Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 4, 29957-29959 [2023-09756]

Download as PDF Federal Register / Vol. 88, No. 89 / Tuesday, May 9, 2023 / Notices Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: May 2, 2023; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Christopher C. Mohr; Comments Due: May 10, 2023. This Notice will be published in the Federal Register. 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. Erica A. Barker, Secretary. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change [FR Doc. 2023–09780 Filed 5–8–23; 8:45 am] BILLING CODE 7710–FW–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97426; File No. SR–Phlx– 2023–15] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 4 May 3, 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 May 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 ddrumheller on DSK120RN23PROD with NOTICES1 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 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 19:27 May 08, 2023 Jkt 259001 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).’’ Specifically, Phlx proposes to amend its Qualified Contingent Cross (‘‘QCC’’) Growth Tier Rebate, in Section B of Options 7, Section 4. Today, the Exchange offers a QCC Growth Tier Rebate 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. The Exchange also offers an alternative qualification to achieve the 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. PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 29957 QCC Growth Tier Rebate. A member’s or member organization’s Open Outcry Floor Transaction volume 5 in a given month must exceed 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 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. The Exchange pays 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-toCustomer; (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). Finally, 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.6 At this time, the Exchange proposes to increase the QCC Growth Tier Rebates. The Exchange proposes to increase the current $0.20 per contract rebate to $0.22 per contract provided the 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 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. 6 The QCC Growth Tier Rebate is available through July 31, 2023. E:\FR\FM\09MYN1.SGM 09MYN1 29958 Federal Register / Vol. 88, No. 89 / Tuesday, May 9, 2023 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 other side. Further, the Exchange proposes to increase the current $0.26 per contract rebate to $0.27 per contract provided the 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 believes that the increased rebates will incentivize 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. Also, this incentive should continue to encourage members and member organizations to commence sending such order flow to Phlx for the opportunity to earn this rebate until the program expires. 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 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. 8 15 VerDate Sep<11>2014 19:27 May 08, 2023 Jkt 259001 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. 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 increase the current $0.20 per contract rebate to $0.22 per contract, provided the 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, is reasonable because the Exchange believes that the increased rebate will encourage members and member organizations to earn larger QCC rebates by executing a larger amount of floor transactions, QCC transaction volume, and Open Outcry Floor Transaction volume on Phlx’s trading floor during the remaining months of the program. The Exchange’s proposal to increase the current $0.20 per contract rebate to $0.22 per contract, provided the 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, is equitable and not unfairly discriminatory because all members and member organizations may qualify for this rebate, provided they transact the requisite volume. The Exchange’s proposal to increase the current $0.26 per contract rebate to $0.27 per contract, provided the 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, BrokerDealer, or Firm order on the other side, is reasonable because the Exchange believes that the increased rebate will encourage members and member 12 Id. at 537. at 539 (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782–83 (December 9, 2008) (SR– NYSEArca–2006–21)). 13 Id. PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 organizations to earn larger QCC rebates by executing a larger amount of floor transactions, QCC transaction volume, and Open Outcry Floor Transaction volume on Phlx’s trading floor during the remaining months of the program. The Exchange’s proposal to increase the current $0.26 per contract rebate to $0.27 per contract, provided the 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, BrokerDealer, or Firm order on the other side, is equitable and not unfairly discriminatory because all members and member organizations may qualify for this rebate, provided they transact the requisite volume. 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’s proposal to increase the current $0.20 per contract rebate to $0.22 per contract, provided the 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, does not impose an undue burden on intra-market competition because all members and E:\FR\FM\09MYN1.SGM 09MYN1 Federal Register / Vol. 88, No. 89 / Tuesday, May 9, 2023 / Notices member organizations may qualify for this rebate, provided they transact the requisite volume. The Exchange’s proposal to increase the current $0.26 per contract rebate to $0.27 per contract, provided the 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, BrokerDealer, or Firm order on the other side, does not impose an undue burden on intra-market competition because all members and member organizations may qualify for this rebate, provided they transact the requisite volume. 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.14 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–09756 Filed 5–8–23; 8:45 am] BILLING CODE 8011–01–P SOCIAL SECURITY ADMINISTRATION [Docket No. SSA 2023–0003] Electronic Comments ddrumheller on DSK120RN23PROD with NOTICES1 All submissions should refer to File Number SR–PHLX–2023–15. 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. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to File Number SR–PHLX–2023–15 and should be submitted on or before May 30, 2023. • 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–2023–15 on the subject line. Notice of Fee Increase for Our Electronic Consent Based Social Security Number Verification Service Paper Comments SUMMARY: • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. 14 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 19:27 May 08, 2023 ACTION: The Social Security Administration (SSA) is announcing a change in the subscription tier structure and associated fees for the electronic Consent Based Social Security Number (SSN) Verification (eCBSV) service. In 15 17 Jkt 259001 Social Security Administration. Notice of fee increase. AGENCY: PO 00000 CFR 200.30–3(a)(12). Frm 00080 Fmt 4703 Sfmt 4703 29959 accordance with statutory requirements, a permitted entity (PE) is required to provide payment to reimburse SSA for the development and support of the eCBSV system. DATES: Applicability date for fee increase: The revised subscription tier structure and associated fees will go into effect for subscription payments made on or after July 10, 2023. FOR FURTHER INFORMATION CONTACT: Christopher David, Office of Data Exchange, Policy Publications, and International Negotiations, Social Security Administration, 6401 Security Boulevard, Baltimore, Maryland 21235– 6401, (866) 395–8801, email eCBSV@ ssa.gov. For information on eligibility or filing for benefits, call SSA’s national toll-free number, 1–800–772–1213 or TTY 1– 800–325–0778, or visit SSA’s internet site, Social Security Online, at https:// www.socialsecurity.gov. SUPPLEMENTARY INFORMATION: Section 215 of the Economic Growth, Regulatory Relief, and Consumer Protection Act 1 (the Banking Bill) directs SSA to modify or develop a database for accepting and comparing fraud protection data 2 provided electronically by a PE.3 In response to this statutory directive, SSA created eCBSV, a fee-based SSN verification service. eCBSV allows PEs to submit, based on the number holder’s consent,4 the SSN, name, and date of birth of the number holder in connection with a credit transaction or a circumstance described in section 604 of the Fair Credit Reporting Act to SSA 1 Public Law 115–174, codified at 42 U.S.C. 405b. Banking Bill defines ‘‘Fraud Protection Data’’ to mean a combination of an individual’s name (including the first name and any family forename or surname), SSN, and date of birth (including month, day, and year). Public Law 115– 174, title II, 215(b)(3), codified at 42 U.S.C. 405b(b)(3). 3 The Banking Bill defines a ‘‘permitted entity’’ to mean a financial institution or service provider, subsidiary, affiliate, agent, subcontractor, or assignee of a financial institution. Public Law 115– 174, title II, 215(b)(4), codified at 42 U.S.C. 405b(b)(4). They must possess an Employer Identification Number and a Dun and Bradstreet number. 4 Under the eCBSV User Agreement, valid Written Consent must meet the requirements of applicable Federal law, SSA’s regulations, and section IV of the eCBSV User Agreement. Valid Written consent must include a wet or electronic signature. Section IV.A.1. eCBSV User Agreement. Electronic signatures must meet the definition in section 106 of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006). 42 U.S.C. 405b(f)(2); section IV.E. eCBSV User Agreement. The written consent must clearly specify to whom the information may be disclosed, the information you want us to disclose (e.g., SSN verification) and, where applicable, during which timeframe the information may be disclosed (e.g., whenever the subject individual is receiving specific services). 20 CFR 401.100. 2 The E:\FR\FM\09MYN1.SGM 09MYN1

Agencies

[Federal Register Volume 88, Number 89 (Tuesday, May 9, 2023)]
[Notices]
[Pages 29957-29959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-09756]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97426; File No. SR-Phlx-2023-15]


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

May 3, 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 May 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 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).'' 
Specifically, Phlx proposes to amend its Qualified Contingent Cross 
(``QCC'') Growth Tier Rebate, in Section B of Options 7, Section 4.
    Today, the Exchange offers a QCC Growth Tier Rebate 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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    The Exchange also offers an alternative qualification to achieve 
the QCC Growth Tier Rebate. A member's or member organization's Open 
Outcry Floor Transaction volume \5\ in a given month must exceed 
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 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. The Exchange pays 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). Finally, 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.\6\
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    \6\ The QCC Growth Tier Rebate is available through July 31, 
2023.
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    At this time, the Exchange proposes to increase the QCC Growth Tier 
Rebates. The Exchange proposes to increase the current $0.20 per 
contract rebate to $0.22 per contract provided the 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

[[Page 29958]]

other side. Further, the Exchange proposes to increase the current 
$0.26 per contract rebate to $0.27 per contract provided the 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 believes that the increased rebates will incentivize 
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. 
Also, this incentive should continue to encourage members and member 
organizations to commence sending such order flow to Phlx for the 
opportunity to earn this rebate until the program expires.
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. 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 increase the current $0.20 per contract 
rebate to $0.22 per contract, provided the 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, is 
reasonable because the Exchange believes that the increased rebate will 
encourage members and member organizations to earn larger QCC rebates 
by executing a larger amount of floor transactions, QCC transaction 
volume, and Open Outcry Floor Transaction volume on Phlx's trading 
floor during the remaining months of the program.
    The Exchange's proposal to increase the current $0.20 per contract 
rebate to $0.22 per contract, provided the 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, is 
equitable and not unfairly discriminatory because all members and 
member organizations may qualify for this rebate, provided they 
transact the requisite volume.
    The Exchange's proposal to increase the current $0.26 per contract 
rebate to $0.27 per contract, provided the 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, is reasonable because the Exchange believes 
that the increased rebate will encourage members and member 
organizations to earn larger QCC rebates by executing a larger amount 
of floor transactions, QCC transaction volume, and Open Outcry Floor 
Transaction volume on Phlx's trading floor during the remaining months 
of the program.
    The Exchange's proposal to increase the current $0.26 per contract 
rebate to $0.27 per contract, provided the 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, is equitable and not unfairly discriminatory 
because all members and member organizations may qualify for this 
rebate, provided they transact the requisite volume.

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's proposal to increase the current $0.20 per contract rebate 
to $0.22 per contract, provided the 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, does not impose 
an undue burden on intra-market competition because all members and

[[Page 29959]]

member organizations may qualify for this rebate, provided they 
transact the requisite volume.
    The Exchange's proposal to increase the current $0.26 per contract 
rebate to $0.27 per contract, provided the 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, does not impose an undue burden on intra-
market competition because all members and member organizations may 
qualify for this rebate, provided they transact the requisite volume.

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.\14\
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    \14\ 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-2023-15 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-2023-15. 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. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to File Number SR-PHLX-2023-15 and should be submitted on 
or before May 30, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-09756 Filed 5-8-23; 8:45 am]
BILLING CODE 8011-01-P
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