Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7 To Establish Pricing for Index Options on the Nasdaq-100 ESG Index, 36621-36624 [2023-11823]

Download as PDF Federal Register / Vol. 88, No. 107 / Monday, June 5, 2023 / Notices ordinary course of business.4 Therefore, we estimate that rule 3a–8 does not impose additional burdens. 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 through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted by August 4, 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, 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. Dated: May 30, 2023. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–11808 Filed 6–2–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. IA–6317] Notice of Intention To Cancel Registration Pursuant to Section 203(H) of the Investment Advisers Act of 1940 ddrumheller on DSK120RN23PROD with NOTICES1 May 30, 2023. Notice is given that the Securities and Exchange Commission (the ‘‘Commission’’) intends to issue an order, pursuant to Section 203(h) of the Investment Advisers Act of 1940 (the ‘‘Act’’), cancelling the registration of The Swarthmore Group, Inc., File No. 801–58069, hereinafter referred to as the ‘‘registrant.’’ Section 203(h) provides, in pertinent part, that if the Commission finds that 4 In order for these companies to raise sufficient capital to fund their product development stage, Commission staff believes that they will need to present potential investors with investment guidelines. Investors generally want to be assured that the company’s funds are invested consistent with the goals of capital preservation and liquidity. VerDate Sep<11>2014 17:59 Jun 02, 2023 Jkt 259001 any person registered under Section 203, or who has pending an application for registration filed under that section, is no longer in existence, is not engaged in business as an investment adviser, or is prohibited from registering as an investment adviser under section 203A, the Commission shall by order, cancel the registration of such person. The registrant appears to be no longer in business as an investment adviser and has not filed its most recent Form ADV amendment with the Commission as required by rule 204–1 under the Act.1 Accordingly, the Commission believes that reasonable grounds exist for a finding that this registrant is no longer eligible to be registered with the Commission as an investment adviser and that the registration should be cancelled pursuant to section 203(h) of the Act. Notice is also given that any interested person may, by June 26, 2023, at 5:30 p.m., submit to the Commission in writing a request for a hearing on the cancellation, accompanied by a statement as to the nature of his or her interest, the reason for such request, and the issues, if any, of fact or law proposed to be controverted, and he or she may request that he or she be notified if the Commission should order a hearing thereon. Any such communication should be emailed to the Commission’s Secretary at Secretarys-Office@sec.gov. At any time after June 26, 2023, the Commission may issue an order cancelling the registration, upon the basis of the information stated above, unless an order for a hearing on the cancellation shall be issued upon request or upon the Commission’s own motion. Persons who requested a hearing, or who requested to be advised as to whether a hearing is ordered, will receive any notices and orders issued in this matter, including the date of the hearing (if ordered) and any postponements thereof. Any adviser whose registration is cancelled under delegated authority may appeal that decision directly to the Commission in accordance with rules 430 and 431 of the Commission’s rules of practice (17 CFR 201.430 and 431). ADDRESSES: The Commission: Secretarys-Office@sec.gov. FOR FURTHER INFORMATION CONTACT: Juliet Han, Senior Counsel at 202–551– 6999; SEC, Division of Investment Management, Office of Chief Counsel, 1 Rule 204–1 under the Act requires any adviser that is required to complete Form ADV to amend the form at least annually and to submit the amendments electronically through the Investment Adviser Registration Depository. PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 36621 100 F Street NE, Washington, DC 20549–8549. For the Commission, by the Division of Investment Management, pursuant to delegated authority.2 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–11821 Filed 6–2–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97618; File No. SR–Phlx– 2023–19] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7 To Establish Pricing for Index Options on the Nasdaq-100 ESG Index May 30, 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 16, 2023, Nasdaq PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange’s Pricing Schedule at Options 7 to adopt pricing for index options on the Nasdaq-100 ESG Index, as described further below. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/phlx/rules, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the 2 17 CFR 200.30–5(e)(2). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\05JNN1.SGM 05JNN1 36622 Federal Register / Vol. 88, No. 107 / Monday, June 5, 2023 / Notices 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. Market Maker,9 Broker-Dealer 10 and Firm 11 orders. Similar to NDX and NDXP, a surcharge of $0.25 per contract will be assessed to Non-Customers who transact EXGN. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Other Changes to Options 7 1. Purpose The Exchange recently received approval to list index options on the Nasdaq-100 ESG Index (‘‘NDXESG options’’).3 The Nasdaq-100 ESG Index is a broad based, modified ESG Risk Rating Score-adjusted marketcapitalization-weighted index that is designed to measure the performance of the companies in the Nasdaq-100 Index (‘‘NDX’’) that meet specific environmental, social and governance (‘‘ESG’’) criteria.4 The Nasdaq-100 ESG Index at all times consists of a selection of securities in NDX.5 These options would trade under the symbol ‘‘EXGN.’’ ddrumheller on DSK120RN23PROD with NOTICES1 Options 7, Section 5 The Exchange now proposes to amend its Pricing Schedule at Options 7, Section 5 to adopt pricing for NDXESG options. Specifically, the Exchange proposes to establish transaction fees for NDXESG that are identical to the transaction fees for NDX and NDXP. The Exchange proposes to amend Section 5.A of Options 7 to assess the following fees Options Transaction Charges: $0.00 for Customer 6 orders, $0.75 per contract for Professional,7 Lead Market Maker,8 3 See Securities Exchange Act Release No. 97506 (May 15, 2023) (Sr–Phlx–2023–09) (Order Granting Approval of Proposed Rule Change to Permit the Listing and Trading of Options on the Nasdaq-100 ESG Index) (not yet published). 4 Companies are evaluated and weighted on the basis of their business activities, controversies and ESG Risk Ratings. 5 See https://indexes.nasdaqomx.com/docs/ methodology_NDXESG.pdf. 6 The term ‘‘Customer’’ applies to any transaction that is identified by a member or member organization for clearing in the Customer range at The Options Clearing Corporation (‘‘OCC’’) which is not for the account of a broker or dealer or for the account of a ‘‘Professional’’ (as that term is defined in Options 1, Section 1(b)(45)). 7 The term ‘‘Professional’’ applies to transactions for the accounts of Professionals, as defined in Options 1, Section 1(b)(45) means any person or entity that (i) is not a broker or dealer in securities, and (ii) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). See Options 7, Section 1(c). 8 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 VerDate Sep<11>2014 17:59 Jun 02, 2023 Jkt 259001 By way of background, the proprietary products listed within Options 7, Section 5.A, NDX, NDXP, XND, and VOLQ, are commonly excluded from a variety of pricing programs. The Exchange notes that the reason for such exclusion is because the Exchange has expended considerable resources developing and maintaining its proprietary products. NDXESG would be excluded from the same pricing once it is added to the list of proprietary products within Options 7, Section 5.A as NDXESG is also a proprietary product. Each exclusion is discussed below. Today, the Customer Rebates in Options 7, Section 2 of the Pricing Schedule are not paid on broad-based index options symbols listed within Options 7, Section 5.A. However, broadbased index options symbols listed within Options 7, Section 5.A. will count toward the volume requirement to qualify for a Customer Rebate Tier. The Exchange proposes to apply the Customer Rebate program in the same manner for NDXESG. Today, Options 7, Section 4 pricing for electronic orders (both simple and complex orders) excludes broad-based index options symbols listed within Options 7, Section 5.A. Also, broadbased index options symbols listed within Options 7, Section 5.A are excluded from a variety of fee programs in Options 7, Section 4 including, the 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). 9 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). 10 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). 11 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). PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 ‘‘Monthly Market Maker Cap,’’ 12 ‘‘Monthly Firm Fee Cap,’’ 13 facilitation orders pursuant to Options 8, Section 30,14 BD-Customer Facilitation,15 ‘‘Strategy Caps,’’ and Marketing Fees. Broad-based index options symbols listed within Options 7, Section 5.A. are not subject to Options 7, Section 6.A. PIXL 16 Pricing. Today, broad-based index options symbols listed within Options 7, Section 5.A are not assessed the FLEX transaction fees set forth in Options 7, Section 6.B, because broad-based index options symbols listed within Options 7, Section 5.A are not considered Eligible Contracts. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,17 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,18 in particular, in that it provides for the equitable allocation of 12 Lead Market Makers and Market Makers are subject to a ‘‘Monthly Market Maker Cap’’ of $500,000 for: (i) electronic Option Transaction Charges, excluding surcharges and excluding options overlying broad-based index options symbols listed within Options 7, Section 5.A; and (ii) QCC Transaction Fees (as defined in Exchange Options 3, Section 12 and Floor QCC Orders, as defined in Options 8, Section 30(e)). See Options 7, Section 4. 13 Firms are subject to a $200,000 ‘‘Monthly Firm Fee Cap’’. Firm Floor Option Transaction Charges and QCC Transaction Fees, in the aggregate, for one billing month that exceed the Monthly Firm Fee Cap per member or member organization, when such members or member organizations are trading in their own proprietary account, are subject to a reduced transaction fee of $0.02 per capped contract unless there is no fee or the fee is waived. See Options 7, Section 4. 14 The Firm Floor Options Transaction Charges are waived for members executing facilitation orders pursuant to Options 8, Section 30 when such members are trading in their own proprietary account (including Cabinet Options Transaction Charges). The Firm Floor Options Transaction Charges are waived for the buy side of a transaction if the same member or its affiliates under Common Ownership represents both sides of a Firm transaction when such members are trading in their own proprietary account. See Options 7, Section 4. 15 Broker-Dealer Floor Options Transaction Charges (including Cabinet Options Transaction Charges) are waived for members executing facilitation orders pursuant to Options 8, Section 30 when such members would otherwise incur this charge for trading in their own proprietary account contra to a Customer (‘‘BD-Customer Facilitation’’), if the member’s BD-Customer Facilitation average daily volume (including both FLEX and non-FLEX transactions) exceeds 10,000 contracts per day in a given month. See Options 7, Section 4. 16 A member may electronically submit for execution an order it represents as agent on behalf of a Public Customer, broker-dealer, or any other entity (‘‘PIXL Order’’) against principal interest or against any other order it represents as agent (an ‘‘Initiating Order’’) provided it submits the PIXL Order for electronic execution into the PIXL Auction (‘‘Auction’’) pursuant to Options 3, Section 13. 17 15 U.S.C. 78f(b). 18 15 U.S.C. 78f(b)(4) and (5). E:\FR\FM\05JNN1.SGM 05JNN1 Federal Register / Vol. 88, No. 107 / Monday, June 5, 2023 / Notices 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. ddrumheller on DSK120RN23PROD with NOTICES1 Options 7, Section 5 The Exchange believes it is reasonable to assess the proposed Options Transaction Charge and Non-Customer surcharge as discussed above for EXGN because the proposed pricing reflects the exclusive and proprietary nature of this product. Similar to NDX and NDXP the Exchange continues to expend resources to build and list proprietary products. Further, the Exchange notes that with its products, market participants are offered an opportunity to transact in NDX, NDXP, XND, or EXGN or separately execute options overlying PowerShares QQQ Trust (‘‘QQQ’’).19 Offering such proprietary products provides market participants with a variety of choices in selecting the product they desire to utilize in order to transact in the Nasdaq-100 Index. These transaction fees enable Phlx to innovate and offer new proprietary products, which in turn incentivizes growth and competition for the innovation of additional products in the options industry. Further, the Exchange believes that the proposed rates for EXGN are reasonable because the proposed fees are identical to fees assessed for NDX and NDXP. The Exchange believes that the proposed rates for EXGN are equitable and not unfairly discriminatory because the Exchange will assess this fee uniformly to all Non-Customers. The Exchange similarly believes that the proposed $0.25 per contract surcharge is equitable and not unfairly discriminatory because it will apply uniformly to all Non-Customers. The Exchange believes it is equitable and not unfairly discriminatory to assess no transaction fees to Customers for EXGN because Customer orders bring valuable liquidity to the market, which liquidity benefits other market participants. Customer liquidity benefits all market participants by providing more trading opportunities, which attracts Lead Market Makers and Market Makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. 19 QQQ is an exchange-traded fund based on the same Nasdaq-100 Index as NDX, NDXP, and XND. VerDate Sep<11>2014 17:59 Jun 02, 2023 Jkt 259001 Other Fee Programs Excluding EXGN from the same pricing programs as all other proprietary products within Options 7, Section 5.A is reasonable because the Exchange seeks to treat EXGN in the same manner as other proprietary products. More specifically, NDX, NDXP, and XND, and now EXGN, represent similar options on the same underlying Nasdaq-100 Index. It is reasonable to not pay Customer Rebates on EXGN in any rebate category because this index option will be exclusively listed on Phlx only. The original intent of the Customer Rebate Program was to pay rebates on electronically-delivered multiply-listed options. By definition, EXGN will not be a multiply-listed option, and the Exchange does not desire to pay rebates on EXGN because of the exclusivity of this option. While the Exchange will not pay any Customer Rebates on EXGN transactions, the Exchange also believes it is reasonable to count EXGN in the total volume to qualify a market participant for these rebates as market participants would be incentivized to transact in EXGN to qualify for the Customer Rebate Tiers. The Exchange believes that its proposal to not pay Customer Rebates on EXGN, but to count EXGN volume toward the volume requirement to qualify for a rebate tier is equitable and not unfairly discriminatory because the Exchange would apply the rebate program as described uniformly for all market participants. Any market participant is eligible to earn a Customer Rebate. The Exchange believes that the proposed updates in Options 7, Section 4 in connection with the application of certain fee programs to EXGN are reasonable, equitable, and not unfairly discriminatory. Particularly, the Exchange believes that it is reasonable to exclude EXGN from the Non-Penny complex surcharge in note 7 of Options 7, Section 4, the Monthly Market Maker Cap, the Monthly Firm Fee Cap, the Floor Options Transaction Charge waivers, the Strategy Caps, and the Marketing Fees in the same manner in which NDX and NDXP are currently excluded from the same programs today. The Exchange believes it is appropriate to update these fee programs in a manner that similarly situates EXGN with NDX and NDXP as these are all proprietary products that are based on the Nasdaq-100 Index. In addition, similar to NDX and NDXP, the Exchange seeks to exclude EXGN from programs that cap or waive transaction fees for market participants. As it relates to the Marketing Fee, the Exchange believes it is reasonable to exclude EXGN from this PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 36623 fee, similar to NDX and NDXP today, because the purpose of the Marketing Fee is to generate more Customer order flow to the Exchange. Because EXGN will be an exclusively listed product on Phlx, the Exchange does not believe that applying a Marketing Fee is necessary for this product. The Exchange’s proposal to exclude EXGN from the various fee programs in Options 7, Section 4 as discussed above is equitable and not unfairly discriminatory because the programs will uniformly exclude all market participant orders in EXGN. The Exchange notes that its proposal does not alter any of the existing fee programs, but instead merely proposes to exclude EXGN in those programs in the same way that NDX and NDXP are currently excluded. The Exchange’s proposal to exclude EXGN from PIXL pricing in Options 7, Section 6.A is reasonable because the Exchange intends to assess the same fees across the board for EXGN transactions. This will align the pricing structure for EXGN with NDX and NDXP. The proposed changes are equitable and not unfairly discriminatory because the Exchange will uniformly exclude EXGN from PIXL pricing for all market participants, and instead uniformly charge them the Options 7, Section 5.A pricing. The Exchange believes that its proposal to assess FLEX EXGN options the Options Transaction Charges and Non-Customer options surcharge in Options 7, Section 5.A is reasonable because the Exchange intends to assess the same fees across the board for EXGN transactions. Specifically, the Exchange will apply the proposed EXGN options surcharge of $0.25 per contract to NonCustomers in FLEX EXGN options. Further, the Exchange will apply the proposed EXGN Options Transaction Charges of $0.75 per contract (NonCustomer) and $0.00 per contract (Customer) to FLEX EXGN options. FLEX NDX and NDXP options are likewise assessed the same Options Transaction Charge and Non-Customer options surcharge that NDX and NDXP options are assessed today. The Exchange’s proposal is equitable and not unfairly discriminatory because the Exchange will uniformly apply these fees to FLEX EXGN options to all similarly situated market participants. The Exchange believes it is reasonable to exclude EXGN from Eligible Contracts for purposes of qualifying for a MARS Payment in the same manner in which NDX and NDXP are currently excluded today. The Exchange believes it is appropriate to update its MARS program in a manner that similarly E:\FR\FM\05JNN1.SGM 05JNN1 36624 Federal Register / Vol. 88, No. 107 / Monday, June 5, 2023 / Notices situates EXGN with its other proprietary products, NDX and NDXP, which are all based on the Nasdaq-100 Index. The Exchange believes that its proposal is equitable and not unfairly discriminatory because the Exchange will uniformly exclude EXGN from MARS for all market participants. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. The Exchange notes that with its products, market participants are offered an opportunity to transact in NDX, NDXP, XND, or EXGN, or separately execute options overlying QQQ. Offering these products provides market participants with a variety of choices in selecting the product they desire to utilize to transact in the Nasdaq-100 Index. Further, the Exchange does not believe that the proposed rule change will impose any burden on intra-market competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed EXGN pricing will apply uniformly to all similarly situated market participants. Specifically, all Non-Customers will be assessed a uniform Options Transaction Charge and options surcharge while Customers receive free executions. As discussed above, Customer liquidity benefits all market participants by providing more trading opportunities, which attracts other market participants, thus facilitating tighter spreads and increased order flow. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others ddrumheller on DSK120RN23PROD with NOTICES1 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.20 20 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 17:59 Jun 02, 2023 Jkt 259001 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–2023–19 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–2023–19. 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 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 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–2023–19 and should be submitted on or before June 26, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–11823 Filed 6–2–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94–409, that the Securities and Exchange Commission will hold an Open Meeting on Wednesday, June 7, 2023 at 10:00 a.m. PLACE: The meeting will be webcast on the Commission’s website at www.sec.gov. STATUS: This meeting will begin at 10:00 a.m. (ET) and will be open to the public via webcast on the Commission’s website at www.sec.gov. MATTERS TO BE CONSIDERED: 1. The Commission will consider whether to adopt rules under the Securities Exchange Act of 1934 (‘‘Exchange Act’’) that are designed to prevent fraud, manipulation, and deception in connection with transactions in security-based swaps as well as to prevent the personnel of a security-based swap dealer or major security-based swap participant from taking actions to coerce, mislead, or otherwise interfere with such entity’s chief compliance officer. 2. The Commission will consider whether to adopt rule amendments to Regulation M under the Exchange Act that remove certain existing rule exceptions that reference credit ratings and substitute in their place new exceptions that are based on alternative standards of creditworthiness. 3. The Commission will consider whether to approve a proposed amendment to the CAT NMS Plan to implement a revised funding model (‘‘Executed Share Model’’) for the consolidated audit trail (‘‘CAT’’) and to establish a fee schedule for Participant CAT fees in accordance with the Executed Share Model. TIME AND DATE: 21 17 E:\FR\FM\05JNN1.SGM CFR 200.30–3(a)(12). 05JNN1

Agencies

[Federal Register Volume 88, Number 107 (Monday, June 5, 2023)]
[Notices]
[Pages 36621-36624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11823]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97618; File No. SR-Phlx-2023-19]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7 
To Establish Pricing for Index Options on the Nasdaq-100 ESG Index

May 30, 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 16, 2023, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II, and III, below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Pricing Schedule at 
Options 7 to adopt pricing for index options on the Nasdaq-100 ESG 
Index, as described further below.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the

[[Page 36622]]

places specified in Item IV below. The Exchange has prepared summaries, 
set forth in sections A, B, and C below, of the most significant 
aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange recently received approval to list index options on 
the Nasdaq-100 ESG Index (``NDXESG options'').\3\ The Nasdaq-100 ESG 
Index is a broad based, modified ESG Risk Rating Score-adjusted market-
capitalization-weighted index that is designed to measure the 
performance of the companies in the Nasdaq-100 Index (``NDX'') that 
meet specific environmental, social and governance (``ESG'') 
criteria.\4\ The Nasdaq-100 ESG Index at all times consists of a 
selection of securities in NDX.\5\ These options would trade under the 
symbol ``EXGN.''
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 97506 (May 15, 2023) 
(Sr-Phlx-2023-09) (Order Granting Approval of Proposed Rule Change 
to Permit the Listing and Trading of Options on the Nasdaq-100 ESG 
Index) (not yet published).
    \4\ Companies are evaluated and weighted on the basis of their 
business activities, controversies and ESG Risk Ratings.
    \5\ See https://indexes.nasdaqomx.com/docs/methodology_NDXESG.pdf.
---------------------------------------------------------------------------

Options 7, Section 5
    The Exchange now proposes to amend its Pricing Schedule at Options 
7, Section 5 to adopt pricing for NDXESG options. Specifically, the 
Exchange proposes to establish transaction fees for NDXESG that are 
identical to the transaction fees for NDX and NDXP. The Exchange 
proposes to amend Section 5.A of Options 7 to assess the following fees 
Options Transaction Charges: $0.00 for Customer \6\ orders, $0.75 per 
contract for Professional,\7\ Lead Market Maker,\8\ Market Maker,\9\ 
Broker-Dealer \10\ and Firm \11\ orders. Similar to NDX and NDXP, a 
surcharge of $0.25 per contract will be assessed to Non-Customers who 
transact EXGN.
---------------------------------------------------------------------------

    \6\ The term ``Customer'' applies to any transaction that is 
identified by a member or member organization for clearing in the 
Customer range at The Options Clearing Corporation (``OCC'') which 
is not for the account of a broker or dealer or for the account of a 
``Professional'' (as that term is defined in Options 1, Section 
1(b)(45)).
    \7\ The term ``Professional'' applies to transactions for the 
accounts of Professionals, as defined in Options 1, Section 1(b)(45) 
means any person or entity that (i) is not a broker or dealer in 
securities, and (ii) places more than 390 orders in listed options 
per day on average during a calendar month for its own beneficial 
account(s). See Options 7, Section 1(c).
    \8\ 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).
    \9\ 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).
    \10\ 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).
    \11\ 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).
---------------------------------------------------------------------------

Other Changes to Options 7
    By way of background, the proprietary products listed within 
Options 7, Section 5.A, NDX, NDXP, XND, and VOLQ, are commonly excluded 
from a variety of pricing programs. The Exchange notes that the reason 
for such exclusion is because the Exchange has expended considerable 
resources developing and maintaining its proprietary products. NDXESG 
would be excluded from the same pricing once it is added to the list of 
proprietary products within Options 7, Section 5.A as NDXESG is also a 
proprietary product. Each exclusion is discussed below.
    Today, the Customer Rebates in Options 7, Section 2 of the Pricing 
Schedule are not paid on broad-based index options symbols listed 
within Options 7, Section 5.A. However, broad-based index options 
symbols listed within Options 7, Section 5.A. will count toward the 
volume requirement to qualify for a Customer Rebate Tier. The Exchange 
proposes to apply the Customer Rebate program in the same manner for 
NDXESG.
    Today, Options 7, Section 4 pricing for electronic orders (both 
simple and complex orders) excludes broad-based index options symbols 
listed within Options 7, Section 5.A. Also, broad-based index options 
symbols listed within Options 7, Section 5.A are excluded from a 
variety of fee programs in Options 7, Section 4 including, the 
``Monthly Market Maker Cap,'' \12\ ``Monthly Firm Fee Cap,'' \13\ 
facilitation orders pursuant to Options 8, Section 30,\14\ BD-Customer 
Facilitation,\15\ ``Strategy Caps,'' and Marketing Fees.
---------------------------------------------------------------------------

    \12\ Lead Market Makers and Market Makers are subject to a 
``Monthly Market Maker Cap'' of $500,000 for: (i) electronic Option 
Transaction Charges, excluding surcharges and excluding options 
overlying broad-based index options symbols listed within Options 7, 
Section 5.A; and (ii) QCC Transaction Fees (as defined in Exchange 
Options 3, Section 12 and Floor QCC Orders, as defined in Options 8, 
Section 30(e)). See Options 7, Section 4.
    \13\ Firms are subject to a $200,000 ``Monthly Firm Fee Cap''. 
Firm Floor Option Transaction Charges and QCC Transaction Fees, in 
the aggregate, for one billing month that exceed the Monthly Firm 
Fee Cap per member or member organization, when such members or 
member organizations are trading in their own proprietary account, 
are subject to a reduced transaction fee of $0.02 per capped 
contract unless there is no fee or the fee is waived. See Options 7, 
Section 4.
    \14\ The Firm Floor Options Transaction Charges are waived for 
members executing facilitation orders pursuant to Options 8, Section 
30 when such members are trading in their own proprietary account 
(including Cabinet Options Transaction Charges). The Firm Floor 
Options Transaction Charges are waived for the buy side of a 
transaction if the same member or its affiliates under Common 
Ownership represents both sides of a Firm transaction when such 
members are trading in their own proprietary account. See Options 7, 
Section 4.
    \15\ Broker-Dealer Floor Options Transaction Charges (including 
Cabinet Options Transaction Charges) are waived for members 
executing facilitation orders pursuant to Options 8, Section 30 when 
such members would otherwise incur this charge for trading in their 
own proprietary account contra to a Customer (``BD-Customer 
Facilitation''), if the member's BD-Customer Facilitation average 
daily volume (including both FLEX and non-FLEX transactions) exceeds 
10,000 contracts per day in a given month. See Options 7, Section 4.
---------------------------------------------------------------------------

    Broad-based index options symbols listed within Options 7, Section 
5.A. are not subject to Options 7, Section 6.A. PIXL \16\ Pricing.
---------------------------------------------------------------------------

    \16\ A member may electronically submit for execution an order 
it represents as agent on behalf of a Public Customer, broker-
dealer, or any other entity (``PIXL Order'') against principal 
interest or against any other order it represents as agent (an 
``Initiating Order'') provided it submits the PIXL Order for 
electronic execution into the PIXL Auction (``Auction'') pursuant to 
Options 3, Section 13.
---------------------------------------------------------------------------

    Today, broad-based index options symbols listed within Options 7, 
Section 5.A are not assessed the FLEX transaction fees set forth in 
Options 7, Section 6.B, because broad-based index options symbols 
listed within Options 7, Section 5.A are not considered Eligible 
Contracts.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\17\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\18\ in particular, in that it 
provides for the equitable allocation of

[[Page 36623]]

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.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

Options 7, Section 5
    The Exchange believes it is reasonable to assess the proposed 
Options Transaction Charge and Non-Customer surcharge as discussed 
above for EXGN because the proposed pricing reflects the exclusive and 
proprietary nature of this product. Similar to NDX and NDXP the 
Exchange continues to expend resources to build and list proprietary 
products. Further, the Exchange notes that with its products, market 
participants are offered an opportunity to transact in NDX, NDXP, XND, 
or EXGN or separately execute options overlying PowerShares QQQ Trust 
(``QQQ'').\19\ Offering such proprietary products provides market 
participants with a variety of choices in selecting the product they 
desire to utilize in order to transact in the Nasdaq-100 Index. These 
transaction fees enable Phlx to innovate and offer new proprietary 
products, which in turn incentivizes growth and competition for the 
innovation of additional products in the options industry. Further, the 
Exchange believes that the proposed rates for EXGN are reasonable 
because the proposed fees are identical to fees assessed for NDX and 
NDXP.
---------------------------------------------------------------------------

    \19\ QQQ is an exchange-traded fund based on the same Nasdaq-100 
Index as NDX, NDXP, and XND.
---------------------------------------------------------------------------

    The Exchange believes that the proposed rates for EXGN are 
equitable and not unfairly discriminatory because the Exchange will 
assess this fee uniformly to all Non-Customers. The Exchange similarly 
believes that the proposed $0.25 per contract surcharge is equitable 
and not unfairly discriminatory because it will apply uniformly to all 
Non-Customers. The Exchange believes it is equitable and not unfairly 
discriminatory to assess no transaction fees to Customers for EXGN 
because Customer orders bring valuable liquidity to the market, which 
liquidity benefits other market participants. Customer liquidity 
benefits all market participants by providing more trading 
opportunities, which attracts Lead Market Makers and Market Makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants.
Other Fee Programs
    Excluding EXGN from the same pricing programs as all other 
proprietary products within Options 7, Section 5.A is reasonable 
because the Exchange seeks to treat EXGN in the same manner as other 
proprietary products. More specifically, NDX, NDXP, and XND, and now 
EXGN, represent similar options on the same underlying Nasdaq-100 
Index.
    It is reasonable to not pay Customer Rebates on EXGN in any rebate 
category because this index option will be exclusively listed on Phlx 
only. The original intent of the Customer Rebate Program was to pay 
rebates on electronically-delivered multiply-listed options. By 
definition, EXGN will not be a multiply-listed option, and the Exchange 
does not desire to pay rebates on EXGN because of the exclusivity of 
this option. While the Exchange will not pay any Customer Rebates on 
EXGN transactions, the Exchange also believes it is reasonable to count 
EXGN in the total volume to qualify a market participant for these 
rebates as market participants would be incentivized to transact in 
EXGN to qualify for the Customer Rebate Tiers. The Exchange believes 
that its proposal to not pay Customer Rebates on EXGN, but to count 
EXGN volume toward the volume requirement to qualify for a rebate tier 
is equitable and not unfairly discriminatory because the Exchange would 
apply the rebate program as described uniformly for all market 
participants. Any market participant is eligible to earn a Customer 
Rebate.
    The Exchange believes that the proposed updates in Options 7, 
Section 4 in connection with the application of certain fee programs to 
EXGN are reasonable, equitable, and not unfairly discriminatory. 
Particularly, the Exchange believes that it is reasonable to exclude 
EXGN from the Non-Penny complex surcharge in note 7 of Options 7, 
Section 4, the Monthly Market Maker Cap, the Monthly Firm Fee Cap, the 
Floor Options Transaction Charge waivers, the Strategy Caps, and the 
Marketing Fees in the same manner in which NDX and NDXP are currently 
excluded from the same programs today. The Exchange believes it is 
appropriate to update these fee programs in a manner that similarly 
situates EXGN with NDX and NDXP as these are all proprietary products 
that are based on the Nasdaq-100 Index. In addition, similar to NDX and 
NDXP, the Exchange seeks to exclude EXGN from programs that cap or 
waive transaction fees for market participants. As it relates to the 
Marketing Fee, the Exchange believes it is reasonable to exclude EXGN 
from this fee, similar to NDX and NDXP today, because the purpose of 
the Marketing Fee is to generate more Customer order flow to the 
Exchange. Because EXGN will be an exclusively listed product on Phlx, 
the Exchange does not believe that applying a Marketing Fee is 
necessary for this product. The Exchange's proposal to exclude EXGN 
from the various fee programs in Options 7, Section 4 as discussed 
above is equitable and not unfairly discriminatory because the programs 
will uniformly exclude all market participant orders in EXGN. The 
Exchange notes that its proposal does not alter any of the existing fee 
programs, but instead merely proposes to exclude EXGN in those programs 
in the same way that NDX and NDXP are currently excluded.
    The Exchange's proposal to exclude EXGN from PIXL pricing in 
Options 7, Section 6.A is reasonable because the Exchange intends to 
assess the same fees across the board for EXGN transactions. This will 
align the pricing structure for EXGN with NDX and NDXP. The proposed 
changes are equitable and not unfairly discriminatory because the 
Exchange will uniformly exclude EXGN from PIXL pricing for all market 
participants, and instead uniformly charge them the Options 7, Section 
5.A pricing.
    The Exchange believes that its proposal to assess FLEX EXGN options 
the Options Transaction Charges and Non-Customer options surcharge in 
Options 7, Section 5.A is reasonable because the Exchange intends to 
assess the same fees across the board for EXGN transactions. 
Specifically, the Exchange will apply the proposed EXGN options 
surcharge of $0.25 per contract to Non-Customers in FLEX EXGN options. 
Further, the Exchange will apply the proposed EXGN Options Transaction 
Charges of $0.75 per contract (Non-Customer) and $0.00 per contract 
(Customer) to FLEX EXGN options. FLEX NDX and NDXP options are likewise 
assessed the same Options Transaction Charge and Non-Customer options 
surcharge that NDX and NDXP options are assessed today. The Exchange's 
proposal is equitable and not unfairly discriminatory because the 
Exchange will uniformly apply these fees to FLEX EXGN options to all 
similarly situated market participants.
    The Exchange believes it is reasonable to exclude EXGN from 
Eligible Contracts for purposes of qualifying for a MARS Payment in the 
same manner in which NDX and NDXP are currently excluded today. The 
Exchange believes it is appropriate to update its MARS program in a 
manner that similarly

[[Page 36624]]

situates EXGN with its other proprietary products, NDX and NDXP, which 
are all based on the Nasdaq-100 Index. The Exchange believes that its 
proposal is equitable and not unfairly discriminatory because the 
Exchange will uniformly exclude EXGN from MARS for all market 
participants.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. In terms of inter-market 
competition, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive, or rebate opportunities available at other venues to be more 
favorable. The Exchange notes that with its products, market 
participants are offered an opportunity to transact in NDX, NDXP, XND, 
or EXGN, or separately execute options overlying QQQ. Offering these 
products provides market participants with a variety of choices in 
selecting the product they desire to utilize to transact in the Nasdaq-
100 Index.
    Further, the Exchange does not believe that the proposed rule 
change will impose any burden on intra-market competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
because the proposed EXGN pricing will apply uniformly to all similarly 
situated market participants. Specifically, all Non-Customers will be 
assessed a uniform Options Transaction Charge and options surcharge 
while Customers receive free executions. As discussed above, Customer 
liquidity benefits all market participants by providing more trading 
opportunities, which attracts other market participants, thus 
facilitating tighter spreads and increased order flow.

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.\20\
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2023-19 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-2023-19. 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-2023-19 and should be submitted on 
or before June 26, 2023.
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-11823 Filed 6-2-23; 8:45 am]
BILLING CODE 8011-01-P
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