Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 4, 2983-2985 [2023-00776]

Download as PDF lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 88, No. 11 / Wednesday, January 18, 2023 / Notices the Securities Act and to enable filers to provide investors with information necessary to evaluate an investment in the security. This information collection differs significantly from many other federal information collections, which are primarily for the use and benefit of the collecting agency. The information required to be filed with the Commission permits verification of compliance with securities law requirements and assures the public availability and dissemination of the information. The Commission estimates that there are approximately 1,019 initial registration statements filed on Form S– 6 annually and approximately 607 annual post-effective amendments to previously effective registration statements filed on Form S–6. The Commission estimates that the hour burden for preparing and filing an initial registration statement on Form S– 6 is 45 hours and for preparing and filing a post-effective amendment to a previously effective registration statement filed on Form S–6 is 40 hours. Therefore, we estimate that the total hour burden of preparing and filing registration statements on Form S–6 for all affected UITs is 68,365 hours. We estimate that the cost burden of preparing and filing an initial registration statement on Form S–6 is $38,825 and for preparing and filing a post-effective amendment is $23,434. Therefore, we estimate that the total cost burden of preparing and filing registration statements on Form S–6 for all affected UITs is $53,787,113. Estimates of average burden hours and costs are made solely for purposes of the Paperwork Reduction Act, and are not derived from a comprehensive or even representative survey or study of the costs of Commission rules and forms. Compliance with the information collection requirements of Form S–6 is mandatory. Responses to the collection of information will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. Written comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including VerDate Sep<11>2014 17:41 Jan 17, 2023 Jkt 259001 2983 through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted by March 20, 2023. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. Please direct your written comments to: David Bottom, Acting Director/Chief Information Officer, Securities and Exchange Commission, c/o John Pezzullo, 100 F Street NE, Washington, DC 20549 or send an email to: PRA_ Mailbox@sec.gov. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Dated: January 11, 2023. Sherry R. Haywood, Assistant Secretary. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change [FR Doc. 2023–00773 Filed 1–17–23; 8:45 am] BILLING CODE 8011–01–P 1. Purpose SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96638; File No. SR–Phlx– 2023–02] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 4 January 11, 2023. 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 January 3, 2023, 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 Phlx’s Pricing Schedule at Options 7, Section 4. 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. 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00107 Fmt 4703 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. Sfmt 4703 Phlx proposes to amend its Pricing Schedule at Options 7, Section 4, ‘‘Multiply Listed Options Fees (Includes options overlying equities, ETFs, ETNs and indexes which are Multiply Listed) (Excludes SPY and broad-based index options symbols listed within Options 7, Section 5.A).’’ Specifically, Phlx proposes an increase to its Qualified Contingent Cross (‘‘QCC’’) rebates that are paid by the Exchange in a given month. Today, the Exchange assesses a $0.20 per contract QCC Transaction Fee for a Lead Market Maker,3 Market Maker,4 3 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. See Options 7, Section 1(c). The term ‘‘Floor Lead Market Maker’’ is a member who is registered as an options Lead Market Maker pursuant to Options 2, Section 12(a) and has a physical presence on the Exchange’s trading floor. See Options 8, Section 2(a)(3). 4 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. See Options 7, Section 1(c). The term ‘‘Floor Market Maker’’ is a Market Maker who is neither an SQT or an RSQT. A Floor Market Maker may provide a quote in open outcry. See Options 8, Section 2(a)(4). E:\FR\FM\18JAN1.SGM 18JAN1 2984 Federal Register / Vol. 88, No. 11 / Wednesday, January 18, 2023 / Notices Firm 5 and Broker-Dealer.6 Customers 7 and Professionals 8 are not assessed a QCC Transaction Fee. QCC Transaction Fees apply to electronic QCC Orders 9 and Floor QCC Orders.10 Rebates are paid on all qualifying executed electronic QCC Orders and Floor QCC Orders based on the following two tier rebate schedule:11 more effectively with other options exchanges for QCC Orders by incentivizing market participants to transact a greater amount of QCC Orders on Phlx in order to receive a greater rebate in a given month. lotter on DSK11XQN23PROD with NOTICES1 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,13 in general, and furthers the QCC REBATE SCHEDULE objectives of Sections 6(b)(4) and 6(b)(5) of the Act,14 in particular, in that it Rebate Tier Threshold per provides for the equitable allocation of contract reasonable dues, fees and other charges Tier 1 .... 0 to 999,999 contracts $0.09 among members and issuers and other persons using any facility, and is not in a month. Tier 2 .... 1,000,000 contracts or 0.17 designed to permit unfair discrimination between customers, more in a month. issuers, brokers, or dealers. The Commission and the courts have The Exchange does not pay a QCC repeatedly expressed their preference Rebate where the transaction is either: (i) Customer-to-Customer; (ii) Customer- for competition over regulatory intervention in determining prices, to-Professional; (iii) Professional-toproducts, and services in the securities Professional; or (iv) a dividend, merger, markets. In Regulation NMS, while short stock interest or reversal or adopting a series of steps to improve the conversion strategy execution (as current market model, the Commission defined in Options 7, Section 4). At this time, the Exchange proposes to highlighted the importance of market increase the Tier 2 QCC Rebate from forces in determining prices and SRO $0.17 to $0.20 per contract. The Tier 2 revenues and, also, recognized that QCC Rebate requires market participants current regulation of the market system to transact 1,000,000 QCC contracts or ‘‘has been remarkably successful in more in a month.12 The Exchange promoting market competition in its believes that increasing this Tier 2 QCC broader forms that are most important to Rebate will permit Phlx to compete investors and listed companies.’’ 15 Likewise, in NetCoalition v. Securities 5 The term ‘‘Firm’’ applies to any transaction that and Exchange Commission 16 is identified by a member or member organization (‘‘NetCoalition’’) the D.C. Circuit upheld for clearing in the Firm range at The Options the Commission’s use of a market-based Clearing Corporation. See Options 7, Section 1(c). approach in evaluating the fairness of 6 The term ‘‘Broker-Dealer’’ applies to any market data fees against a challenge transaction which is not subject to any of the other transaction fees applicable within a particular claiming that Congress mandated a costcategory. See Options 7, Section 1(c). based approach.17 As the court 7 The term ‘‘Customer’’ applies to any transaction emphasized, the Commission ‘‘intended that is identified by a member or member in Regulation NMS that ‘market forces, organization for clearing in the Customer range at The Options Clearing Corporation (‘‘OCC’’) which rather than regulatory requirements’ is not for the account of a broker or dealer or for play a role in determining the market the account of a ‘‘Professional’’ (as that term is data . . . to be made available to defined in Options 1, Section 1(b)(45)). See Options investors and at what cost.’’ 18 7, Section 1(c). 8 The term ‘‘Professional’’ applies to transactions Further, ‘‘[n]o one disputes that for the accounts of Professionals, as defined in competition for order flow is ‘fierce.’ Options 1, Section 1(b)(45) means any person or . . . As the SEC explained, ‘[i]n the U.S. entity that (i) is not a broker or dealer in securities, national market system, buyers and and (ii) places more than 390 orders in listed options per day on average during a calendar month sellers of securities, and the brokerfor its own beneficial account(s). See Options 7, dealers that act as their order-routing Section 1(c). agents, have a wide range of choices of 9 Electronic QCC Orders are described in Options where to route orders for execution’; 3, Section 12. 10 Floor QCC Orders are described in Options 8, [and] ‘no exchange can afford to take its Section 30(e). market share percentages for granted’ 11 Volume resulting from all executed electronic QCC Orders and Floor QCC Orders, including Customer-to-Customer, Customer-to-Professional, and Professional-to-Professional transactions and excluding dividend, merger, short stock interest or reversal or conversion strategy executions, is aggregated in determining the applicable volume tier. 12 Tier 1 of the QCC Rebate Schedule requires market participants to transact from 0 to 999,999 QCC contracts in a month. VerDate Sep<11>2014 17:41 Jan 17, 2023 Jkt 259001 13 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 15 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). 16 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). 17 See NetCoalition, at 534–535. 18 Id. at 537. because ‘no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers’. . . .’’ 19 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. The Exchange believes that it is reasonable to increase the Tier 2 QCC Rebate from $0.17 to $0.20 per contract.20 The Exchange believes that increasing this QCC Rebate will permit Phlx to compete more effectively with other options exchange for QCC Orders by incentivizing market participants to transact a greater amount of QCC Orders on Phlx in order to receive a greater rebate in a given month. The Exchange believes that it is equitable and not unfairly discriminatory to increase the Tier 2 QCC Rebate from $0.17 to $0.20 per contract. All market participants are eligible to transact QCC Orders, either electronically or on the Trading Floor, and would, therefore, be eligible to receive QCC Rebates for all qualifying executed QCC Orders, without limitation. 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 QCC orders. 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. 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 14 15 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 19 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)). 20 The Tier 2 QCC Rebate requires market participants to transact 1,000,000 QCC contracts or more in a month. E:\FR\FM\18JAN1.SGM 18JAN1 Federal Register / Vol. 88, No. 11 / Wednesday, January 18, 2023 / Notices degree to which fee changes in this market may impose any burden on competition is extremely limited. Intra-Market Competition The proposed amendments do not impose an undue burden on intramarket competition. The Exchange believes that increasing the Tier 2 QCC Rebate from $0.17 to $0.20 per contract does not impose an undue burden on competition because all market participants are eligible to transact QCC Orders, either electronically or on the Trading Floor, and would, therefore, be eligible to receive QCC Rebates for all qualifying executed QCC Orders, without limitation. 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.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: lotter on DSK11XQN23PROD with NOTICES1 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–2023–02 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–2023–02. 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–2023–02, and should be submitted on or before February 8, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–00776 Filed 1–17–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 17:41 Jan 17, 2023 Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List January 11, 2023. Pursuant to section 19(b)(1) 1 of the Securities Exchange Act of 1934 1 15 Jkt 259001 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on January 3, 2023, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the selfregulatory organization. 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 its Price List (the ‘‘Price List’’) with respect to certain regulatory fees related to the Central Registration Depository (‘‘CRD’’ or ‘‘CRD system’’), which are collected by the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’). The Exchange proposes to implement the fee change on January 3, 2023. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization 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 those 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 parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose [Release No. 34–96636; File No. SR–NYSE– 2023–02] 22 17 21 15 2985 PO 00000 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). Frm 00109 Fmt 4703 Sfmt 4703 The Exchange proposes to amend the Price List with respect to certain regulatory fees collected by FINRA for use of CRD.4 The Exchange proposes to 2 15 U.S.C. 78a. CFR 240.19b–4. 4 CRD is the central licensing and registration system for the U.S. securities industry. The CRD system enables individuals and firms seeking registration with multiple states and self-regulatory organizations to do so by submitting a single form, fingerprint card, and a combined payment of fees to FINRA. Through the CRD system, FINRA maintains the qualification, employment, and 3 17 Continued E:\FR\FM\18JAN1.SGM 18JAN1

Agencies

[Federal Register Volume 88, Number 11 (Wednesday, January 18, 2023)]
[Notices]
[Pages 2983-2985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-00776]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96638; File No. SR-Phlx-2023-02]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, 
Section 4

January 11, 2023.
    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 January 3, 2023, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III below, 
which Items have been prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Phlx's Pricing Schedule at Options 
7, Section 4.
    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 Schedule at Options 7, Section 
4, ``Multiply Listed Options Fees (Includes options overlying equities, 
ETFs, ETNs and indexes which are Multiply Listed) (Excludes SPY and 
broad-based index options symbols listed within Options 7, Section 
5.A).'' Specifically, Phlx proposes an increase to its Qualified 
Contingent Cross (``QCC'') rebates that are paid by the Exchange in a 
given month.
    Today, the Exchange assesses a $0.20 per contract QCC Transaction 
Fee for a Lead Market Maker,\3\ Market Maker,\4\

[[Page 2984]]

Firm \5\ and Broker-Dealer.\6\ Customers \7\ and Professionals \8\ are 
not assessed a QCC Transaction Fee. QCC Transaction Fees apply to 
electronic QCC Orders \9\ and Floor QCC Orders.\10\ Rebates are paid on 
all qualifying executed electronic QCC Orders and Floor QCC Orders 
based on the following two tier rebate schedule:\11\
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    \3\ 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. See Options 7, Section 1(c). The term ``Floor Lead Market 
Maker'' is a member who is registered as an options Lead Market 
Maker pursuant to Options 2, Section 12(a) and has a physical 
presence on the Exchange's trading floor. See Options 8, Section 
2(a)(3).
    \4\ 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. See Options 
7, Section 1(c). The term ``Floor Market Maker'' is a Market Maker 
who is neither an SQT or an RSQT. A Floor Market Maker may provide a 
quote in open outcry. See Options 8, Section 2(a)(4).
    \5\ The term ``Firm'' applies to any transaction that is 
identified by a member or member organization for clearing in the 
Firm range at The Options Clearing Corporation. See Options 7, 
Section 1(c).
    \6\ The term ``Broker-Dealer'' applies to any transaction which 
is not subject to any of the other transaction fees applicable 
within a particular category. See Options 7, Section 1(c).
    \7\ 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)). See Options 7, Section 1(c).
    \8\ 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). See Options 7, Section 1(c).
    \9\ Electronic QCC Orders are described in Options 3, Section 
12.
    \10\ Floor QCC Orders are described in Options 8, Section 30(e).
    \11\ Volume resulting from all executed electronic QCC Orders 
and Floor QCC Orders, including Customer-to-Customer, Customer-to-
Professional, and Professional-to-Professional transactions and 
excluding dividend, merger, short stock interest or reversal or 
conversion strategy executions, is aggregated in determining the 
applicable volume tier.

                           QCC Rebate Schedule
------------------------------------------------------------------------
                                                                 Rebate
                Tier                         Threshold            per
                                                                contract
------------------------------------------------------------------------
Tier 1..............................  0 to 999,999 contracts       $0.09
                                       in a month.
Tier 2..............................  1,000,000 contracts or        0.17
                                       more in a month.
------------------------------------------------------------------------

    The Exchange does not pay a QCC Rebate where the transaction is 
either: (i) Customer-to-Customer; (ii) Customer-to-Professional; (iii) 
Professional-to-Professional; or (iv) a dividend, merger, short stock 
interest or reversal or conversion strategy execution (as defined in 
Options 7, Section 4).
    At this time, the Exchange proposes to increase the Tier 2 QCC 
Rebate from $0.17 to $0.20 per contract. The Tier 2 QCC Rebate requires 
market participants to transact 1,000,000 QCC contracts or more in a 
month.\12\ The Exchange believes that increasing this Tier 2 QCC Rebate 
will permit Phlx to compete more effectively with other options 
exchanges for QCC Orders by incentivizing market participants to 
transact a greater amount of QCC Orders on Phlx in order to receive a 
greater rebate in a given month.
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    \12\ Tier 1 of the QCC Rebate Schedule requires market 
participants to transact from 0 to 999,999 QCC contracts in a month.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\13\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\14\ 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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    \13\ 15 U.S.C. 78f(b).
    \14\ 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.'' \15\
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    \15\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    Likewise, in NetCoalition v. Securities and Exchange Commission 
\16\ (``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.\17\ 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.'' \18\
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    \16\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \17\ See NetCoalition, at 534-535.
    \18\ 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'. . . .'' \19\ 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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    \19\ 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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    The Exchange believes that it is reasonable to increase the Tier 2 
QCC Rebate from $0.17 to $0.20 per contract.\20\ The Exchange believes 
that increasing this QCC Rebate will permit Phlx to compete more 
effectively with other options exchange for QCC Orders by incentivizing 
market participants to transact a greater amount of QCC Orders on Phlx 
in order to receive a greater rebate in a given month.
---------------------------------------------------------------------------

    \20\ The Tier 2 QCC Rebate requires market participants to 
transact 1,000,000 QCC contracts or more in a month.
---------------------------------------------------------------------------

    The Exchange believes that it is equitable and not unfairly 
discriminatory to increase the Tier 2 QCC Rebate from $0.17 to $0.20 
per contract. All market participants are eligible to transact QCC 
Orders, either electronically or on the Trading Floor, and would, 
therefore, be eligible to receive QCC Rebates for all qualifying 
executed QCC Orders, without limitation.

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 QCC orders. 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. 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

[[Page 2985]]

degree to which fee changes in this market may impose any burden on 
competition is extremely limited.
Intra-Market Competition
    The proposed amendments do not impose an undue burden on intra-
market competition. The Exchange believes that increasing the Tier 2 
QCC Rebate from $0.17 to $0.20 per contract does not impose an undue 
burden on competition because all market participants are eligible to 
transact QCC Orders, either electronically or on the Trading Floor, and 
would, therefore, be eligible to receive QCC Rebates for all qualifying 
executed QCC Orders, without limitation.

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.\21\
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    \21\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2023-02 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-2023-02. 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-2023-02, and should be submitted on 
or before February 8, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-00776 Filed 1-17-23; 8:45 am]
BILLING CODE 8011-01-P
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