Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 4 Regarding Multiply Listed Options Fees, 16697-16700 [2023-05542]
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Federal Register / Vol. 88, No. 53 / Monday, March 20, 2023 / Notices
manner that would impose an undue
burden on competition.
The Exchange believes that the
proposed fees do not impose a burden
on competition or on other SROs that is
not necessary or appropriate in
furtherance of the purposes of the Act.
In particular, market participants are not
forced to subscribe to Cboe Options Top
Data, or any of the Exchange’s data
feeds, as described above. As noted, the
quote and last sale data contained in the
Exchange’s Cboe Options Top feed is
identical to the data sent to OPRA for
redistribution to the public, including
data relating to the Exchange’s
proprietary and exclusively listed
products. Accordingly, Exchange top-ofbook data is therefore widely available
today from a number of different
sources.
Because market data customers can
find suitable substitute feeds, an
exchange that overprices its market data
products stands a high risk that users
may substitute another product. These
competitive pressures ensure that no
one exchange’s market data fees can
impose an undue burden on
competition, and the Exchange’s
proposed fees do not do so here.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any written
comments from members or other
interested parties.
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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 25 and paragraph (f) of Rule
19b–4 26 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 necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
25 15
U.S.C. 78s(b)(3)(A).
26 17 CFR 240.19b–4(f).
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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:
• 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–
CBOE–2023–013 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–CBOE–2023–013. 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–CBOE–2023–013 and
should be submitted on or before April
10, 2023.
Frm 00119
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–05544 Filed 3–17–23; 8:45 am]
BILLING CODE 8011–01–P
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COMMISSION
Electronic Comments
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[Release No. 34–97133; File No. SR–Phlx–
2023–08]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Options 7,
Section 4 Regarding Multiply Listed
Options Fees
March 14, 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 March 1,
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, ‘‘Multiply Listed Options
Fees (Includes options overlying
equities, ETFs, ETNs and indexes which
are Multiply Listed) (Excludes SPY).’’
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
27 17
CFR–200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 88, No. 53 / Monday, March 20, 2023 / Notices
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
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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).’’
Recently, Phlx established a QCC
Growth Tier Rebate within section B of
Options 7, Section 4 to encourage Phlx
members and member organizations to
transact a greater number of QCC Orders
on Phlx. In order to qualify for the QCC
Growth Tier Rebate, a member’s or
member organization’s total floor
transaction,3 and electronic QCC Orders
and Floor QCC Orders volume (‘‘QCC
transaction volume’’) must exceed
12,500,000 contracts in a given month.
In addition to the aforementioned
criteria, the member’s or member
organization’s respective Phlx House
Account 4 must execute QCC transaction
volume of 250,000 or more contracts in
excess of the member’s or member
organization’s QCC transaction volume
in January 2023. For members or
member organizations with no QCC
transaction volume in January 2023, the
QCC transaction volume, in their
respective Phlx House Account, must be
250,000 or more contracts in a given
month.
Further, a member or member
organization may alternatively achieve
the QCC Growth Tier Rebate if a
member’s or member organization’s
Open Outcry Floor Transaction 5
3 The term ‘‘floor transaction’’ is a transaction that
is effected in open outcry on the Exchange’s trading
floor. See Phlx Options 7, Section 1(c). Of note, the
term ‘‘floor transaction’’ is more broadly defined
than the term ‘‘Open Outcry Floor Transaction’’
which is discussed herein and is a subset of the
term ‘‘floor transaction.’’
4 Each Phlx member or member organization is
required to establish one Phlx House Account with
the Exchange’s Membership Department. Only one
Phlx House Account is required to transact business
on Phlx. The Exchange assesses a $50.00 a month
account fee for this account as provided for within
Options 7, Section 8A. A Phlx member or member
organization has the option of acquiring multiple
Phlx House Accounts depending on a member’s or
member organization’s business model and how
they elect to organize their business.
5 The term ‘‘Open Outcry Floor Transaction’’
includes all transactions executed in open outcry
on Phlx’s trading floor except: (1) dividend, merger,
short stock interest, reversal and conversion, jelly
roll, and box spread strategy executions as defined
in this Options 7, Section 4; (2) Cabinet
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volume in a given month exceeds
500,000 contracts. In addition to the
aforementioned criteria, a member’s or
member organization’s respective Phlx
House Account must execute QCC
transaction volume of 2,500,000 or more
contracts in excess of the member’s or
member organization’s QCC transaction
volume in January 2023. For members
or member organizations with no QCC
transaction volume in January 2023, the
QCC transaction volume, in their
respective Phlx House Account, must be
2,500,000 or more contracts in a given
month.
Today, the Exchange pays the QCC
Growth Tier Rebates per Phlx House
Account. Specifically, the Exchange
pays a $0.20 per contract QCC Growth
Tier Rebate on a QCC Order comprised
of a Customer or Professional order on
one side and a Lead Market Maker,
Market Maker, Broker-Dealer, or Firm
order on the other side. Further, the
Exchange pays a $0.26 per contract QCC
Growth Tier Rebate on a QCC Order
comprised of a Lead Market Maker,
Market Maker, Broker-Dealer, or Firm
order on one side and a Lead Market
Maker, Market Maker, Broker-Dealer, or
Firm order on the other side.6
At this time, the Exchange proposes to
continue to pay the QCC Growth Tier
Rebate on all qualifying executed
electronic QCC Orders, as defined in
Options 3, Section 12, and Floor QCC
Orders, as defined in Options 8, Section
30(e), except 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,
reversal and conversion, jelly roll, and
box spread strategy executions (as
defined in Options 7, Section 4).
The proposed exclusions are similar
to the exclusions for payments on QCC
Rebates in section A of Options 7,
Section 4. Of note, currently, QCC
Growth Tier Rebates are not paid on
Customer-to-Customer, Customer-toProfessional, or Professional-toProfessional QCC Orders because the
QCC Growth Tier Rebate specifies it is
only paid on a QCC Order comprised of
a Customer or Professional order on one
side and a Lead Market Maker, Market
Maker, Broker-Dealer, or Firm order on
the other side, and a QCC Order
comprised of a Lead Market Maker,
Market Maker, Broker-Dealer, or Firm
order on one side and a Lead Market
Maker, Market Maker, Broker-Dealer, or
Transactions as defined in Options 8, Section 33;
and (3) Customer-to-Customer transactions.
6 Members and member organizations are entitled
to one QCC Rebate in a given month, either the QCC
Rebate in Section A or the QCC Growth Tier Rebate
in Section B in a given month, but not both.
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Firm order on the other side. The
Exchange is including these exclusions
to the QCC Growth Tier Rebate to mirror
the exclusions within QCC Rebates in
section A.
Notwithstanding, the limitation on
eligible orders to receive a QCC Growth
Tier Rebate, the Exchange believes that
the QCC Growth Tier Rebate will
continue to encourage market
participants to send QCC orders to Phlx
for execution in an effort to earn higher
QCC Rebates.
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.
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
Likewise, in NetCoalition v. Securities
and Exchange Commission 10
(‘‘NetCoalition’’) the D.C. Circuit upheld
the Commission’s use of a market-based
approach in evaluating the fairness of
market data fees against a challenge
claiming that Congress mandated a costbased approach.11 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.’’ 12
Further, ‘‘[n]o one disputes that
competition for order flow is ‘fierce.’
. . . As the SEC explained, ‘[i]n the U.S.
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
9 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
10 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010).
11 See NetCoalition, at 534–535.
12 Id. at 537.
8 15
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national market system, buyers and
sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’ . . . .’’ 13 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’s proposal to amend
the QCC Growth Tier Rebate to pay the
QCC Growth Tier on all qualifying
executed electronic QCC Orders except
where the transaction is either
Customer-to-Customer; Customer-toProfessional; Professional-toProfessional; or a dividend, merger,
short stock interest, reversal and
conversion, jelly roll, and box spread
strategy executions (as defined in
Options 7, Section 4) is reasonable
because despite the limitation on
eligible orders to receive a QCC Growth
Tier Rebate, the Exchange believes that
this rebate will continue to provide
incentives for members and member
organizations to engage in substantial
amounts of trading activity which
would serve to bring additional open
outcry liquidity to the trading floor and
additional QCC Order Flow to Phlx.
This incentive may also encourage
members and member organizations to
commence sending such order flow to
Phlx for the opportunity to earn this
rebate. The proposed exclusions are
similar to the exclusions for payments
on QCC Rebates in section A of Options
7, Section 4.14
The Exchange’s proposal to amend
the QCC Growth Tier Rebate to pay the
QCC Growth Tier on all qualifying
executed electronic QCC Orders except
where the transaction is either
Customer-to-Customer; Customer-toProfessional; Professional-to13 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)).
14 Of note, currently, QCC Growth Tier Rebates
are not paid on Customer-to-Customer, Customerto-Professional, or Professional-to-Professional QCC
Orders because the QCC Growth Tier Rebate
specifies it is only paid on a QCC Order comprised
of a Customer or Professional order on one side and
a Lead Market Maker, Market Maker, Broker-Dealer,
or Firm order on the other side, and a QCC Order
comprised of a Lead Market Maker, Market Maker,
Broker-Dealer, or Firm order on one side and a Lead
Market Maker, Market Maker, Broker-Dealer, or
Firm order on the other side. The Exchange is
including these exclusions to the QCC Growth Tier
Rebate to mirror the exclusions within QCC Rebates
in section A.
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Professional; or a dividend, merger,
short stock interest, reversal and
conversion, jelly roll, and box spread
strategy executions (as defined in
Options 7, Section 4) is equitable and
not unfairly discriminatory because any
member or member organization may
qualify for the QCC Growth Tier Rebate.
Further, the Exchange will uniformly
apply the proposed exceptions for
eligible QCC Orders.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
Inter-Market Competition
The proposal does not impose an
undue burden on inter-market
competition. The Exchange believes its
proposal remains competitive with
other options markets and will offer
market participants with another choice
of where to transact options. The
Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
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
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. In terms of intramarket competition, the Exchange does
not believe that its proposals will place
any category of market participant at a
competitive disadvantage. The
Exchange believes that the proposed
amendments to the QCC Rebate Growth
Tier Rebates will continue to provide
incentives for members and member
organizations to engage in substantial
amounts of trading activity which
would serve to bring additional open
outcry liquidity to the trading floor and
additional QCC Order Flow to Phlx.
The Exchange’s proposal to amend
the QCC Growth Tier Rebate to pay the
QCC Growth Rebates on all qualifying
executed electronic QCC Orders except
where the transaction is either
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16699
Customer-to-Customer; Customer-toProfessional; Professional-toProfessional; or a dividend, merger,
short stock interest, reversal and
conversion, jelly roll, and box spread
strategy executions (as defined in
Options 7, Section 4) does not impose
an undue burden on competition
because any member or member
organization may qualify for the QCC
Growth Tier Rebate. Further, the
Exchange will uniformly apply the
proposed exceptions for eligible QCC
Orders.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.15
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–2023–08 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–2023–08. This file
number should be included on the
15 15
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U.S.C. 78s(b)(3)(A)(ii).
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Federal Register / Vol. 88, No. 53 / Monday, March 20, 2023 / Notices
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–2023–08 and should
be submitted on or before April 10,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Sherry R. Haywood,
Assistant Secretary.
In the event that the time, date, or
location of this meeting changes, an
announcement of the change, along with
the new time, date, and/or place of the
meeting will be posted on the
Commission’s website at https://
www.sec.gov.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B)
and (10) and 17 CFR 200.402(a)(3),
(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and
(a)(10), permit consideration of the
scheduled matters at the closed meeting.
The subject matter of the closed
meeting will consist of the following
topics:
Institution and settlement of
injunctive actions;
Institution and settlement of
administrative proceedings;
Resolution of litigation claims; and
Other matters relating to examinations
and enforcement proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting agenda items that
may consist of adjudicatory,
examination, litigation, or regulatory
matters.
Contact Person for More Information:
For further information; please contact
Vanessa A. Countryman from the Office
of the Secretary at (202) 551–5400.
Authority: 5 U.S.C. 552b.
Dated: March 16, 2023.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2023–05750 Filed 3–16–23; 11:15 am]
BILLING CODE 8011–01–P
[FR Doc. 2023–05542 Filed 3–17–23; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97139; File No. SR–
CboeEDGX–2023–014]
Sunshine Act Meetings
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Sponsored Participant Rules 11.3(a)
and 11.3(b)(2)
Time and Date: 2:00 p.m. on
Thursday, March 23, 2023.
Place: The meeting will be held via
remote means and/or at the
Commission’s headquarters, 100 F
Street NE, Washington, DC 20549.
Status: This meeting will be closed to
the public.
Matters To Be Considered:
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the closed meeting. Certain
staff members who have an interest in
the matters also may be present.
March 14, 2023.
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 February
28, 2023, Cboe EDGX Exchange, Inc.
(the ‘‘Exchange’’ or ‘‘EDGX’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
1 15
16 17
CFR 200.30–3(a)(12).
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00122
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proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 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
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) proposes to
amend Exchange Rules 11.3(a)–(b), to:
(1) define the term ‘‘Sponsored Access’’;
(2) provide that the Sponsored
Participant rules of the Exchange apply
only to the trading of equities; and (3)
to codify that the agreement required by
and between the Sponsoring Member
and Sponsored Participant must include
a provision that any Sponsored Access
relationship must follow the
requirements of SEC Rule 15c3–5, the
Market Access Rule (‘‘MAR’’).5 The text
of the proposed rule change is provided
below and in Exhibit 5.6
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, 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.
3 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
5 17 CFR 240.15c3–5—Risk management controls
for brokers or dealers with market access.
6 The Exchange proposes to implement the
proposed changes to Rule 11.3(a)–(b)(1)–(3) on a
date that will be announced via Cboe Trade Desk,
notifying both existing and prospective Sponsoring
Members and Sponsored Participants, of the new
rule language and required contractual provisions.
4 17
E:\FR\FM\20MRN1.SGM
20MRN1
]]>Agencies
[Federal Register Volume 88, Number 53 (Monday, March 20, 2023)]
[Notices]
[Pages 16697-16700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05542]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97133; File No. SR-Phlx-2023-08]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7,
Section 4 Regarding Multiply Listed Options Fees
March 14, 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 March 1, 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, ``Multiply Listed Options Fees (Includes options
overlying equities, ETFs, ETNs and indexes which are Multiply Listed)
(Excludes SPY).''
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
[[Page 16698]]
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).''
Recently, Phlx established a QCC Growth Tier Rebate within section
B of Options 7, Section 4 to encourage Phlx members and member
organizations to transact a greater number of QCC Orders on Phlx. In
order to qualify for the QCC Growth Tier Rebate, a member's or member
organization's total floor transaction,\3\ and electronic QCC Orders
and Floor QCC Orders volume (``QCC transaction volume'') must exceed
12,500,000 contracts in a given month. In addition to the
aforementioned criteria, the member's or member organization's
respective Phlx House Account \4\ must execute QCC transaction volume
of 250,000 or more contracts in excess of the member's or member
organization's QCC transaction volume in January 2023. For members or
member organizations with no QCC transaction volume in January 2023,
the QCC transaction volume, in their respective Phlx House Account,
must be 250,000 or more contracts in a given month.
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\3\ The term ``floor transaction'' is a transaction that is
effected in open outcry on the Exchange's trading floor. See Phlx
Options 7, Section 1(c). Of note, the term ``floor transaction'' is
more broadly defined than the term ``Open Outcry Floor Transaction''
which is discussed herein and is a subset of the term ``floor
transaction.''
\4\ Each Phlx member or member organization is required to
establish one Phlx House Account with the Exchange's Membership
Department. Only one Phlx House Account is required to transact
business on Phlx. The Exchange assesses a $50.00 a month account fee
for this account as provided for within Options 7, Section 8A. A
Phlx member or member organization has the option of acquiring
multiple Phlx House Accounts depending on a member's or member
organization's business model and how they elect to organize their
business.
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Further, a member or member organization may alternatively achieve
the QCC Growth Tier Rebate if a member's or member organization's Open
Outcry Floor Transaction \5\ volume in a given month exceeds 500,000
contracts. In addition to the aforementioned criteria, a member's or
member organization's respective Phlx House Account must execute QCC
transaction volume of 2,500,000 or more contracts in excess of the
member's or member organization's QCC transaction volume in January
2023. For members or member organizations with no QCC transaction
volume in January 2023, the QCC transaction volume, in their respective
Phlx House Account, must be 2,500,000 or more contracts in a given
month.
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\5\ The term ``Open Outcry Floor Transaction'' includes all
transactions executed in open outcry on Phlx's trading floor except:
(1) dividend, merger, short stock interest, reversal and conversion,
jelly roll, and box spread strategy executions as defined in this
Options 7, Section 4; (2) Cabinet Transactions as defined in Options
8, Section 33; and (3) Customer-to-Customer transactions.
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Today, the Exchange pays the QCC Growth Tier Rebates per Phlx House
Account. Specifically, the Exchange pays a $0.20 per contract QCC
Growth Tier Rebate on a QCC Order comprised of a Customer or
Professional order on one side and a Lead Market Maker, Market Maker,
Broker-Dealer, or Firm order on the other side. Further, the Exchange
pays a $0.26 per contract QCC Growth Tier Rebate on a QCC Order
comprised of a Lead Market Maker, Market Maker, Broker-Dealer, or Firm
order on one side and a Lead Market Maker, Market Maker, Broker-Dealer,
or Firm order on the other side.\6\
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\6\ Members and member organizations are entitled to one QCC
Rebate in a given month, either the QCC Rebate in Section A or the
QCC Growth Tier Rebate in Section B in a given month, but not both.
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At this time, the Exchange proposes to continue to pay the QCC
Growth Tier Rebate on all qualifying executed electronic QCC Orders, as
defined in Options 3, Section 12, and Floor QCC Orders, as defined in
Options 8, Section 30(e), except 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, reversal and conversion, jelly roll, and box spread strategy
executions (as defined in Options 7, Section 4).
The proposed exclusions are similar to the exclusions for payments
on QCC Rebates in section A of Options 7, Section 4. Of note,
currently, QCC Growth Tier Rebates are not paid on Customer-to-
Customer, Customer-to-Professional, or Professional-to-Professional QCC
Orders because the QCC Growth Tier Rebate specifies it is only paid on
a QCC Order comprised of a Customer or Professional order on one side
and a Lead Market Maker, Market Maker, Broker-Dealer, or Firm order on
the other side, and a QCC Order comprised of a Lead Market Maker,
Market Maker, Broker-Dealer, or Firm order on one side and a Lead
Market Maker, Market Maker, Broker-Dealer, or Firm order on the other
side. The Exchange is including these exclusions to the QCC Growth Tier
Rebate to mirror the exclusions within QCC Rebates in section A.
Notwithstanding, the limitation on eligible orders to receive a QCC
Growth Tier Rebate, the Exchange believes that the QCC Growth Tier
Rebate will continue to encourage market participants to send QCC
orders to Phlx for execution in an effort to earn higher QCC Rebates.
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.
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\7\ 15 U.S.C. 78f(b).
\8\ 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.'' \9\
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\9\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Likewise, in NetCoalition v. Securities and Exchange Commission
\10\ (``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.\11\ 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.'' \12\
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\10\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\11\ See NetCoalition, at 534-535.
\12\ 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.
[[Page 16699]]
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' . . . .'' \13\
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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\13\ 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's proposal to amend the QCC Growth Tier Rebate to pay
the QCC Growth Tier on all qualifying executed electronic QCC Orders
except where the transaction is either Customer-to-Customer; Customer-
to-Professional; Professional-to-Professional; or a dividend, merger,
short stock interest, reversal and conversion, jelly roll, and box
spread strategy executions (as defined in Options 7, Section 4) is
reasonable because despite the limitation on eligible orders to receive
a QCC Growth Tier Rebate, the Exchange believes that this rebate will
continue to provide incentives for members and member organizations to
engage in substantial amounts of trading activity which would serve to
bring additional open outcry liquidity to the trading floor and
additional QCC Order Flow to Phlx. This incentive may also encourage
members and member organizations to commence sending such order flow to
Phlx for the opportunity to earn this rebate. The proposed exclusions
are similar to the exclusions for payments on QCC Rebates in section A
of Options 7, Section 4.\14\
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\14\ Of note, currently, QCC Growth Tier Rebates are not paid on
Customer-to-Customer, Customer-to-Professional, or Professional-to-
Professional QCC Orders because the QCC Growth Tier Rebate specifies
it is only paid on a QCC Order comprised of a Customer or
Professional order on one side and a Lead Market Maker, Market
Maker, Broker-Dealer, or Firm order on the other side, and a QCC
Order comprised of a Lead Market Maker, Market Maker, Broker-Dealer,
or Firm order on one side and a Lead Market Maker, Market Maker,
Broker-Dealer, or Firm order on the other side. The Exchange is
including these exclusions to the QCC Growth Tier Rebate to mirror
the exclusions within QCC Rebates in section A.
---------------------------------------------------------------------------
The Exchange's proposal to amend the QCC Growth Tier Rebate to pay
the QCC Growth Tier on all qualifying executed electronic QCC Orders
except where the transaction is either Customer-to-Customer; Customer-
to-Professional; Professional-to-Professional; or a dividend, merger,
short stock interest, reversal and conversion, jelly roll, and box
spread strategy executions (as defined in Options 7, Section 4) is
equitable and not unfairly discriminatory because any member or member
organization may qualify for the QCC Growth Tier Rebate. Further, the
Exchange will uniformly apply the proposed exceptions for eligible QCC
Orders.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Inter-Market Competition
The proposal does not impose an undue burden on inter-market
competition. The Exchange believes its proposal remains competitive
with other options markets and will offer market participants with
another choice of where to transact options. The Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be 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 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. In terms of intra-market competition, the Exchange
does not believe that its proposals will place any category of market
participant at a competitive disadvantage. The Exchange believes that
the proposed amendments to the QCC Rebate Growth Tier Rebates will
continue to provide incentives for members and member organizations to
engage in substantial amounts of trading activity which would serve to
bring additional open outcry liquidity to the trading floor and
additional QCC Order Flow to Phlx.
The Exchange's proposal to amend the QCC Growth Tier Rebate to pay
the QCC Growth Rebates on all qualifying executed electronic QCC Orders
except where the transaction is either Customer-to-Customer; Customer-
to-Professional; Professional-to-Professional; or a dividend, merger,
short stock interest, reversal and conversion, jelly roll, and box
spread strategy executions (as defined in Options 7, Section 4) does
not impose an undue burden on competition because any member or member
organization may qualify for the QCC Growth Tier Rebate. Further, the
Exchange will uniformly apply the proposed exceptions for eligible QCC
Orders.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\15\
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\15\ 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-2023-08 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-2023-08. This file
number should be included on the
[[Page 16700]]
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-2023-08 and
should be submitted on or before April 10, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-05542 Filed 3-17-23; 8:45 am]
BILLING CODE 8011-01-P
