the 4 For example, if a SQF port is ordered on September 9, 2022 and is not active during the month of September, the participant would not be charged the SQF Port Fee for the month of September. However, if the port becomes active on October 15, 2022 for the first time, the full monthly fee would be charged as October would be the second month of connectivity. 5 For example, if a SQF port is ordered on September 9, 2022 and active on September 13, 2022, the participant would be charged the prorated port fee for September 10, 2022 through September 30, 2022. 6 See, e.g., Cboe BZX U.S. Equities Exchange Fee Schedule, available at https://markets.cboe.com/us/ equities/membership/fee_schedule/bzx/; New York Stock Exchange Price List 2022, available at https:// www.nyse.com/publicdocs/nyse/markets/nyse/ NYSE_Price_List.pdf. 7 15 U.S.C. 78f(b). VerDate Sep<11>2014 16:56 Sep 14, 2022 Jkt 256001 objectives of Sections 6(b)(4) and 6(b)(5) of the Act,8 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 Exchange’s proposed changes to its port fee schedule are reasonable in several respects. As a threshold matter, the Exchange is subject to significant competitive forces in the market for options and equity securities transaction services that constrain its pricing determinations in that market. 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.’’ 9 The Exchange believes that it is reasonable to prorate port fees for the first month of connectivity. As discussed above, the Exchange believes it is important for participants to have the flexibility to establish new connections to the Exchange at any time during the month without being hampered by a full month charge. For example, the Exchange believes it is reasonable to charge a user who begins a subscription on the last day of the month to be charged only for use of a port for that day. As noted above, other exchanges already charge their customers for new ports on a prorated basis for the first month of service.10 The proposed language describing the Exchange’s practice to bill for the remainder of the month upon cancellation is intended only to clarify the existing practice and limit any confusion. The Exchange believes that the proposal is also equitable and not unfairly discriminatory because the proposed change to prorate port fees for the first month of service and continue to charge for the remainder of the month upon cancellation will apply uniformly 8 15 U.S.C. 78f(b)(4) and (5). Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). 10 Supra note 6. 9 Securities PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 to all similarly situated participants. Removing the requirement to pay a full month’s port fee if a user joins any day other than the first of the month is userfriendly and provides users incentive to subscribe at their convenience. The Exchange believes that prorating the fees for the first month of a user’s subscription will ensure that the fees are more equitable to a user’s utilization of the products. All users will benefit from the proration of the first month of their subscription. The Exchange also believes that it is just and equitable, and in the interests of market participants, for the Exchange to clarify the Exchange’s existing practice to provide NTF ports at no cost to Options 7, Section 9B(iv), codifying existing practice where it is not expressly stated in the Rule. The Exchange believes that market participants will benefit from increased clarity, which will help limit any potential confusion in the future. 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. Intramarket Competition The Exchange does not believe that its proposal will place any category of Exchange participants at a competitive disadvantage. The proposed change to prorate port fees for the first month of service will apply uniformly to all similarly situated participants. All users will receive the benefit of a proration for the first month of port connectivity, which will enable users to save money that they otherwise would incur under the Exchange’s current rules that do not provide for proration. The proposed language describing the Exchange’s practice to bill for the remainder of the month upon cancellation, as well as the proposed language to the options Rules that NTF ports are provided at no cost, merely codify and clarify existing practices of the Exchange. Intermarket Competition The Exchange believes that the proposed change to its port fee schedule to provide proration for the first month of port connectivity will not impose a burden on competition because the Exchange’s execution services are completely voluntary and subject to extensive competition both from the other live exchanges and from offexchange venues, which include alternative trading systems that trade national market system stock. Moreover, E:\FR\FM\15SEN1.SGM 15SEN1 Federal Register / Vol. 87, No. 178 / Thursday, September 15, 2022 / Notices as noted above, other exchanges currently charge new ports on a prorated basis for the first month of service.11 The proposed changes will help ensure that the Exchange’s billing practices are commensurate with competitors. The proposed change to the Exchange’s port fee schedule is reflective of this competition because, as a threshold issue, the Exchange is a relatively small market so its ability to burden intermarket competition is limited. In this regard, even the largest U.S. equities exchange by volume only has 17–18% market share, which in most markets could hardly be categorized as having enough market power to burden competition. Accordingly, the Exchange does not believe that the proposed change will impair the ability of members, participants, or competing order execution venues to maintain their competitive standing in the financial markets. The proposed change to clarify that NTF ports are provided at no cost is designed to expressly state existing practice without changing its operation and, therefore, the Exchange believes that the proposed change will 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 lotter on DSK11XQN23PROD with NOTICES1 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 12 and paragraph (f) of Rule 19b–4 13 thereunder. 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 note 6. U.S.C. 78s(b)(3)(A). 13 17 CFR 240.19b–4(f). 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 J. Matthew DeLesDernier, Deputy Secretary. Electronic Comments [FR Doc. 2022–19916 Filed 9–14–22; 8:45 am] • 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–2022–34 on the subject line. • 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–2022–34. 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–2022–34 and should be submitted on or before October 6, 2022. 12 15 16:56 Sep 14, 2022 14 17 Jkt 256001 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–95717; File No. SR–OCC– 2022–009] Paper Comments 11 Supra VerDate Sep<11>2014 56719 PO 00000 CFR 200.30–3(a)(12). Frm 00100 Fmt 4703 Sfmt 4703 Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Partial Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Partial Amendment No. 1, by The Options Clearing Corporation Concerning One Multiplier Options September 9, 2022. I. Introduction On July 18, 2022, the Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change SR–OCC–2022– 009 pursuant to Section 19(b) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) 1 and Rule 19b–4 2 thereunder. The proposed rule change would amend provisions of OCC Rules to accommodate the issuance, clearance, and settlement of index options and flexibly-structured index options with an index multiplier of one.3 The proposed rule change was published for public comment in the Federal Register on August 1, 2022.4 On August 10, 2022, OCC filed Partial Amendment No. 1 to the proposed rule change.5 The Commission has received no comments regarding the proposed rule change. The Commission is publishing this notice to solicit comments on Partial Amendment No. 1 from interested persons, and is approving the proposed rule change, as 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Notice of Filing infra note 4, 87 FR at 47016. 4 Securities Exchange Act Release No. 95364 (July 26, 2022), 87 FR 47016 (Aug. 1, 2022) (File No. SR– OCC–2022–009) (‘‘Notice of Filing’’). 5 In Partial Amendment No. 1, OCC updated the description of Information Memo #50046 contained in Footnote 6 of SR–OCC–2022–009 to align with the proposed language for OCC Rule 1804 contained in Exhibit 5 to SR–OCC–2022–009 that an index or flexibly-structured index option with a multiplier of one will have an automatic exercise threshold amount of $0.01 per contract. Partial Amendment No. 1 included a similar update to Item 4 of SR– OCC–2022–009. 2 17 E:\FR\FM\15SEN1.SGM 15SEN1

Agencies

[Federal Register Volume 87, Number 178 (Thursday, September 15, 2022)]
[Notices]
[Pages 56717-56719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19916]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95722; File No. SR-PHLX-2022-34]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Its Port-
Related Fees, at Equity 7, Section 3, and Options 7, Section 9

September 9, 2022.
    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 1, 2022, 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 port-related fees, at 
Equity 7, Section 3, and Options 7, Section 9, as described further 
below. 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
    The purpose of the proposed rule change is to (i) amend Equity 7, 
Section 3, and Options 7, Section 9, to prorate port fees for the first 
month of service, (ii) add language to Equity 7, Section 3, and Options 
7, Section 9, to clarify that port fees for cancelled services will 
continue to be charged for the remainder of month, and (iii) clarify 
that Nasdaq Testing Facility (``NTF'') ports are provided at no cost in 
Options 7, Section 9.
    Currently, the Exchange does not prorate port connectivity fees 
under either its equity or options rules. Thus, participants are 
assessed a full month's fee if they direct the Exchange to make the 
subscribed connectivity live on any day of the month, including the 
last day thereof. Participants are also assessed a full month's port 
fee if they cancel service during the month.
    The Exchange proposes to provide prorated port fees for the first 
month of service for new requests. By prorating the first month's fees, 
the Exchange would charge participants port fees only for the days in 
which the participants are connected to the Exchange during the first 
month of service. The Exchange proposes to continue the current 
practice of charging port fees for the remainder of the month upon 
cancellation. If a participant starts and cancels service in the same 
month, the participant would not be billed for those days prior to the 
service start date but would be billed for the remainder of the month, 
including after the service is cancelled.\3\
---------------------------------------------------------------------------

    \3\ For example, if a participant orders a port on September 4, 
2022 and cancels the port on September 16, 2022, the participant 
would be charged the prorated port fee for September 5, 2022 through 
September 30, 2022.

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[[Page 56718]]

    Currently, the SQF Port Fee in Options 7, Section 9B(i)(2) is only 
assessed for SQF ports that receive inbound quotes at any time within 
that month. The Exchange is not proposing to change this practice. 
Participants would continue to be assessed the SQF Port Fee only during 
months where the SQF port is active.\4\ During the first month of 
service, assuming the SQF port is active at any point during the month, 
the SQF Port Fee would be prorated based on the connectivity date.\5\ 
The proposal would not impact the fee assessed for existing ports. 
Rather, the proposed change would only impact market participants that 
acquire a new port going forward.
---------------------------------------------------------------------------

    \4\ For example, if a SQF port is ordered on September 9, 2022 
and is not active during the month of September, the participant 
would not be charged the SQF Port Fee for the month of September. 
However, if the port becomes active on October 15, 2022 for the 
first time, the full monthly fee would be charged as October would 
be the second month of connectivity.
    \5\ For example, if a SQF port is ordered on September 9, 2022 
and active on September 13, 2022, the participant would be charged 
the prorated port fee for September 10, 2022 through September 30, 
2022.
---------------------------------------------------------------------------

    The Exchange believes it is important for participants to have the 
option to establish new connections to the Exchange at any time during 
the month without being hampered by a full month charge irrespective of 
when during the month service begins. Moreover, other exchanges also 
charge new ports on a prorated basis for the first month of service.\6\
---------------------------------------------------------------------------

    \6\ See, e.g., Cboe BZX U.S. Equities Exchange Fee Schedule, 
available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/; New York Stock Exchange Price List 2022, 
available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
---------------------------------------------------------------------------

    The Exchange also proposes to add language to Options 7, Section 
9B(iv) to clarify the Exchange's existing practice that NTF Ports are 
provided at no cost. The NTF provides subscribers with a virtual System 
test environment that closely approximates the production environment 
on which they may test their automated systems that integrate with the 
Exchange. For example, the NTF provides subscribers a virtual System 
environment for testing upcoming releases and product enhancements, as 
well as testing firm software prior to implementation. The Exchange 
proposes adding express language in the options Rules to provide 
increased clarity to market participants.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\8\ 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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange's proposed changes to its port fee schedule are 
reasonable in several respects. As a threshold matter, the Exchange is 
subject to significant competitive forces in the market for options and 
equity securities transaction services that constrain its pricing 
determinations in that market. 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.'' \9\
---------------------------------------------------------------------------

    \9\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable to prorate port fees 
for the first month of connectivity. As discussed above, the Exchange 
believes it is important for participants to have the flexibility to 
establish new connections to the Exchange at any time during the month 
without being hampered by a full month charge. For example, the 
Exchange believes it is reasonable to charge a user who begins a 
subscription on the last day of the month to be charged only for use of 
a port for that day. As noted above, other exchanges already charge 
their customers for new ports on a prorated basis for the first month 
of service.\10\ The proposed language describing the Exchange's 
practice to bill for the remainder of the month upon cancellation is 
intended only to clarify the existing practice and limit any confusion.
---------------------------------------------------------------------------

    \10\ Supra note 6.
---------------------------------------------------------------------------

    The Exchange believes that the proposal is also equitable and not 
unfairly discriminatory because the proposed change to prorate port 
fees for the first month of service and continue to charge for the 
remainder of the month upon cancellation will apply uniformly to all 
similarly situated participants. Removing the requirement to pay a full 
month's port fee if a user joins any day other than the first of the 
month is user-friendly and provides users incentive to subscribe at 
their convenience. The Exchange believes that prorating the fees for 
the first month of a user's subscription will ensure that the fees are 
more equitable to a user's utilization of the products. All users will 
benefit from the proration of the first month of their subscription.
    The Exchange also believes that it is just and equitable, and in 
the interests of market participants, for the Exchange to clarify the 
Exchange's existing practice to provide NTF ports at no cost to Options 
7, Section 9B(iv), codifying existing practice where it is not 
expressly stated in the Rule. The Exchange believes that market 
participants will benefit from increased clarity, which will help limit 
any potential confusion in the future.

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.
Intramarket Competition
    The Exchange does not believe that its proposal will place any 
category of Exchange participants at a competitive disadvantage. The 
proposed change to prorate port fees for the first month of service 
will apply uniformly to all similarly situated participants. All users 
will receive the benefit of a proration for the first month of port 
connectivity, which will enable users to save money that they otherwise 
would incur under the Exchange's current rules that do not provide for 
proration. The proposed language describing the Exchange's practice to 
bill for the remainder of the month upon cancellation, as well as the 
proposed language to the options Rules that NTF ports are provided at 
no cost, merely codify and clarify existing practices of the Exchange.
Intermarket Competition
    The Exchange believes that the proposed change to its port fee 
schedule to provide proration for the first month of port connectivity 
will not impose a burden on competition because the Exchange's 
execution services are completely voluntary and subject to extensive 
competition both from the other live exchanges and from off-exchange 
venues, which include alternative trading systems that trade national 
market system stock. Moreover,

[[Page 56719]]

as noted above, other exchanges currently charge new ports on a 
prorated basis for the first month of service.\11\ The proposed changes 
will help ensure that the Exchange's billing practices are commensurate 
with competitors.
---------------------------------------------------------------------------

    \11\ Supra note 6.
---------------------------------------------------------------------------

    The proposed change to the Exchange's port fee schedule is 
reflective of this competition because, as a threshold issue, the 
Exchange is a relatively small market so its ability to burden 
intermarket competition is limited. In this regard, even the largest 
U.S. equities exchange by volume only has 17-18% market share, which in 
most markets could hardly be categorized as having enough market power 
to burden competition. Accordingly, the Exchange does not believe that 
the proposed change will impair the ability of members, participants, 
or competing order execution venues to maintain their competitive 
standing in the financial markets.
    The proposed change to clarify that NTF ports are provided at no 
cost is designed to expressly state existing practice without changing 
its operation and, therefore, the Exchange believes that the proposed 
change will 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) of the Act \12\ and paragraph (f) of Rule 19b-4 \13\ 
thereunder.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f).
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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-2022-34 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-2022-34. 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-2022-34 and should be submitted on 
or before October 6, 2022.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19916 Filed 9-14-22; 8:45 am]
BILLING CODE 8011-01-P
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