Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Pricing Schedule at Options 7, Section 5, 71372-71375 [2022-25353]

Download as PDF 71372 Federal Register / Vol. 87, No. 224 / Tuesday, November 22, 2022 / Notices 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– PEARL–2022–48 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–PEARL–2022–48. 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–PEARL–2022–48 and should be submitted on or before December 13, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Sherry R. Haywood, Assistant Secretary. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96329; File No. SR–Phlx– 2022–46] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Pricing Schedule at Options 7, Section 5 November 16, 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 November 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. Lead market maker Rebate for Adding Liquidity ......................................... Fee for Removing Liquidity .......................................... $0.00 0.40 I I $0.20 0.40 The Exchange proposes to amend the Exchange’s Pricing Schedule at Options 7, Section 5.D. 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 [FR Doc. 2022–25358 Filed 11–21–22; 8:45 am] Customer I. Self-Regulatory Organization’s Statement of the Terms of Substance of 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 the pricing for its singly-listed U.S. dollarsettled foreign currency options (‘‘FX options’’ or ‘‘FCOs’’) 3 in Options 7, Section 5.D. Today, the Exchange assesses fees and rebates for executions that add or remove liquidity in simple and complex FX options orders. For simple FX options, Part A of Section 5.D outlines the following rebates for adding liquidity and fees for removing liquidity: Market maker I $0.20 0.40 Brokerdealer Firm I $0.00 0.40 I $0.00 0.40 Professional I $0.00 0.40 khammond on DSKJM1Z7X2PROD with NOTICES For complex FX options, Part B of Section 5.D outlines the following fees for removing liquidity: Customer Fee for Adding Liquidity ............................................... 22 17 1 15 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). VerDate Sep<11>2014 17:48 Nov 21, 2022 $0.40 Lead market maker $0.40 2 17 Market maker $0.40 CFR 240.19b–4. Exchange will add the term ‘‘FCOs’’ in the Options 7, Section 5.D header. FCOs include XDB, 3 The Jkt 259001 PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 Firm $0.40 Brokerdealer $0.40 Professional $0.40 XDE, XDN, XDS, XDA, XDZ and XDC, and trade pursuant to Options 4C. E:\FR\FM\22NON1.SGM 22NON1 71373 Federal Register / Vol. 87, No. 224 / Tuesday, November 22, 2022 / Notices Customer Fee for Removing Liquidity .......................................... Simple FX options orders that are executed against the individual components of complex FX options orders are assessed the fees and paid the rebates in Part A. However, the individual components of complex FX options orders are assessed the fees in Part B. Transactions in FX options originating on the Exchange floor are subject to the fees for removing liquidity described above. However, if one side of the transaction originates on the Exchange floor and any other side of the trade was the result of an electronically submitted order or a quote, then the fees for removing liquidity apply to the transactions which originated on the Exchange floor, and the contracts that 0.40 Market maker 0.40 Firm 0.40 are executed electronically are subject to the rebates and fees, as applicable, for simple and complex orders. The fees for FX options executions in all electronic auctions including, but not limited to, the Quote Exhaust auction,4 the opening process and complex electronic auction, including the Complex Order Live Auction (‘‘COLA’’),5 are $0.40 per contract for Customer,6 Professional,7 Firm,8 BrokerDealer,9 Lead Market Maker 10 and Market Maker.11 Furthermore, PIXL 12 executions in FX options are charged as follows: $0.20 per contract for Initiating Orders,13 and $0.40 per contract for all other participants. Options Transaction Charge ................................................ Brokerdealer 0.40 Professional 0.40 0.40 The Exchange now proposes to replace the pricing described above for simple and complex FCOs with a streamlined pricing schedule that would remove the maker/taker model as well as the current auction, floor/electronic, and simple/complex segmentations. As proposed, all Non-Customers 14 will be assessed a uniform Options Transaction Charge of $0.50 per contract for all transactions in FCOs while Customers will not be assessed any Options Transaction Charges. To effectuate the foregoing changes, the Exchange proposes to delete Parts A and B of Section 5.D in their entirety and replace them with the following fee schedule: Customer Professional Lead market maker and market maker Brokerdealer Firm $0.00 $0.50 $0.50 $0.50 $0.50 The Exchange believes that its proposal is consistent with Section 6(b) of the Act,15 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,16 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 believes that the proposed changes in Options 7, Section 5.D in connection with the standard options transaction fees and complex surcharges for singly-listed FCOs are reasonable, equitable, and not unfairly discriminatory because the proposed changes will streamline FCO pricing for all market participants, and will incentivize market participants to transact in more FCOs on Phlx. Specifically, the Exchange will simplify pricing by removing the maker/taker model as well as the current auction, floor/electronic, and simple/complex segmentations. The Exchange believes that it is reasonable to eliminate the $0.20 per contract rebate currently offered to Lead Market Makers and Market Makers for adding liquidity in simple FCOs because this incentive has not been effective at encouraging these market participants to add increased liquidity in simple FCOs. The Exchange further believes that eliminating the differentiated pricing between maker/ taker, auction, floor/electronic, and 4 A Quote Exhaust occurs when the Exchange’s disseminated market at a particular price level includes a quote, and such market is exhausted by an inbound contra-side quote or order (‘‘initiating quote or order’’), and following such exhaustion, contracts remain to be executed from the initiating quote or order through the initial execution price. See Options 3, Section 6(a)(2)(B)(2). 5 Complex orders on the complex order book may be subject to an automated auction process pursuant to Options 3, Section 14(e). 6 The term ‘‘Customer’’ applies to any transaction that is identified by a member or member organization for clearing in the Customer range at The Options Clearing Corporation (‘‘OCC’’) which is not for the account of a broker or dealer or for the account of a ‘‘Professional’’ (as that term is defined in Options 1, Section 1(b)(45)). 7 The term ‘‘Professional’’ applies to transactions for the accounts of Professionals, as defined in Options 1, Section 1(b)(45) means any person or entity that (i) is not a broker or dealer in securities, and (ii) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). 8 The term ‘‘Firm’’ applies to any transaction that is identified by a member or member organization for clearing in the Firm range at OCC. 9 The term ‘‘Broker-Dealer’’ applies to any transaction which is not subject to any of the other transaction fees applicable within a particular category. 10 The term ‘‘Lead Market Maker’’ applies to transactions for the account of a Lead Market Maker (as defined in Options 2, Section 12(a)). A Lead Market Maker is an Exchange member who is registered as an options Lead Market Maker pursuant to Options 2, Section 12(a). An options Lead Market Maker includes a Remote Lead Market Maker which is defined as an options Lead Market Maker in one or more classes that does not have a physical presence on an Exchange floor and is approved by the Exchange pursuant to Options 2, Section 11. 11 The term ‘‘Market Maker’’ is defined in Options 1, Section 1(b)(28) as a member of the Exchange who is registered as an options Market Maker pursuant to Options 2, Section 12(a). A Market Maker includes SQTs and RSQTs as well as Floor Market Makers. 12 PIXL is the Exchange’s electronic price improvement auction. See Options 3, Section 13. 13 A member may electronically submit for execution an order it represents as agent on behalf of a Public Customer, broker-dealer, or any other entity (‘‘PIXL Order’’) against principal interest or against any other order (except as provided in subparagraph (a)(6) of Options 3, Section 13) it represents as agent (an ‘‘Initiating Order’’) provided it submits the PIXL Order for electronic execution into the PIXL Auction (‘‘Auction’’) pursuant to Options 3, Section 13. See Options 3, Section 13. 14 The term ‘‘Non-Customer’’ applies to transactions for the accounts of Lead Market Makers, Market Makers, Firms, Professionals, Broker-Dealers and JBOs. The term ‘‘Joint Back Office’’ or ‘‘JBO’’ applies to any transaction that is identified by a member or member organization for clearing in the Firm range at OCC and is identified with an origin code as a JBO. A JBO will be priced the same as a Broker-Dealer. 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(4) and (5). The Exchange also proposes to assess all market participants a surcharge of $0.25 per contract for all complex orders traded in FCOs. 2. Statutory Basis khammond on DSKJM1Z7X2PROD with NOTICES Lead market maker VerDate Sep<11>2014 17:48 Nov 21, 2022 Jkt 259001 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 E:\FR\FM\22NON1.SGM 22NON1 71374 Federal Register / Vol. 87, No. 224 / Tuesday, November 22, 2022 / Notices khammond on DSKJM1Z7X2PROD with NOTICES simple/complex FCO transactions is reasonable as it will simplify the fee structure in a manner that may make the fee schedule more comprehensible and administrable and thus, more appealing to, market participants. As proposed, all Non-Customers will instead be assessed a uniform Options Transaction Charge of $0.50 per contract for all transactions in FCOs while Customers will not be assessed any Options Transaction Charges. While Non-Customers will be charged higher Options Transaction Fees under the proposed pricing program,17 the Exchange believes that the proposal is reasonable and would continue to incentivize these market participants to transact in singly-listed FCOs because the proposed fees generally remain lower than the fees currently charged for the Exchange’s other singly-listed options.18 In addition, Customers would no longer be assessed any standard transaction charges for FCOs whereas today, they would be assessed a $0.40 per contract fee for removing liquidity. As a result, the Exchange believes that the proposed pricing is structured in a way that continues to encourage market participants, including Customers in particular, to transact in singly-listed FCOs on Phlx. The Exchange believes that the proposed standard Options Transaction Charges are equitable and not unfairly discriminatory because they will apply uniformly to all similarly situated market participants. With respect to the proposal to assess no Options Transaction Charges to Customers, the Exchange notes that there is a history in the options markets of providing preferential treatment to customers, and customer order flow attracts additional liquidity to the Exchange. The Exchange believes that additional Customer order flow in FCOs will provide all market participants with more trading opportunities and encourage an increase in Lead Market Maker and Market Maker activity, which facilitates tighter spreads. This may cause an additional 17 As discussed above, Non-Customers are currently charged a $0.40 per contract fee for removing liquidity in simple and complex FCOs. For simple FCOs, Firms, Broker-Dealers, and Professionals have the opportunity to receive free executions for adding liquidity in FCOs, while Lead Market Makers and Market Makers may receive a $0.20 per contract rebate for adding liquidity. See Options 7, Section 5.D. 18 As set forth in Options 7, Section 5.C, the Exchange currently charges Firms, Broker-Dealers, and Professionals an Options Transaction Charge of $0.75 per contract in singly-listed options. Lead Market Makers and Market Makers are currently charged $0.40 per contract. Lastly, Customers are charged $0.40 per contract for transactions in singly-listed options. VerDate Sep<11>2014 17:48 Nov 21, 2022 Jkt 259001 corresponding increase in order flow from other market participants, contributing overall towards a robust and well-balance market ecosystem, particularly in FCOs. The Exchange believes that the proposed complex surcharge is reasonable as the surcharge is designed to update fees for Phlx’s services to reflect their current value—rather than their value when the FCO pricing was adopted in its present form eight years ago 19—based on Phlx’s ability to deliver value to its customers by offering singlylisted products on its market like FCOs. Even with the complex surcharge, all market participants except Lead Market Makers and Market Makers would be assessed consistent or lower fees for their singly-listed FCO orders compared to the fees currently assessed to other singly-listed options orders.20 Customer FCO transactions, in particular, will continue to get the benefit of lower pricing even with the complex surcharge. Customer orders bring valuable liquidity to the market, which liquidity benefits other market participants through more trading opportunities. This, in turn, attracts Lead Market Maker and Market Maker activity, which facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. Further, the Exchange believes that applying the complex surcharge consistently across all market participants, in conjunction with the uniform pricing described above, will streamline the fee structure in a manner that may make the fee schedule may be more comprehensible and administrable to the benefit of all market participants. Lastly, the Exchange believes that the proposed complex surcharge is equitable and not unfairly discriminatory as the surcharge will apply uniformly to all market participants. 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 19 The Exchange has not amended pricing for FCOs since 2014. See Securities Exchange Act Release No. 72806 (August 11, 2014), 79 FR 48269 (August 15, 2014) (SR–Phlx–2014–51). 20 Aggregating the proposed complex surcharge and options transaction charges, all Non-Customers would be assessed $0.75 per contract for complex trades in singly-listed FCOs while Customers would be assessed $0.25 per contract. In contrast, under the singly-listed options pricing schedule in Options 7, Section 5.C, Firms, Broker-Dealers, and Professionals would be assessed $0.75 per contract, and Lead Market Makers, Market Makers, and Customers would be charged $0.40 per contract. PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 necessary or appropriate in furtherance of the purposes of the Act. In terms of intra-market competition, the proposed pricing for singly-listed FCOs will apply uniformly to all similarly situated market participants. Specifically, all Non-Priority Customers will be assessed a uniform Options Transaction Charge while Customers will not be assessed any Options Transaction Charges. In addition, all market participants will be assessed a uniform surcharge on their complex FCO transactions. Even with the complex surcharge, Customers will continue to be charged lower fees for FCO trades. Accordingly, the proposed FCO pricing is designed to incentivize Customer order flow in particular, which the Exchange believes will benefit all market participants by providing more trading opportunities, which attracts other market participants, thus facilitating tighter spreads and increased order flow. In terms of inter-market competition, 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 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 and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In sum, if the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. 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. E:\FR\FM\22NON1.SGM 22NON1 Federal Register / Vol. 87, No. 224 / Tuesday, November 22, 2022 / 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.21 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–2022–46 on the subject line. khammond on DSKJM1Z7X2PROD with NOTICES 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–2022–46. 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–2022–46 and should be submitted on or before December 13, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–25353 Filed 11–21–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96332; File No. SR– PEARL–2022–50] Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 2617 Order Execution and Routing November 16, 2022. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 7, 2022, MIAX PEARL, LLC (‘‘MIAX Pearl’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘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 is filing a proposed rule change to amend the Route to Primary Auction (‘‘PAC’’) routing option under Exchange Rule 2617(b)(5)(B). The text of the proposed rule change is available on the Exchange’s website at https://www.miaxoptions.com/rulefilings/pearl at MIAX Pearl’s principal 22 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 21 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 17:48 Nov 21, 2022 Jkt 259001 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 71375 office, 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 amend the PAC routing option under Exchange Rule 2617(b)(5)(B) that is available to orders in equity securities traded on the Exchange’s equity trading platform (referred to herein as ‘‘MIAX Pearl Equities’’).3 Specifically, the Exchange proposes to amend Exchange Rule 2617(b)(5)(B)(1)(i) to harmonize the timeline by which displayed Limit Orders 4 and Market Orders 5 with a time-in-force of Regular Hours Only (‘‘RHO’’) 6 are routed to participate in the primary listing market’s opening process with the timeline by which the Exchange currently routes displayed Limit Orders to participate in the primary listing market’s closing process. The Exchange offers its Equity Members 7 optional routing functionality that allows them to use the Exchange to access liquidity on other trading centers. The functionality 3 The Exchange notes that provisions of Exchange Rule 2617(b)(5) that are not subject to this proposed rule change were amended in a separate filing, but those amendments have not yet been implemented. See Securities Exchange Act Release No. 95298 (July 15, 2022), 87 FR 43579 (July 21, 2022) (SR– PEARL–2022–29). 4 See Exchange Rule 2614(a)(1). 5 See Exchange Rule 2614(a)(2). 6 Exchange Rule 2614(b)(2) defines ‘‘Regular Hours Only’’ or ‘‘RHO’’ as ‘‘[a]n order that is designated for execution only during Regular Trading Hours, which includes the Opening Process for equity securities. An order with a time-in-force of RHO entered into the System before the opening of business on the Exchange as determined pursuant to Exchange Rule 2600 will be accepted but not eligible for execution until the start of Regular Trading Hours.’’ 7 The term ‘‘Equity Member’’ is a Member authorized by the Exchange to transact business on MIAX Pearl Equities. See Exchange Rule 1901. E:\FR\FM\22NON1.SGM 22NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 87, Number 224 (Tuesday, November 22, 2022)]
[Notices]
[Pages 71372-71375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25353]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96329; File No. SR-Phlx-2022-46]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Pricing Schedule at Options 7, Section 5

November 16, 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 November 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 Pricing Schedule at 
Options 7, Section 5.D.
    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 Exchange proposes to amend the pricing for its singly-listed 
U.S. dollar-settled foreign currency options (``FX options'' or 
``FCOs'') \3\ in Options 7, Section 5.D. Today, the Exchange assesses 
fees and rebates for executions that add or remove liquidity in simple 
and complex FX options orders. For simple FX options, Part A of Section 
5.D outlines the following rebates for adding liquidity and fees for 
removing liquidity:
---------------------------------------------------------------------------

    \3\ The Exchange will add the term ``FCOs'' in the Options 7, 
Section 5.D header. FCOs include XDB, XDE, XDN, XDS, XDA, XDZ and 
XDC, and trade pursuant to Options 4C.

----------------------------------------------------------------------------------------------------------------
                                                  Lead
                                   Customer      market       Market        Firm       Broker-     Professional
                                                 maker        maker                     dealer
----------------------------------------------------------------------------------------------------------------
Rebate for Adding Liquidity....        $0.00        $0.20        $0.20        $0.00        $0.00           $0.00
Fee for Removing Liquidity.....         0.40         0.40         0.40         0.40         0.40            0.40
----------------------------------------------------------------------------------------------------------------

    For complex FX options, Part B of Section 5.D outlines the 
following fees for removing liquidity:

----------------------------------------------------------------------------------------------------------------
                                                  Lead
                                   Customer      market       Market        Firm       Broker-     Professional
                                                 maker        maker                     dealer
----------------------------------------------------------------------------------------------------------------
Fee for Adding Liquidity.......        $0.40        $0.40        $0.40        $0.40        $0.40           $0.40

[[Page 71373]]

 
Fee for Removing Liquidity.....         0.40         0.40         0.40         0.40         0.40            0.40
----------------------------------------------------------------------------------------------------------------

    Simple FX options orders that are executed against the individual 
components of complex FX options orders are assessed the fees and paid 
the rebates in Part A. However, the individual components of complex FX 
options orders are assessed the fees in Part B. Transactions in FX 
options originating on the Exchange floor are subject to the fees for 
removing liquidity described above. However, if one side of the 
transaction originates on the Exchange floor and any other side of the 
trade was the result of an electronically submitted order or a quote, 
then the fees for removing liquidity apply to the transactions which 
originated on the Exchange floor, and the contracts that are executed 
electronically are subject to the rebates and fees, as applicable, for 
simple and complex orders.
    The fees for FX options executions in all electronic auctions 
including, but not limited to, the Quote Exhaust auction,\4\ the 
opening process and complex electronic auction, including the Complex 
Order Live Auction (``COLA''),\5\ are $0.40 per contract for 
Customer,\6\ Professional,\7\ Firm,\8\ Broker-Dealer,\9\ Lead Market 
Maker \10\ and Market Maker.\11\ Furthermore, PIXL \12\ executions in 
FX options are charged as follows: $0.20 per contract for Initiating 
Orders,\13\ and $0.40 per contract for all other participants.
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    \4\ A Quote Exhaust occurs when the Exchange's disseminated 
market at a particular price level includes a quote, and such market 
is exhausted by an inbound contra-side quote or order (``initiating 
quote or order''), and following such exhaustion, contracts remain 
to be executed from the initiating quote or order through the 
initial execution price. See Options 3, Section 6(a)(2)(B)(2).
    \5\ Complex orders on the complex order book may be subject to 
an automated auction process pursuant to Options 3, Section 14(e).
    \6\ The term ``Customer'' applies to any transaction that is 
identified by a member or member organization for clearing in the 
Customer range at The Options Clearing Corporation (``OCC'') which 
is not for the account of a broker or dealer or for the account of a 
``Professional'' (as that term is defined in Options 1, Section 
1(b)(45)).
    \7\ The term ``Professional'' applies to transactions for the 
accounts of Professionals, as defined in Options 1, Section 1(b)(45) 
means any person or entity that (i) is not a broker or dealer in 
securities, and (ii) places more than 390 orders in listed options 
per day on average during a calendar month for its own beneficial 
account(s).
    \8\ The term ``Firm'' applies to any transaction that is 
identified by a member or member organization for clearing in the 
Firm range at OCC.
    \9\ The term ``Broker-Dealer'' applies to any transaction which 
is not subject to any of the other transaction fees applicable 
within a particular category.
    \10\ The term ``Lead Market Maker'' applies to transactions for 
the account of a Lead Market Maker (as defined in Options 2, Section 
12(a)). A Lead Market Maker is an Exchange member who is registered 
as an options Lead Market Maker pursuant to Options 2, Section 
12(a). An options Lead Market Maker includes a Remote Lead Market 
Maker which is defined as an options Lead Market Maker in one or 
more classes that does not have a physical presence on an Exchange 
floor and is approved by the Exchange pursuant to Options 2, Section 
11.
    \11\ The term ``Market Maker'' is defined in Options 1, Section 
1(b)(28) as a member of the Exchange who is registered as an options 
Market Maker pursuant to Options 2, Section 12(a). A Market Maker 
includes SQTs and RSQTs as well as Floor Market Makers.
    \12\ PIXL is the Exchange's electronic price improvement 
auction. See Options 3, Section 13.
    \13\ A member may electronically submit for execution an order 
it represents as agent on behalf of a Public Customer, broker-
dealer, or any other entity (``PIXL Order'') against principal 
interest or against any other order (except as provided in sub-
paragraph (a)(6) of Options 3, Section 13) it represents as agent 
(an ``Initiating Order'') provided it submits the PIXL Order for 
electronic execution into the PIXL Auction (``Auction'') pursuant to 
Options 3, Section 13. See Options 3, Section 13.
---------------------------------------------------------------------------

    The Exchange now proposes to replace the pricing described above 
for simple and complex FCOs with a streamlined pricing schedule that 
would remove the maker/taker model as well as the current auction, 
floor/electronic, and simple/complex segmentations. As proposed, all 
Non-Customers \14\ will be assessed a uniform Options Transaction 
Charge of $0.50 per contract for all transactions in FCOs while 
Customers will not be assessed any Options Transaction Charges. To 
effectuate the foregoing changes, the Exchange proposes to delete Parts 
A and B of Section 5.D in their entirety and replace them with the 
following fee schedule:
---------------------------------------------------------------------------

    \14\ The term ``Non-Customer'' applies to transactions for the 
accounts of Lead Market Makers, Market Makers, Firms, Professionals, 
Broker-Dealers and JBOs. The term ``Joint Back Office'' or ``JBO'' 
applies to any transaction that is identified by a member or member 
organization for clearing in the Firm range at OCC and is identified 
with an origin code as a JBO. A JBO will be priced the same as a 
Broker-Dealer.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Lead market
                                                                         Customer       Professional      maker and     Broker-  dealer        Firm
                                                                                                         market maker
--------------------------------------------------------------------------------------------------------------------------------------------------------
Options Transaction Charge.........................................           $0.00            $0.50            $0.50            $0.50            $0.50
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Exchange also proposes to assess all market participants a 
surcharge of $0.25 per contract for all complex orders traded in FCOs.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\15\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\16\ 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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes in Options 7, 
Section 5.D in connection with the standard options transaction fees 
and complex surcharges for singly-listed FCOs are reasonable, 
equitable, and not unfairly discriminatory because the proposed changes 
will streamline FCO pricing for all market participants, and will 
incentivize market participants to transact in more FCOs on Phlx. 
Specifically, the Exchange will simplify pricing by removing the maker/
taker model as well as the current auction, floor/electronic, and 
simple/complex segmentations. The Exchange believes that it is 
reasonable to eliminate the $0.20 per contract rebate currently offered 
to Lead Market Makers and Market Makers for adding liquidity in simple 
FCOs because this incentive has not been effective at encouraging these 
market participants to add increased liquidity in simple FCOs. The 
Exchange further believes that eliminating the differentiated pricing 
between maker/taker, auction, floor/electronic, and

[[Page 71374]]

simple/complex FCO transactions is reasonable as it will simplify the 
fee structure in a manner that may make the fee schedule more 
comprehensible and administrable and thus, more appealing to, market 
participants.
    As proposed, all Non-Customers will instead be assessed a uniform 
Options Transaction Charge of $0.50 per contract for all transactions 
in FCOs while Customers will not be assessed any Options Transaction 
Charges. While Non-Customers will be charged higher Options Transaction 
Fees under the proposed pricing program,\17\ the Exchange believes that 
the proposal is reasonable and would continue to incentivize these 
market participants to transact in singly-listed FCOs because the 
proposed fees generally remain lower than the fees currently charged 
for the Exchange's other singly-listed options.\18\ In addition, 
Customers would no longer be assessed any standard transaction charges 
for FCOs whereas today, they would be assessed a $0.40 per contract fee 
for removing liquidity. As a result, the Exchange believes that the 
proposed pricing is structured in a way that continues to encourage 
market participants, including Customers in particular, to transact in 
singly-listed FCOs on Phlx.
---------------------------------------------------------------------------

    \17\ As discussed above, Non-Customers are currently charged a 
$0.40 per contract fee for removing liquidity in simple and complex 
FCOs. For simple FCOs, Firms, Broker-Dealers, and Professionals have 
the opportunity to receive free executions for adding liquidity in 
FCOs, while Lead Market Makers and Market Makers may receive a $0.20 
per contract rebate for adding liquidity. See Options 7, Section 
5.D.
    \18\ As set forth in Options 7, Section 5.C, the Exchange 
currently charges Firms, Broker-Dealers, and Professionals an 
Options Transaction Charge of $0.75 per contract in singly-listed 
options. Lead Market Makers and Market Makers are currently charged 
$0.40 per contract. Lastly, Customers are charged $0.40 per contract 
for transactions in singly-listed options.
---------------------------------------------------------------------------

    The Exchange believes that the proposed standard Options 
Transaction Charges are equitable and not unfairly discriminatory 
because they will apply uniformly to all similarly situated market 
participants. With respect to the proposal to assess no Options 
Transaction Charges to Customers, the Exchange notes that there is a 
history in the options markets of providing preferential treatment to 
customers, and customer order flow attracts additional liquidity to the 
Exchange. The Exchange believes that additional Customer order flow in 
FCOs will provide all market participants with more trading 
opportunities and encourage an increase in Lead Market Maker and Market 
Maker activity, which facilitates tighter spreads. This may cause an 
additional corresponding increase in order flow from other market 
participants, contributing overall towards a robust and well-balance 
market ecosystem, particularly in FCOs.
    The Exchange believes that the proposed complex surcharge is 
reasonable as the surcharge is designed to update fees for Phlx's 
services to reflect their current value--rather than their value when 
the FCO pricing was adopted in its present form eight years ago \19\--
based on Phlx's ability to deliver value to its customers by offering 
singly-listed products on its market like FCOs. Even with the complex 
surcharge, all market participants except Lead Market Makers and Market 
Makers would be assessed consistent or lower fees for their singly-
listed FCO orders compared to the fees currently assessed to other 
singly-listed options orders.\20\ Customer FCO transactions, in 
particular, will continue to get the benefit of lower pricing even with 
the complex surcharge. Customer orders bring valuable liquidity to the 
market, which liquidity benefits other market participants through more 
trading opportunities. This, in turn, attracts Lead Market Maker and 
Market Maker activity, which facilitates tighter spreads, which may 
cause an additional corresponding increase in order flow from other 
market participants. Further, the Exchange believes that applying the 
complex surcharge consistently across all market participants, in 
conjunction with the uniform pricing described above, will streamline 
the fee structure in a manner that may make the fee schedule may be 
more comprehensible and administrable to the benefit of all market 
participants. Lastly, the Exchange believes that the proposed complex 
surcharge is equitable and not unfairly discriminatory as the surcharge 
will apply uniformly to all market participants.
---------------------------------------------------------------------------

    \19\ The Exchange has not amended pricing for FCOs since 2014. 
See Securities Exchange Act Release No. 72806 (August 11, 2014), 79 
FR 48269 (August 15, 2014) (SR-Phlx-2014-51).
    \20\ Aggregating the proposed complex surcharge and options 
transaction charges, all Non-Customers would be assessed $0.75 per 
contract for complex trades in singly-listed FCOs while Customers 
would be assessed $0.25 per contract. In contrast, under the singly-
listed options pricing schedule in Options 7, Section 5.C, Firms, 
Broker-Dealers, and Professionals would be assessed $0.75 per 
contract, and Lead Market Makers, Market Makers, and Customers would 
be charged $0.40 per contract.
---------------------------------------------------------------------------

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. In terms of intra-market 
competition, the proposed pricing for singly-listed FCOs will apply 
uniformly to all similarly situated market participants. Specifically, 
all Non-Priority Customers will be assessed a uniform Options 
Transaction Charge while Customers will not be assessed any Options 
Transaction Charges. In addition, all market participants will be 
assessed a uniform surcharge on their complex FCO transactions. Even 
with the complex surcharge, Customers will continue to be charged lower 
fees for FCO trades. Accordingly, the proposed FCO pricing is designed 
to incentivize Customer order flow in particular, which the Exchange 
believes will benefit all market participants by providing more trading 
opportunities, which attracts other market participants, thus 
facilitating tighter spreads and increased order flow.
    In terms of inter-market competition, 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 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 and with alternative trading systems that have been exempted 
from compliance with the statutory standards applicable to exchanges. 
Because competitors are free to modify their own fees in response, and 
because market participants may readily adjust their order routing 
practices, the Exchange believes that the degree to which fee changes 
in this market may impose any burden on competition is extremely 
limited. In sum, if the changes proposed herein are unattractive to 
market participants, it is likely that the Exchange will lose market 
share as a result. Accordingly, the Exchange does not believe that the 
proposed changes will impair the ability of members or competing order 
execution venues to maintain their competitive standing in the 
financial markets.

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.

[[Page 71375]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\21\
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

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-2022-46 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-2022-46. 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-2022-46 and 
should be submitted on or before December 13, 2022.
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25353 Filed 11-21-22; 8:45 am]
BILLING CODE 8011-01-P

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