Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Codify the Definition of Phlx Options Trade Outline, 78401-78406 [2024-21871]
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Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Notices
would benefit from the changes on the
same basis. Accordingly, the proposed
change would not impose a disparate
burden on competition among market
participants on the Exchange.
Intermarket Competition. The
Exchange operates in a highly
competitive market in which market
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee levels
at those other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees and rebates to remain competitive
with other exchanges and with offexchange venues. Because competitors
are free to modify their own fees and
credits in response, and because market
participants may readily adjust their
order routing practices, the Exchange
does not believe its proposed fee change
can impose any burden on intermarket
competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective upon filing pursuant to Section
19(b)(3)(A) 21 of the Act and paragraph
(f)(2) of Rule 19b–4 thereunder. At any
time within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
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:
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–NYSE–2024–59. 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
a.m. and 3 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–NYSE–2024–59 and should be
submitted on or before October 16,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–21882 Filed 9–24–24; 8:45 am]
BILLING CODE 8011–01–P
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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–
NYSE–2024–59 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101099; File No. SR–Phlx–
2024–48]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Codify the Definition
of Phlx Options Trade Outline
September 19, 2024.
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
September 6, 2024, 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 and
II below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to codify the
definition of Phlx Options Trade
Outline in the Phlx rulebook. This filing
also incorporates a previous proposal to
adjust fees for Phlx Options Trade
Outline for both the End of Day and
Intra-Day product.
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.
1 15
21 15
U.S.C. 78s(b)(3)(A).
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to codify the definition of
Phlx Options Trade Outline in the Phlx
rulebook. This filing also incorporates a
previous proposal to adjust fees for Phlx
Options Trade Outline for both the End
of Day and Intra-Day product.3
PHLX Options Trade Outline
(‘‘PHOTO’’)
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PHOTO 4 provides aggregate quantity
and volume information for trades on
the Exchange for all series 5 during a
trading session.6 Information is
provided in the following categories: (i)
total exchange volume for Intra-Day
information and total exchange and
industry volume for End of Day
information for each reported series; (ii)
open interest for the series; (iii)
aggregate quantity of trades and
aggregate trade volume effected to open
a position,7 characterized by origin type
3 The previously introduced fee proposal was
initially filed on July 1, 2024, as SR–Phlx–2024–31.
On July 15, 2024, that filing was withdrawn and
refiled as SR–Phlx–2024–35. On July 29, 2024, that
filing was withdrawn and refiled as SR–Phlx–2024–
38. On August 12, 2024, that proposal was
withdrawn and replaced with SR–Phlx–2024–41 to
incorporate those fees into a filing that codifies the
definition of PHLX Options Trade Outline. On
August 23, 2024, SR–Phlx–2024–41 was withdrawn
and replaced with SR–Phlx–2024–44 to provide
additional information. On September 6, 2024, SR–
Phlx–2024–44 was withdrawn and replaced with
the instant filing to provide further information.
4 See Securities Exchange Act Release No. 62887
(September 10, 2010), 75 FR 57092 (September 17,
2010) (SR–Phlx–2010–121) (establishing fees for the
PHOTO intra-day and end of day products);
Securities Exchange Act Release No. 63351
(November 19, 2010), 75 FR 73140 (November 29,
2010) (SR–Phlx–2010–154) (establishing fees for
PHOTO historical data); Securities Exchange Act
Release No. 93293 (October 12, 2021), 86 FR 57716
(October 18, 2021) (SR–Phlx–2021–58) (changing
fees and introducing discount for historical data
and license for the external distribution of Derived
Data).
5 Every options series trades as a distinct symbol;
the terms ‘‘series’’ and ‘‘symbol’’ are therefore
synonyms.
6 PHOTO provides information on electronic
trades, but excludes trades made on the PHLX floor.
7 PHOTO provides subscribers with the aggregate
number of ‘‘opening purchase transactions.’’ The
term ‘‘opening purchase transaction’’ means an
exchange options transaction in which the
purchaser’s intention is to create or increase a long
position in the series of options involved in such
transaction. See Options 1, Section 1(b)(34).
PHOTO will also provide subscribers with the
aggregate number of ‘‘opening writing
transactions.’’ The term ‘‘opening writing
transaction’’ means an Exchange options
transaction in which the seller’s (writer’s) intention
is to create or increase a short position in the series
of options involved in such transaction. See
Options 1, Section 1(b)(35).
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(Customer,8 Broker-Dealer,9 Market
Maker,10 Firm 11 and Professional 12),
and for Customers and Professionals,
further subdivided by trade size
buckets; and (iv) aggregate quantity of
trades and aggregate trade volume
effected to close a position,13
characterized by origin type, (Customer,
Broker-Dealer, Market Maker, Firm and
8 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)). Options 7,
Section 1(c).
9 The term ‘‘Broker-Dealer’’ applies to any
transaction which is not subject to any of the other
transaction fees applicable within a particular
category. Options 7, Section 1(c).
10 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. Options 7, Section 1(c). This
includes specialists, Registered Options Traders
(‘‘ROTs’’), Streaming Quote Traders (‘‘SQTs’’) and
Remote Streaming Quote Traders (‘‘RSQTs’’). A
‘‘Streaming Quote Trader’’ or ‘‘SQT’’ means a
Market Maker who has received permission from
the Exchange to generate and submit option
quotations electronically in options to which such
SQT is assigned. An SQT may only submit such
quotations while such SQT is physically present on
the trading floor of the Exchange. An SQT may only
submit quotes in classes of options in which the
SQT is assigned. See Options 1, Section 1(b)(54). A
‘‘Remote Streaming Quote Trader’’ or ‘‘RSQT’’
means a Market Maker that is a member affiliated
with a Remote Streaming Quote Trader
Organization with no physical trading floor
presence who has received permission from the
Exchange to generate and submit option quotations
electronically in options to which such RSQT has
been assigned. A qualified RSQT may function as
a Remote Lead Market Maker upon Exchange
approval. An RSQT is also known as a Remote
Market Maker (‘‘RMM’’) pursuant to Options 2,
Section 11. A Remote Streaming Quote
Organization (‘‘RSQTO’’) or Remote Market Maker
Organization (‘‘RMO’’) are Exchange member
organizations that have qualified pursuant to
Options 2, Section 1. See Options 1, Section
1(b)(49).
11 The term ‘‘Firm’’ applies to any transaction that
is identified by a member or member organization
for clearing in the Firm range at OCC. Options 7,
Section 1(c).
12 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). Options 7, Section
1(c).
13 PHOTO provides subscribers with the aggregate
number of ‘‘closing purchase transactions’’ in the
affected series. A ‘‘closing purchase transaction’’
means an Exchange options transaction in which
the purchaser’s intention is to reduce or eliminate
a short position in the series of options involved in
such transaction. See Options 1, Section 1(b)(11).
PHOTO will also provide subscribers with the
aggregate number of ‘‘closing sale transactions.’’ A
‘‘closing sale transaction’’ means an Exchange
options transaction in which the seller’s intention
is to reduce or eliminate a long position in the
series of options involved in such transaction. See
Options 1, Section 1(b)(12).
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Professional), and for Customers and
Professionals, further subdivided by
trade size buckets.
PHLX Options Trade Outline End of
Day will also provide opening buy,
closing buy, opening sell and closing
sell information, which shall include
option first trade price, option high
trade price, option low trade price, and
option last trade price.
End of Day information is available
the next business day. Intra-Day
information is updated at 10-minute
intervals over the course of the trading
day. Historical information is available
upon request.
PHOTO provides proprietary
Exchange trade data and does not
include any intraday trade data from
any other exchange.14 The information
provided, both in End of Day and
Intraday formats, is not a real-time data
feed.
PHOTO is a completely voluntary
product in that the Exchange is not
required by any rule or regulation to
make this data available and potential
subscribers may purchase it only if they
voluntarily choose to do so.
This information is available to all
market participants, including both
members and non-members, for all
series and symbols in End of Day, IntraDay, and historical files (upon request).
The End of Day file is updated during
an overnight process with the additional
fields described above and is available
the following morning. The monthly
subscriber fee for the End of Day
product is currently $750.
The Intra-Day product is captured in
‘‘snapshots’’ taken every 10 minutes
throughout the trading day, available to
subscribers within 2 minutes of the
conclusion of each period. Subscribers
receive the first calculation at 9:42 a.m.
ET, representing data captured from
9:30 a.m. to 9:39 a.m., and the second
calculation at 9:52 a.m., representing
data from both the most recent snapshot
and previous snapshots, continuing over
the course of the trading day. The
monthly subscriber fee for the Intra-Day
product is currently $2,500.
PHOTO historical data provides
information about the past activity of all
option series traded on the Exchange for
each trading session conducted during a
prior calendar month selected by the
subscriber.15 This data is intended to
enhance a purchaser’s ability to analyze
option trade and volume data, evaluate
historical trends in the trading activity
14 The End of Day report includes a field that
presents Total Industry Volume for the Series.
15 See Securities Exchange Act Release 63351
(November 19, 2010), 75 FR 73140 (November 29,
2010) (SR–Phlx–2010–154).
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of a particular option series, and create
and test trading models and analytical
strategies. Historical files provide the
same fields of information as the End of
Day and Intraday files, respectively.
Historical data is available starting in
January 2009.
Products similar to Trade Outline
have been available on multiple
exchanges for many years and are wellestablished in the market. Such
products are available from Nasdaq
Options Market (‘‘NOM’’),16 Nasdaq ISE
LLC (‘‘ISE’’),17 Nasdaq GEMX LLC
(‘‘GEMX’’),18 Cboe Options Exchange
(‘‘Cboe’’),19 NYSE American Options
(‘‘NYSE American’’),20 NYSE Arca
Options (‘‘NYSE Arca’’),21 BOX Options
Market LLC (‘‘BOX’’),22 MIAX Pearl
Options Exchange (‘‘Pearl’’),23 and
others. In general, the relative value of
these products depends on the volume
of transactions included; the greater the
volume of transactions, the greater the
value of the data. The current
purchasers of Trade Outline are
investment banks, market makers, asset
managers and other buy-side investors.
Proposed Changes
ddrumheller on DSK120RN23PROD with NOTICES1
Definition of PHOTO
The Exchange proposes to codify the
definition of PHOTO. Nothing in this
16 See Nasdaq Stock Market Rules, Options 7,
Section 4 (Nasdaq Options Market Data Distributor
Fees).
17 See Nasdaq ISE Rules, Options 7, Section 10(A)
and (B) (Nasdaq ISE Open/Close Trade Profile End
of Day; Nasdaq ISE Open/Close Trade Profile Intraday).
18 See Nasdaq GEMX Rules, Options 7, Sections
7(D) (Nasdaq GEMX Open/Close End of Day Trade
Profile) and 7(E) (Nasdaq GEMX Open/Close Intraday Trade Profile).
19 See, e.g., Securities Exchange Act Release No.
94913 (May 13, 2022), 87 FR 30534 (May 19, 2022)
(SR–Cboe–2022–023) (describing End of Day and
Intra-day Open-Close Data as a summary of trading
activity on the exchange at the option level by
origin, side of the market, price and transaction
type).
20 See, e.g., Securities Exchange Act Release No.
93803 (December 16, 2021), 86 FR 72647 (December
22, 2021) (SR–NYSEAMER–2021–46) (describing
the NYSE Options Open-Close Volume Summary as
a volume summary of trading activity on the
exchange at the option level by origin, side of the
market, contract volume and transaction type).
21 See, e.g., Securities Exchange Act Release No.
93132 (September 27, 2021), 86 FR 54499 (October
1, 2021) (SR–NYSEArca–2021–82) (describing the
NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the
exchange at the option level by origin, side of the
market, contract volume and transaction type).
22 See, e.g., Securities Exchange Act Release No.
97174 (March 21, 2023), 88 FR 18201 (March 27,
2023) (SR–BOX–2023–09) (describing the BOX
exchange Open-Close Data report as providing
volume by origin, buying/selling, and opening/
closing criteria).
23 See, e.g., Securities Exchange Act Release No.
91964 (May 21, 2021), 86 FR 28667 (May 27, 2021)
(SR–PEARL–2021–24) (introducing the Open-Close
Report).
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codification is intended to change the
product in any way, but rather is
intended to describe the product exactly
as it exists. Specifically, the Exchange
proposes the following definition:
PHLX Options Trade Outline provides
aggregate quantity and volume information
for trades on the Exchange for all series
during a trading session. Information is
provided in the following categories: (i) total
exchange volume for Intra-Day information
and total exchange and industry volume for
End of Day information for each reported
series; (ii) open interest for the series; (iii)
aggregate quantity of trades and aggregate
trade volume effected to open a position,
characterized by origin type (Customer,
Broker-Dealer, Market Maker, Firm, and
Professional), and for Customers and
Professionals, further subdivided by trade
size buckets; and (iv) aggregate quantity of
trades and aggregate trade volume effected to
close a position, characterized by origin type
(Customer, Broker-Dealer, Market Maker,
Firm, and Professional), and for Customers
and Professionals, further subdivided by
trade size buckets.
PHLX Options Trade Outline End of Day
will also provide opening buy, closing buy,
opening sell and closing sell information,
which shall include option first trade price,
option high trade price, option low trade
price, and option last trade price.
End of Day information will be available
the next business day. Intra-Day information
is updated at 10-minute intervals over the
course of the trading day. Historical
information will be available upon request.
Previously Introduced Fee Changes
The Exchange previously proposed to
increase the fee for the End of Day
product from $750 to $850 per month,
and the Intra-Day Product from $2,500
to $3,000 per month.
The Exchange also proposes to clarify
that ad hoc requests for historical data
are $500 per month for End of Day data
and $1,000 per month for Intra-Day
data, and that historical data will be
available starting in January 2009. These
rates will apply to any request for
historical data that does not fall within
the existing discounts for the most
recent 36 months of information for
Current Distributors. The proposed
language is intended to avoid confusion
over fees for historical data, and to
specify the availability of such data, but
will not change any applicable fees.
In addition, the Exchange proposes to
insert a comma after the phrase ‘‘or the
Intra-Day Product for the current
month’’ into the definition of Current
Distributor. The revised sentence will
read as follows:
A ‘‘Current Distributor’’ is any firm that
purchases either the End of Day Product for
the current month, or the Intra-Day Product
for the current month, in the same month
that the 36 months of historical End of Day
or Intra-Day data is ordered.
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The change is designed to clarify that
the phrase ‘‘the same month that the 36
months of historical End of Day or IntraDay data is ordered’’ applies to both
firms that purchase End of Day data in
the current month and firms that
purchase Intra-Day data for the current
month. The clarification will not change
how the fee is charged.
2. Statutory Basis
The Exchange believes that its
proposal to codify the definition of
PHOTO is consistent with Section 6(b)
of the Act,24 in general, and furthers the
objectives of Section 6(b)(5) of the Act,25
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest.
Adding the definition of PHOTO will
provide additional clarity and
specificity to the Phlx rulebook. Nothing
in this codification is intended to
change the product or the way it
functions, but rather is intended to
describe the product exactly as it exists
today. Providing additional clarity about
an exchange product will help investors
make better informed decisions about
PHOTO, and therefore will help protect
investors and promote the public
interest.
Similarly, adding language regarding
fees for ad hoc requests for historical
data that do not fall within existing
discounts for historical data will also
provide additional clarity and
specificity to the rulebook. Nothing in
this codification is intended to change
the product or the way it functions, but
rather is intended to describe the
product as it exists today.
The same holds true for the
clarification of the definition of Current
Distributor, which is also designed to
add clarity and specificity to the
rulebook without changing the
underlying fees. This additional clarity
will help investors make better
informed decisions about PHOTO, and
thereby help protect investors and
promote the public interest.
The Exchange also believes that its
proposal to change fees is consistent
with Section 6(b) of the Act,26 in
general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,27
in particular, in that it provides for the
equitable allocation of reasonable dues,
fees and other charges among members
24 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
26 15 U.S.C. 78f(b).
27 15 U.S.C. 78f(b)(4) and (5).
25 15
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Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Notices
and issuers and other persons using any
facility, and is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
Equitable Allocation of Reasonable
Dues, Fees and Other Charges
The proposed changes are an
equitable allocation of reasonable dues,
fees and other charges because: (i) the
trade outline products offered by
multiple exchanges are substitutes, and
customers are free to choose which
product they purchase; and (ii) the
proposed fees are comparable to the fees
charged by other exchanges, and
customers are free to purchase other
products if the Exchange has mistaken
the value of its product.
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Substitution
As noted above, products similar to
Trade Outline have been available on
multiple exchanges for many years and
are well-established in the market. Such
products are available from the Phlx,28
ISE,29 GEMX,30 Cboe,31 NYSE
American,32 NYSE Arca,33 BOX,34
Pearl,35 and others.
Trade outline products offer the same
categories of data through end of day or
intra-day reports. The information
provided by one exchange is generally
28 See Securities Exchange Act Release No. 62887
(September 10, 2010), 75 FR 57092 (September 17,
2010) (SR–Phlx–2010–121) (introducing PHOTO on
September 1, 2010).
29 See Nasdaq ISE Rules, Options 7, Section 10(A)
and (B) (Nasdaq ISE Open/Close Trade Profile End
of Day; Nasdaq ISE Open/Close Trade Profile Intraday).
30 See Nasdaq GEMX Rules, Options 7, Sections
7(D) (Nasdaq GEMX Open/Close End of Day Trade
Profile) and 7(E) (Nasdaq GEMX Open/Close Intraday Trade Profile).
31 See, e.g., Securities Exchange Act Release No.
94913 (May 13, 2022), 87 FR 30534 (May 19, 2022)
(SR–Cboe–2022–023) (describing End of Day and
Intra-day Open-Close Data as a summary of trading
activity on the exchange at the option level by
origin, side of the market, price and transaction
type).
32 See, e.g., Securities Exchange Act Release No.
93803 (December 16, 2021), 86 FR 72647 (December
22, 2021) (SR–NYSEAMER–2021–46) (describing
the NYSE Options Open-Close Volume Summary as
a volume summary of trading activity on the
exchange at the option level by origin, side of the
market, contract volume and transaction type).
33 See, e.g., Securities Exchange Act Release No.
93132 (September 27, 2021), 86 FR 54499 (October
1, 2021) (SR–NYSEArca–2021–82) (describing the
NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the
exchange at the option level by origin, side of the
market, contract volume and transaction type).
34 See, e.g., Securities Exchange Act Release No.
97174 (March 21, 2023), 88 FR 18201 (March 27,
2023) (SR–BOX–2023–09) (describing the BOX
exchange Open-Close Data report as providing
volume by origin, buying/selling, and opening/
closing criteria).
35 See, e.g., Securities Exchange Act Release No.
91964 (May 21, 2021), 86 FR 28667 (May 27, 2021)
(SR–PEARL–2021–24) (introducing the Open-Close
Report).
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similar to that provided by other
exchanges because order flow can move
from one exchange to another, and
market sentiment trends that appear on
one exchange are likely to be similar to
the sentiment trends on other
exchanges. The key differentiator in the
quality of the data depends on the
volume of transactions on a given
exchange; the greater the volume of
transactions, the greater the value of the
data. Customers can choose not to
purchase the trade outline product of
one exchange and substitute it for that
of another exchange.
Customers can also choose not to
purchase a trade outline product at all.
Trade outline products are designed to
help investors understand underlying
market trends to improve the quality of
investment decisions, but are not
necessary to execute a trade. Customers
can, and do, choose to forego the
information from Trade Outline or any
of its competitor products when making
a trade.
Nasdaq and its affiliates have
observed that customers purchase
sufficient data to provide a view of the
market, but not more, as the value of
data from each additional exchange
yields diminishing returns. As a result,
all exchanges are limited in what they
will be able to charge for trade outline.
As the Commission and courts 36 have
recognized, ‘‘[i]f competitive forces are
operative, the self-interest of the
exchanges themselves will work
powerfully to constrain unreasonable or
unfair behavior.’’ 37 Accordingly, ‘‘the
existence of significant competition
provides a substantial basis for finding
that the terms of an exchange’s fee
proposal are equitable, fair, reasonable,
and not unreasonably or unfairly
36 The decision of the United States Court of
Appeals for the District of Columbia Circuit in
NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010)
upheld the Commission’s reliance upon
competitive markets to set reasonable and equitably
allocated fees for market data. ‘‘In fact, the
legislative history indicates that the Congress
intended that the market system evolve through the
interplay of competitive forces as unnecessary
regulatory restrictions are removed and that the SEC
wield its regulatory power in those situations where
competition may not be sufficient, such as in the
creation of a consolidated transactional reporting
system.’’ NetCoalition I at 535 (quoting H.R. Rep.
No. 94–229, at 92 (1975), as reprinted in 1975
U.S.C.C.A.N. 321, 323) (internal quotation marks
omitted). The court agreed with the Commission’s
conclusion that ‘‘Congress intended that
competitive forces should dictate the services and
practices that constitute the U.S. national market
system for trading equity securities.’’ Id. (quoting
Securities Exchange Act Release No. 59039
(December 2, 2008), 73bFR 74770 (December 9,
2008) (SR–NYSEArca–2006–21)).
37 See Securities Exchange Act Release No. 59039
(December 2, 2008), 73 FR 74770 (December 9,
2008) (SR–NYSEArca–2006–21).
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discriminatory.’’ 38 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.’’ 39
Trade Outline is in direct competition
with multiple exchanges that offer
similar products in end of day and intraday formats.40
Comparability of Proposed Fees
The proposed fees are comparable to
the fees charged by similarly situated
exchanges.
As explained above, the value of
Trade Outline is determined in part by
the number of underlying transactions
reflected in the data. The Phlx Exchange
has a market share comparable to the
Cboe C1 exchange, which has a market
share of approximately 9%, while PHLX
has a market share of approximately
10% during the second quarter of
2024.41 As the Cboe C1 exchange
charges $3,000 for its intra-day
product,42 the proposed fee of $3,000 for
the PHLX Intra-day product is
comparable.
For the end of day trade outline
product, Cboe C1 charges $600.43 The
Exchange believes that a fee of $600
understates the true value of the end of
day product. The Intra-day to end of day
price ratio for Cboe C1 is 5:1 ($3,000 v.
$600). Most trade outline products have
a lower ratio. EDGX, with an 8% market
share, has a ratio of 2:1 ($1,000 for intraday data and $500 for end of day
data).44 PHLX believes that the
proposed end of day fee of $850 (with
a ratio of 3.5:1) better reflects the
38 See
id.
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
40 These substitute products include NOTO, ISE
Trade Profile, GEMX Trade Profile data; open-close
data from Cboe C1, C2, BZX, and EDGX; and Open
Close Reports from MIAX Options, Pearl, and
Emerald.
41 See NasdaqTrader.com, ‘‘Options Market
Statistics,’’ available at https://
www.nasdaqtrader.com/Trader.aspx?id=
OptionsVolumeSummary.
42 See Cboe DataShop, ‘‘Cboe Open-Close Volume
Summary,’’ available at https://datashop.cboe.com/
cboe-options-open-close-volume-summary.
43 Id.
44 Id.
39 See
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relative value of the products, and
therefore is proposing a fee of $850 for
its end of day product.
If the Exchange is incorrect in its
assessment of the marketplace, current
and prospective customers will elect not
to purchase Trade Outline.
As noted above, clarifying fees for ad
hoc requests for historical data, and the
definition of Current Distributor, will
not change fees, and therefore will not
impact the equitable allocation of
reasonable dues, fees and other charges.
ddrumheller on DSK120RN23PROD with NOTICES1
The Proposal Does Not Permit Unfair
Discrimination
Nothing in the proposal treats any
category of market participant any
differently from any other category of
market participant. Trade Outline is
available to all market participants,
including members and non-members,
and all market participants receive the
same information in the Trade Outline
data feed.
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. In such an
environment, the Exchange must
continually adjust its fees to remain
competitive with other exchanges and
with alternative trading systems that
have been exempted from compliance
with the statutory standards applicable
to exchanges. Because competitors are
free to modify their own fees in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited.
Adding the definition of PHOTO will
promote competition by helping
investors make better informed
decisions about PHOTO. Nothing about
the addition of a definition will impact
inter-market competition or intra-market
competition negatively.
Intermarket Competition
Nothing in the proposal burdens
inter-market competition (the
competition among self-regulatory
organizations).
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17:28 Sep 24, 2024
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As discussed above, Trade Outline is
subject to direct competition from other
options exchanges that offer substitutes.
Nothing in the proposal would interfere
with the ability of any exchange to
change its fees.
Intra-Market Competition
Nothing in the proposal burdens
intra-market competition (the
competition among consumers of
exchange data). Trade Outline is
available to any customer under the
same fee schedule as any other
customer, and any market participant
that wishes to purchase these products
can do so on a non-discriminatory basis.
Adding language to clarify fees for ad
hoc requests for historical data, and to
clarify the definition of Current
Distributor, will not change fees, and
will promote competition by better
informing investors.
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
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days after the date of
the filing, or such shorter time as the
Commission may designate if consistent
with the protection of investors and the
public interest, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 45 and Rule 19b–4(f)(6) 46
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 47 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),48 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposed
45 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
47 17 CFR 240.19b–4(f)(6).
48 17 CFR 240.19b–4(f)(6)(iii).
46 17
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78405
rule change may become operative upon
filing. The Exchange states that adding
the definition of PHOTO will provide
additional clarity and specificity to the
Phlx rulebook, and nothing in the
clarification changes the product or the
way it functions, but rather describes
the product exactly as it exists today.
The Exchange also states that the fees
included in this filing have been in
effect since July 1, 2024, and waiver of
the operative delay will allow
application of those fees to continue
uninterrupted. For these reasons, the
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest. Therefore, the
Commission hereby waives the
operative delay and designates the
proposal operative upon filing.49
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission 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–2024–48 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–Phlx–2024–48. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
49 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Notices
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
a.m. and 3 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–2024–48 and should be
submitted on or before October 16,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.50
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024–21871 Filed 9–24–24; 8:45 am]
BILLING CODE 8011–01–P
Applicants
request an order to permit certain
registered closed-end investment
companies to issue multiple classes of
shares and to impose asset-based
distribution and/or service fees and
early withdrawal charges.
SUMMARY OF APPLICATION:
Gemcorp Capital Advisors
LLC and Gemcorp Commodities
Alternative Products Fund.
The application was filed
on June 28, 2024, and amended on July
11, 2024, and August 23, 2024.
FILING DATES:
An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing on any application by
emailing the SEC’s Secretary at
Secretarys-Office@sec.gov and serving
the Applicants with a copy of the
request by email, if an email address is
listed for the relevant Applicant below,
or personally or by mail, if a physical
address is listed for the relevant
Applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on October 14, 2024, and
should be accompanied by proof of
service on the Applicants, in the form
of an affidavit, or, for lawyers, a
certificate of service. Pursuant to rule 0–
5 under the Act, hearing requests should
state the nature of the writer’s interest,
any facts bearing upon the desirability
of a hearing on the matter, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary.
HEARING OR NOTIFICATION OF HEARING:
The Commission:
Secretarys-Office@sec.gov. Applicants:
Sally-Jane Miller, sjmiller@gemcorp.net,
with a copy to Jonathan Gaines, Esq.,
Dechert LLP, 1095 Avenue of the
Americas, New York, NY 10036.
[Investment Company Act Release No.
35328; 812–15596]
FOR FURTHER INFORMATION CONTACT:
Gemcorp Capital Advisors LLC and
Gemcorp Commodities Alternative
Products Fund
Trace W. Rakestraw, Senior Special
Counsel, at (202) 551–6825 (Division of
Investment Management, Chief
Counsel’s Office).
September 19, 2024.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice.
ddrumheller on DSK120RN23PROD with NOTICES1
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 18(a)(2), 18(c) and 18(i) of the
Act, under sections 6(c) and 23(c) of the
Act for an exemption from rule 23c–3
under the Act, and for an order pursuant
to section 17(d) of the Act and rule 17d–
1 under the Act.
50 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:28 Sep 24, 2024
Jkt 262001
[FR Doc. 2024–21857 Filed 9–24–24; 8:45 am]
BILLING CODE 8011–01–P
APPLICANTS:
ADDRESSES:
SECURITIES AND EXCHANGE
COMMISSION
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
For
Applicants’ representations, legal
analysis, and conditions, please refer to
Applicants’ application, dated August
23, 2024, which may be obtained via the
Commission’s website by searching for
the file number at the top of this
document, or for an Applicant using the
Company name search field on the
SEC’s EDGAR system. The SEC’s
EDGAR system may be searched at
https://www.sec.gov/edgar/searchedgar/
legacy/companysearch.html. You may
also call the SEC’s Public Reference
Room at (202) 551–8090.
SUPPLEMENTARY INFORMATION:
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101103; File No. SR–
NYSECHX–2024–29]
Self-Regulatory Organizations; NYSE
Chicago, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rule 7.31
September 19, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 9, 2024, the NYSE Chicago,
Inc. (‘‘NYSE Chicago’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 7.31 regarding the Minimum Trade
Size Modifier. The proposed rule
change is available on the Exchange’s
website at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
E:\FR\FM\25SEN1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 186 (Wednesday, September 25, 2024)]
[Notices]
[Pages 78401-78406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-21871]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101099; File No. SR-Phlx-2024-48]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Codify the
Definition of Phlx Options Trade Outline
September 19, 2024.
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 September 6, 2024, 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 and II below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\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 codify the definition of Phlx Options
Trade Outline in the Phlx rulebook. This filing also incorporates a
previous proposal to adjust fees for Phlx Options Trade Outline for
both the End of Day and Intra-Day product.
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.
[[Page 78402]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to codify the definition
of Phlx Options Trade Outline in the Phlx rulebook. This filing also
incorporates a previous proposal to adjust fees for Phlx Options Trade
Outline for both the End of Day and Intra-Day product.\3\
---------------------------------------------------------------------------
\3\ The previously introduced fee proposal was initially filed
on July 1, 2024, as SR-Phlx-2024-31. On July 15, 2024, that filing
was withdrawn and refiled as SR-Phlx-2024-35. On July 29, 2024, that
filing was withdrawn and refiled as SR-Phlx-2024-38. On August 12,
2024, that proposal was withdrawn and replaced with SR-Phlx-2024-41
to incorporate those fees into a filing that codifies the definition
of PHLX Options Trade Outline. On August 23, 2024, SR-Phlx-2024-41
was withdrawn and replaced with SR-Phlx-2024-44 to provide
additional information. On September 6, 2024, SR-Phlx-2024-44 was
withdrawn and replaced with the instant filing to provide further
information.
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PHLX Options Trade Outline (``PHOTO'')
PHOTO \4\ provides aggregate quantity and volume information for
trades on the Exchange for all series \5\ during a trading session.\6\
Information is provided in the following categories: (i) total exchange
volume for Intra-Day information and total exchange and industry volume
for End of Day information for each reported series; (ii) open interest
for the series; (iii) aggregate quantity of trades and aggregate trade
volume effected to open a position,\7\ characterized by origin type
(Customer,\8\ Broker-Dealer,\9\ Market Maker,\10\ Firm \11\ and
Professional \12\), and for Customers and Professionals, further
subdivided by trade size buckets; and (iv) aggregate quantity of trades
and aggregate trade volume effected to close a position,\13\
characterized by origin type, (Customer, Broker-Dealer, Market Maker,
Firm and Professional), and for Customers and Professionals, further
subdivided by trade size buckets.
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\4\ See Securities Exchange Act Release No. 62887 (September 10,
2010), 75 FR 57092 (September 17, 2010) (SR-Phlx-2010-121)
(establishing fees for the PHOTO intra-day and end of day products);
Securities Exchange Act Release No. 63351 (November 19, 2010), 75 FR
73140 (November 29, 2010) (SR-Phlx-2010-154) (establishing fees for
PHOTO historical data); Securities Exchange Act Release No. 93293
(October 12, 2021), 86 FR 57716 (October 18, 2021) (SR-Phlx-2021-58)
(changing fees and introducing discount for historical data and
license for the external distribution of Derived Data).
\5\ Every options series trades as a distinct symbol; the terms
``series'' and ``symbol'' are therefore synonyms.
\6\ PHOTO provides information on electronic trades, but
excludes trades made on the PHLX floor.
\7\ PHOTO provides subscribers with the aggregate number of
``opening purchase transactions.'' The term ``opening purchase
transaction'' means an exchange options transaction in which the
purchaser's intention is to create or increase a long position in
the series of options involved in such transaction. See Options 1,
Section 1(b)(34). PHOTO will also provide subscribers with the
aggregate number of ``opening writing transactions.'' The term
``opening writing transaction'' means an Exchange options
transaction in which the seller's (writer's) intention is to create
or increase a short position in the series of options involved in
such transaction. See Options 1, Section 1(b)(35).
\8\ 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)). Options 7, Section 1(c).
\9\ The term ``Broker-Dealer'' applies to any transaction which
is not subject to any of the other transaction fees applicable
within a particular category. Options 7, Section 1(c).
\10\ 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. Options 7,
Section 1(c). This includes specialists, Registered Options Traders
(``ROTs''), Streaming Quote Traders (``SQTs'') and Remote Streaming
Quote Traders (``RSQTs''). A ``Streaming Quote Trader'' or ``SQT''
means a Market Maker who has received permission from the Exchange
to generate and submit option quotations electronically in options
to which such SQT is assigned. An SQT may only submit such
quotations while such SQT is physically present on the trading floor
of the Exchange. An SQT may only submit quotes in classes of options
in which the SQT is assigned. See Options 1, Section 1(b)(54). A
``Remote Streaming Quote Trader'' or ``RSQT'' means a Market Maker
that is a member affiliated with a Remote Streaming Quote Trader
Organization with no physical trading floor presence who has
received permission from the Exchange to generate and submit option
quotations electronically in options to which such RSQT has been
assigned. A qualified RSQT may function as a Remote Lead Market
Maker upon Exchange approval. An RSQT is also known as a Remote
Market Maker (``RMM'') pursuant to Options 2, Section 11. A Remote
Streaming Quote Organization (``RSQTO'') or Remote Market Maker
Organization (``RMO'') are Exchange member organizations that have
qualified pursuant to Options 2, Section 1. See Options 1, Section
1(b)(49).
\11\ The term ``Firm'' applies to any transaction that is
identified by a member or member organization for clearing in the
Firm range at OCC. Options 7, Section 1(c).
\12\ 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). Options 7, Section 1(c).
\13\ PHOTO provides subscribers with the aggregate number of
``closing purchase transactions'' in the affected series. A
``closing purchase transaction'' means an Exchange options
transaction in which the purchaser's intention is to reduce or
eliminate a short position in the series of options involved in such
transaction. See Options 1, Section 1(b)(11). PHOTO will also
provide subscribers with the aggregate number of ``closing sale
transactions.'' A ``closing sale transaction'' means an Exchange
options transaction in which the seller's intention is to reduce or
eliminate a long position in the series of options involved in such
transaction. See Options 1, Section 1(b)(12).
---------------------------------------------------------------------------
PHLX Options Trade Outline End of Day will also provide opening
buy, closing buy, opening sell and closing sell information, which
shall include option first trade price, option high trade price, option
low trade price, and option last trade price.
End of Day information is available the next business day. Intra-
Day information is updated at 10-minute intervals over the course of
the trading day. Historical information is available upon request.
PHOTO provides proprietary Exchange trade data and does not include
any intraday trade data from any other exchange.\14\ The information
provided, both in End of Day and Intraday formats, is not a real-time
data feed.
---------------------------------------------------------------------------
\14\ The End of Day report includes a field that presents Total
Industry Volume for the Series.
---------------------------------------------------------------------------
PHOTO is a completely voluntary product in that the Exchange is not
required by any rule or regulation to make this data available and
potential subscribers may purchase it only if they voluntarily choose
to do so.
This information is available to all market participants, including
both members and non-members, for all series and symbols in End of Day,
Intra-Day, and historical files (upon request).
The End of Day file is updated during an overnight process with the
additional fields described above and is available the following
morning. The monthly subscriber fee for the End of Day product is
currently $750.
The Intra-Day product is captured in ``snapshots'' taken every 10
minutes throughout the trading day, available to subscribers within 2
minutes of the conclusion of each period. Subscribers receive the first
calculation at 9:42 a.m. ET, representing data captured from 9:30 a.m.
to 9:39 a.m., and the second calculation at 9:52 a.m., representing
data from both the most recent snapshot and previous snapshots,
continuing over the course of the trading day. The monthly subscriber
fee for the Intra-Day product is currently $2,500.
PHOTO historical data provides information about the past activity
of all option series traded on the Exchange for each trading session
conducted during a prior calendar month selected by the subscriber.\15\
This data is intended to enhance a purchaser's ability to analyze
option trade and volume data, evaluate historical trends in the trading
activity
[[Page 78403]]
of a particular option series, and create and test trading models and
analytical strategies. Historical files provide the same fields of
information as the End of Day and Intraday files, respectively.
Historical data is available starting in January 2009.
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\15\ See Securities Exchange Act Release 63351 (November 19,
2010), 75 FR 73140 (November 29, 2010) (SR-Phlx-2010-154).
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Products similar to Trade Outline have been available on multiple
exchanges for many years and are well-established in the market. Such
products are available from Nasdaq Options Market (``NOM''),\16\ Nasdaq
ISE LLC (``ISE''),\17\ Nasdaq GEMX LLC (``GEMX''),\18\ Cboe Options
Exchange (``Cboe''),\19\ NYSE American Options (``NYSE American''),\20\
NYSE Arca Options (``NYSE Arca''),\21\ BOX Options Market LLC
(``BOX''),\22\ MIAX Pearl Options Exchange (``Pearl''),\23\ and others.
In general, the relative value of these products depends on the volume
of transactions included; the greater the volume of transactions, the
greater the value of the data. The current purchasers of Trade Outline
are investment banks, market makers, asset managers and other buy-side
investors.
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\16\ See Nasdaq Stock Market Rules, Options 7, Section 4 (Nasdaq
Options Market Data Distributor Fees).
\17\ See Nasdaq ISE Rules, Options 7, Section 10(A) and (B)
(Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/
Close Trade Profile Intra-day).
\18\ See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq
GEMX Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX
Open/Close Intra-day Trade Profile).
\19\ See, e.g., Securities Exchange Act Release No. 94913 (May
13, 2022), 87 FR 30534 (May 19, 2022) (SR-Cboe-2022-023) (describing
End of Day and Intra-day Open-Close Data as a summary of trading
activity on the exchange at the option level by origin, side of the
market, price and transaction type).
\20\ See, e.g., Securities Exchange Act Release No. 93803
(December 16, 2021), 86 FR 72647 (December 22, 2021) (SR-NYSEAMER-
2021-46) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type).
\21\ See, e.g., Securities Exchange Act Release No. 93132
(September 27, 2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-
2021-82) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type).
\22\ See, e.g., Securities Exchange Act Release No. 97174 (March
21, 2023), 88 FR 18201 (March 27, 2023) (SR-BOX-2023-09) (describing
the BOX exchange Open-Close Data report as providing volume by
origin, buying/selling, and opening/closing criteria).
\23\ See, e.g., Securities Exchange Act Release No. 91964 (May
21, 2021), 86 FR 28667 (May 27, 2021) (SR-PEARL-2021-24)
(introducing the Open-Close Report).
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Proposed Changes
Definition of PHOTO
The Exchange proposes to codify the definition of PHOTO. Nothing in
this codification is intended to change the product in any way, but
rather is intended to describe the product exactly as it exists.
Specifically, the Exchange proposes the following definition:
PHLX Options Trade Outline provides aggregate quantity and
volume information for trades on the Exchange for all series during
a trading session. Information is provided in the following
categories: (i) total exchange volume for Intra-Day information and
total exchange and industry volume for End of Day information for
each reported series; (ii) open interest for the series; (iii)
aggregate quantity of trades and aggregate trade volume effected to
open a position, characterized by origin type (Customer, Broker-
Dealer, Market Maker, Firm, and Professional), and for Customers and
Professionals, further subdivided by trade size buckets; and (iv)
aggregate quantity of trades and aggregate trade volume effected to
close a position, characterized by origin type (Customer, Broker-
Dealer, Market Maker, Firm, and Professional), and for Customers and
Professionals, further subdivided by trade size buckets.
PHLX Options Trade Outline End of Day will also provide opening
buy, closing buy, opening sell and closing sell information, which
shall include option first trade price, option high trade price,
option low trade price, and option last trade price.
End of Day information will be available the next business day.
Intra-Day information is updated at 10-minute intervals over the
course of the trading day. Historical information will be available
upon request.
Previously Introduced Fee Changes
The Exchange previously proposed to increase the fee for the End of
Day product from $750 to $850 per month, and the Intra-Day Product from
$2,500 to $3,000 per month.
The Exchange also proposes to clarify that ad hoc requests for
historical data are $500 per month for End of Day data and $1,000 per
month for Intra-Day data, and that historical data will be available
starting in January 2009. These rates will apply to any request for
historical data that does not fall within the existing discounts for
the most recent 36 months of information for Current Distributors. The
proposed language is intended to avoid confusion over fees for
historical data, and to specify the availability of such data, but will
not change any applicable fees.
In addition, the Exchange proposes to insert a comma after the
phrase ``or the Intra-Day Product for the current month'' into the
definition of Current Distributor. The revised sentence will read as
follows:
A ``Current Distributor'' is any firm that purchases either the
End of Day Product for the current month, or the Intra-Day Product
for the current month, in the same month that the 36 months of
historical End of Day or Intra-Day data is ordered.
The change is designed to clarify that the phrase ``the same month
that the 36 months of historical End of Day or Intra-Day data is
ordered'' applies to both firms that purchase End of Day data in the
current month and firms that purchase Intra-Day data for the current
month. The clarification will not change how the fee is charged.
2. Statutory Basis
The Exchange believes that its proposal to codify the definition of
PHOTO is consistent with Section 6(b) of the Act,\24\ in general, and
furthers the objectives of Section 6(b)(5) of the Act,\25\ in
particular, in that it is designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in general
to protect investors and the public interest.
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\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(5).
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Adding the definition of PHOTO will provide additional clarity and
specificity to the Phlx rulebook. Nothing in this codification is
intended to change the product or the way it functions, but rather is
intended to describe the product exactly as it exists today. Providing
additional clarity about an exchange product will help investors make
better informed decisions about PHOTO, and therefore will help protect
investors and promote the public interest.
Similarly, adding language regarding fees for ad hoc requests for
historical data that do not fall within existing discounts for
historical data will also provide additional clarity and specificity to
the rulebook. Nothing in this codification is intended to change the
product or the way it functions, but rather is intended to describe the
product as it exists today.
The same holds true for the clarification of the definition of
Current Distributor, which is also designed to add clarity and
specificity to the rulebook without changing the underlying fees. This
additional clarity will help investors make better informed decisions
about PHOTO, and thereby help protect investors and promote the public
interest.
The Exchange also believes that its proposal to change fees is
consistent with Section 6(b) of the Act,\26\ in general, and furthers
the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\27\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among members
[[Page 78404]]
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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\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(4) and (5).
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Equitable Allocation of Reasonable Dues, Fees and Other Charges
The proposed changes are an equitable allocation of reasonable
dues, fees and other charges because: (i) the trade outline products
offered by multiple exchanges are substitutes, and customers are free
to choose which product they purchase; and (ii) the proposed fees are
comparable to the fees charged by other exchanges, and customers are
free to purchase other products if the Exchange has mistaken the value
of its product.
Substitution
As noted above, products similar to Trade Outline have been
available on multiple exchanges for many years and are well-established
in the market. Such products are available from the Phlx,\28\ ISE,\29\
GEMX,\30\ Cboe,\31\ NYSE American,\32\ NYSE Arca,\33\ BOX,\34\
Pearl,\35\ and others.
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\28\ See Securities Exchange Act Release No. 62887 (September
10, 2010), 75 FR 57092 (September 17, 2010) (SR-Phlx-2010-121)
(introducing PHOTO on September 1, 2010).
\29\ See Nasdaq ISE Rules, Options 7, Section 10(A) and (B)
(Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/
Close Trade Profile Intra-day).
\30\ See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq
GEMX Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX
Open/Close Intra-day Trade Profile).
\31\ See, e.g., Securities Exchange Act Release No. 94913 (May
13, 2022), 87 FR 30534 (May 19, 2022) (SR-Cboe-2022-023) (describing
End of Day and Intra-day Open-Close Data as a summary of trading
activity on the exchange at the option level by origin, side of the
market, price and transaction type).
\32\ See, e.g., Securities Exchange Act Release No. 93803
(December 16, 2021), 86 FR 72647 (December 22, 2021) (SR-NYSEAMER-
2021-46) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type).
\33\ See, e.g., Securities Exchange Act Release No. 93132
(September 27, 2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-
2021-82) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type).
\34\ See, e.g., Securities Exchange Act Release No. 97174 (March
21, 2023), 88 FR 18201 (March 27, 2023) (SR-BOX-2023-09) (describing
the BOX exchange Open-Close Data report as providing volume by
origin, buying/selling, and opening/closing criteria).
\35\ See, e.g., Securities Exchange Act Release No. 91964 (May
21, 2021), 86 FR 28667 (May 27, 2021) (SR-PEARL-2021-24)
(introducing the Open-Close Report).
---------------------------------------------------------------------------
Trade outline products offer the same categories of data through
end of day or intra-day reports. The information provided by one
exchange is generally similar to that provided by other exchanges
because order flow can move from one exchange to another, and market
sentiment trends that appear on one exchange are likely to be similar
to the sentiment trends on other exchanges. The key differentiator in
the quality of the data depends on the volume of transactions on a
given exchange; the greater the volume of transactions, the greater the
value of the data. Customers can choose not to purchase the trade
outline product of one exchange and substitute it for that of another
exchange.
Customers can also choose not to purchase a trade outline product
at all. Trade outline products are designed to help investors
understand underlying market trends to improve the quality of
investment decisions, but are not necessary to execute a trade.
Customers can, and do, choose to forego the information from Trade
Outline or any of its competitor products when making a trade.
Nasdaq and its affiliates have observed that customers purchase
sufficient data to provide a view of the market, but not more, as the
value of data from each additional exchange yields diminishing returns.
As a result, all exchanges are limited in what they will be able to
charge for trade outline.
As the Commission and courts \36\ have recognized, ``[i]f
competitive forces are operative, the self-interest of the exchanges
themselves will work powerfully to constrain unreasonable or unfair
behavior.'' \37\ Accordingly, ``the existence of significant
competition provides a substantial basis for finding that the terms of
an exchange's fee proposal are equitable, fair, reasonable, and not
unreasonably or unfairly discriminatory.'' \38\ 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.'' \39\ Trade Outline is in direct competition with multiple
exchanges that offer similar products in end of day and intra-day
formats.\40\
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\36\ The decision of the United States Court of Appeals for the
District of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525
(D.C. Cir. 2010) upheld the Commission's reliance upon competitive
markets to set reasonable and equitably allocated fees for market
data. ``In fact, the legislative history indicates that the Congress
intended that the market system evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed and that the SEC wield its regulatory power in those
situations where competition may not be sufficient, such as in the
creation of a consolidated transactional reporting system.''
NetCoalition I at 535 (quoting H.R. Rep. No. 94-229, at 92 (1975),
as reprinted in 1975 U.S.C.C.A.N. 321, 323) (internal quotation
marks omitted). The court agreed with the Commission's conclusion
that ``Congress intended that competitive forces should dictate the
services and practices that constitute the U.S. national market
system for trading equity securities.'' Id. (quoting Securities
Exchange Act Release No. 59039 (December 2, 2008), 73bFR 74770
(December 9, 2008) (SR-NYSEArca-2006-21)).
\37\ See Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
\38\ See id.
\39\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
\40\ These substitute products include NOTO, ISE Trade Profile,
GEMX Trade Profile data; open-close data from Cboe C1, C2, BZX, and
EDGX; and Open Close Reports from MIAX Options, Pearl, and Emerald.
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Comparability of Proposed Fees
The proposed fees are comparable to the fees charged by similarly
situated exchanges.
As explained above, the value of Trade Outline is determined in
part by the number of underlying transactions reflected in the data.
The Phlx Exchange has a market share comparable to the Cboe C1
exchange, which has a market share of approximately 9%, while PHLX has
a market share of approximately 10% during the second quarter of
2024.\41\ As the Cboe C1 exchange charges $3,000 for its intra-day
product,\42\ the proposed fee of $3,000 for the PHLX Intra-day product
is comparable.
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\41\ See NasdaqTrader.com, ``Options Market Statistics,''
available at https://www.nasdaqtrader.com/Trader.aspx?id=OptionsVolumeSummary.
\42\ See Cboe DataShop, ``Cboe Open-Close Volume Summary,''
available at https://datashop.cboe.com/cboe-options-open-close-volume-summary.
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For the end of day trade outline product, Cboe C1 charges $600.\43\
The Exchange believes that a fee of $600 understates the true value of
the end of day product. The Intra-day to end of day price ratio for
Cboe C1 is 5:1 ($3,000 v. $600). Most trade outline products have a
lower ratio. EDGX, with an 8% market share, has a ratio of 2:1 ($1,000
for intra-day data and $500 for end of day data).\44\ PHLX believes
that the proposed end of day fee of $850 (with a ratio of 3.5:1) better
reflects the
[[Page 78405]]
relative value of the products, and therefore is proposing a fee of
$850 for its end of day product.
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\43\ Id.
\44\ Id.
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If the Exchange is incorrect in its assessment of the marketplace,
current and prospective customers will elect not to purchase Trade
Outline.
As noted above, clarifying fees for ad hoc requests for historical
data, and the definition of Current Distributor, will not change fees,
and therefore will not impact the equitable allocation of reasonable
dues, fees and other charges.
The Proposal Does Not Permit Unfair Discrimination
Nothing in the proposal treats any category of market participant
any differently from any other category of market participant. Trade
Outline is available to all market participants, including members and
non-members, and all market participants receive the same information
in the Trade Outline data feed.
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. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. Because
competitors are free to modify their own fees in response, and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
Adding the definition of PHOTO will promote competition by helping
investors make better informed decisions about PHOTO. Nothing about the
addition of a definition will impact inter-market competition or intra-
market competition negatively.
Intermarket Competition
Nothing in the proposal burdens inter-market competition (the
competition among self-regulatory organizations).
As discussed above, Trade Outline is subject to direct competition
from other options exchanges that offer substitutes. Nothing in the
proposal would interfere with the ability of any exchange to change its
fees.
Intra-Market Competition
Nothing in the proposal burdens intra-market competition (the
competition among consumers of exchange data). Trade Outline is
available to any customer under the same fee schedule as any other
customer, and any market participant that wishes to purchase these
products can do so on a non-discriminatory basis.
Adding language to clarify fees for ad hoc requests for historical
data, and to clarify the definition of Current Distributor, will not
change fees, and will promote competition by better informing
investors.
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
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \45\ and Rule 19b-
4(f)(6) \46\ thereunder.
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\45\ 15 U.S.C. 78s(b)(3)(A).
\46\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \47\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\48\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative upon filing. The Exchange states that
adding the definition of PHOTO will provide additional clarity and
specificity to the Phlx rulebook, and nothing in the clarification
changes the product or the way it functions, but rather describes the
product exactly as it exists today. The Exchange also states that the
fees included in this filing have been in effect since July 1, 2024,
and waiver of the operative delay will allow application of those fees
to continue uninterrupted. For these reasons, the Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. Therefore, the
Commission hereby waives the operative delay and designates the
proposal operative upon filing.\49\
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\47\ 17 CFR 240.19b-4(f)(6).
\48\ 17 CFR 240.19b-4(f)(6)(iii).
\49\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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 necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission 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-2024-48 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-Phlx-2024-48. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will
[[Page 78406]]
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 a.m. and 3 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-2024-48 and should be submitted on or before October 16, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\50\
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\50\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-21871 Filed 9-24-24; 8:45 am]
BILLING CODE 8011-01-P
