Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 9, 104597-104601 [2024-30526]

Download as PDF Federal Register / Vol. 89, No. 246 / Monday, December 23, 2024 / Notices 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: • Use the Commission’s internet comment form (www.sec.gov/rules/ sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– FICC–2024–012 on the subject line. Paper Comments khammond on DSK9W7S144PROD with NOTICES • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. All submissions should refer to File Number SR–FICC–2024–012. 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 (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 FICC and on DTCC’s website (www.dtcc.com/legal/sec-rule-filings). 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–FICC–2024–012 and should be submitted on or before January 13, 2025. 17:03 Dec 20, 2024 [FR Doc. 2024–30520 Filed 12–20–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–425, OMB Control No. 3235–0468] Electronic Comments VerDate Sep<11>2014 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Sherry R. Haywood, Assistant Secretary. Jkt 265001 Proposed Collection; Comment Request; Reinstatement Without Change: Rule 10A–1 Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the collection of information provided for in Rule 10A–1 (17 CFR 240.10A–1), under the Securities Exchange Act of 1934 (‘‘Act’’) (15 U.S.C. 78a et seq.). The Commission plans to submit this existing collection of information to the Office of Management and Budget (‘‘OMB’’) for reinstatement and approval. Rule 10A–1 (17 CFR 240.10A–1) implements the reporting requirements in Section 10A of the Exchange Act (15 U.S.C. 78j–1) which was enacted by Congress on December 22, 1995 as part of the Private Securities Litigation Reform Act of 1995, Public Law 104–67, 109 Stat 737. Under section 10A and Rule 10A–1, reporting occurs only if a registrant’s board of directors receives a report from its auditor that (1) there is an illegal act material to the registrant’s financial statements, (2) senior management and the board have not taken timely and appropriate remedial action, and (3) the failure to take such action is reasonably expected to warrant the auditor’s modification of the audit report or resignation from the audit engagement. The board of directors must notify the Commission within one business day of receiving such a report. If the board fails to provide that notice, then the auditor, within the next business day, must provide the Commission with a copy of the report that it gave to the board. Likely respondents are those registrants filing audited financial statements under the Securities 19 17 PO 00000 CFR 200.30–3(a)(12). Frm 00087 Fmt 4703 Sfmt 4703 104597 Exchange Act of 1934 (15 U.S.C. 78a, et seq.) and the Investment Company Act of 1940 (15 U.S.C. 80a–1, et seq.). This information collection requirement was previously approved by OMB, but the approval expired on June 30, 2021. Accordingly, the Commission will request a reinstatement of OMB’s approval. It is estimated that Rule 10A–1 results in an aggregate additional reporting burden of 5 hours per year. The estimated average burden hours are solely for purposes of the Paperwork Reduction Act and are not derived from a comprehensive or even a representative survey or study of the costs of SEC rules or forms. Written comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency’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 in writing within 60 days of this publication. Please direct your written comments to Austin Gerig, Director/Chief Data Officer, Securities and Exchange Commission, c/o Tanya Ruttenberg, 100 F Street NE, Washington, DC 20549 or send an email to: PRA_Mailbox@ sec.gov. Dated: December 17, 2024. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–30495 Filed 12–20–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–101941; File No. SR-Phlx2024–69] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 9 December 17, 2024. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 E:\FR\FM\23DEN1.SGM 23DEN1 104598 Federal Register / Vol. 89, No. 246 / Monday, December 23, 2024 / Notices (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on December 3, 2024, 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 increase the Exchange’s port pricing in Options 7, Section 9 for the Specialized Quote Feed (‘‘SQF’’) 3 Ports and SQF Purge Ports. While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on January 1, 2025. 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.4 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 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 ‘‘Specialized Quote Feed’’ or ‘‘SQF’’ is an interface that allows Lead Market Makers, Streaming Quote Traders (‘‘SQTs’’) and Remote Streaming Quote Traders (‘‘RSQTs’’) to connect, send, and receive messages related to quotes, Immediate-or-Cancel Orders, and auction responses into and from the Exchange. Features include the following: (1) options symbol directory messages (e.g., underlying and complex instruments); (2) system event messages (e.g., start of trading hours messages and start of opening); (3) trading action messages (e.g., halts and resumes); (4) execution messages; (5) quote messages; (6) Immediate-orCancel Order messages; (7) risk protection triggers and purge notifications; (8) opening imbalance messages; (9) auction notifications; and (10) auction responses. The SQF Purge Interface only receives and notifies of purge requests from the Lead Market Maker, SQT or RSQT. Lead Market Makers, SQTs and RSQTs may only enter interest into SQF in their assigned options series. Immediate-or-Cancel Orders entered into SQF are not subject to the Order Price Protection, the Market Order Spread Protection, or Size Limitation in Options 3, Section 15(a)(1), (a)(2) and (b)(2), respectively. See Options 3, Section 7(a)(i)(B). 4 The Exchange initially filed this fee proposal as SR7–Phlx–2024-55 on October 18, 2024. On December 3, 2024, the Exchange withdrew SR-Phlx2024–55 and replaced it with this fee change. khammond on DSK9W7S144PROD with NOTICES 2 17 VerDate Sep<11>2014 17:03 Dec 20, 2024 Jkt 265001 statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to amend Options 7, Section 9, B to increase the Exchange’s SQF Port Fee, SQF Purge Port Fee and SQF Fee Cap (as defined below) by 10%. Options 7, Section 9, B includes the Exchange’s fees that relate to the SQF Ports, SQF Purge Ports, and the SQF Fee Cap (as defined below) that Market Makers 5 use to connect to the Exchange to send quotes. Today, Phlx assesses $1,250 per port, per month up to a maximum of $42,000 per month for an SQF Port that receives inbound quotes at any time within that month (‘‘SQF Fee Cap’’).6 Also, today, Phlx assesses $500 per port, per month for each of the first 5 SQF Purge Ports and $100 per port, per month for each port thereafter. With this proposal, Phlx would assess Market Makers $1,375 per port, per month (a 10% increase from $1,250) with an SQF Fee Cap of $46,200 per month (a 10% increase from $42,000). With this proposal, Phlx would assess Market Makers $550 per port, per month for each of the first 5 SQF Purge Ports (a 10% increase from $500) and $110 per port, per month for each port thereafter (a 10% increase from $100).7 The proposed SQF Port Fee and SQF Purge Port Fee increases would enable the Exchange to maintain and improve its market technology and services to remain competitive with its peers. Over the years, customer demand for risk protections and capacity has increased. The Exchange continues to invest in maintaining, improving, and enhancing 5 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). 6 An active port shall mean that the port was utilized to submit a quote to the System during a given month. See Options 7, Section 9, B. Today, Market Makers are not assessed an active SQF Port Fee for additional ports acquired for ten business days for the purpose of transitioning technology. The member organization is required to provide the Exchange with written notification of the transition and all additional ports, provided at no cost, will be removed at the end of the ten business days. See Options 7, Section 9, B. 7 Phlx proposes to add commas between per port and per month on the Pricing Schedule for the SQF Purge Port Fee. PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 its port protocols like SQF Ports and SQF Purge Ports—for the benefit and often at the behest of its customers. Such enhancements include refreshing hardware, upgrading risk protections and information security, and offering customers additional capacity. Nevertheless, the Exchange has not increased Phlx’s SQF Port Fee since 2015,8 has not increased its SQF Purge Port Fee since 2016,9 and has not increased its SQF Fee Cap since 2014,10 where inflation has been roughly 12.10%, 10.40% and 12.40%, respectively, as measured using the metric described below. As such, the Exchange proposes to increase its SQF Port Fee by 10%, with respect to inflation that has occurred since 2015, its SQF Purge Port Fee by 10%, with respect to inflation that has occurred since 2016, and its SQF Fee Cap by 10%, with respect to inflation that has occurred since 2014, so as to align with the foregoing fee increases. As discussed below, the Exchange proposes to adjust its pricing by an industry- and product-specific inflationary measure. It is reasonable and consistent with the Act for the Exchange to recoup its investments, at least in part, by adjusting its pricing. Continuing to operate at pricing frozen at 2014, 2015 and 2016 levels, respectively, impacts the Exchange’s ability to enhance its offerings and the interests of market participants and investors. The pricing increases the Exchange proposes are based on an industryspecific Producer Price Index (‘‘PPI’’), which is a tailored measure of inflation.11 As a general matter, the Producer Price Index is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPI measures price change from the perspective of the seller. This contrasts with other metrics, such as the Consumer Price Index (‘‘CPI’’), that measure price change from the purchaser’s perspective.12 About 10,000 PPIs for individual products and groups of products are tracked and released each month.13 PPIs are available for the output of nearly all 8 See Securities Exchange Act Release No. 74833 (April 29, 2015), 80 FR 25749 (May 5, 2015) (SRPhlx–2015-36). 9 See Securities Exchange Act Release No. 77613 (April 13, 2016), 81 FR 23023 (April 19, 2016) (SRPhlx–2016-45). 10 See Securities Exchange Act Release No. 73687 (November 25, 2014), 79 FR 71485 (December 2, 2014) (SR-Phlx–2014-73). 11 See https://fred.stlouisfed.org/seriesBeta/ PCU51825182#0. 12 See https://www.bls.gov/ppi/overview.htm. 13 See id. E:\FR\FM\23DEN1.SGM 23DEN1 khammond on DSK9W7S144PROD with NOTICES Federal Register / Vol. 89, No. 246 / Monday, December 23, 2024 / Notices industries in the goods-producing sectors of the U.S. economy—mining, manufacturing, agriculture, fishing, and forestry—as well as natural gas, electricity, and construction, among others. The PPI program covers approximately 69 percent of the service sector’s output, as measured by revenue reported in the 2017 Economic Census. For purposes of this proposal, the relevant industry-specific PPI is the Data Processing and Related Services PPI (‘‘Data PPI’’), which is an industry net-output PPI that measures the average change in selling prices received by companies that provide data processing services. The Data PPI industry was introduced in January 2002 by the Bureau of Labor Statistics (‘‘BLS’’) as part of an ongoing effort to expand Producer Price Index coverage of the services sector of the U.S. economy and is identified as NAICS—518210 in the North American Industry Classification System.14 According to the BLS ‘‘[t]he primary output of NAICS 518210 is the provision of electronic data processing services. In the broadest sense, computer services companies help their customers efficiently use technology. The processing services market consists of vendors who use their own computer systems—often utilizing proprietary software—to process customers’ transactions and data. Companies that offer processing services collect, organize, and store a customer’s transactions and other data for recordkeeping purposes. Price movements for the NAICS 518210 index are based on changes in the revenue received by companies that provide data processing services. Each month, companies provide net transaction prices for a specified service. The transaction is an actual contract selected by probability, where the price-determining characteristics are held constant while the service is repriced. The prices used in index calculation are the actual prices billed for the selected service contract.’’ 15 The Exchange believes the Data PPI is an appropriate measure to be considered in the context of the proposed pricing changes because the Exchange uses its ‘‘own computer systems’’ and ‘‘proprietary software,’’ i.e., its own data center and proprietary matching engine software, respectively, to collect, organize, store and report customers’ transactions in U.S. options securities 14 NAICS appears in table 5 of the PPI Detailed Report and is available at https://data.bls.gov/ timeseries/PCU518210518210. 15 See https://www.bls.gov/ppi/factsheets/ producer-price-index-for-the-data-processing-andrelated-servicesindustry-naics-518210.htm. VerDate Sep<11>2014 17:03 Dec 20, 2024 Jkt 265001 on the Exchange’s proprietary trading platform. In other words, the Exchange is in the business of data processing and related services via its data center and proprietary matching engine software. For purposes of this proposed rule change, with respect to the SQF Port Fee, the Exchange examined the Data PPI value for the period from April 2015 to October 2024 (when the subject pricing was adopted). The Data PPI had a starting value of 103.800 in April 2015 and an ending value of 115.902 in October 2024, a 12.10% increase. For purposes of this proposed rule change, with respect to the SQF Purge Port Fee, the Exchange examined the Data PPI value for the period from April 2016 to October 2024(when the subject pricing was adopted). The Data PPI had a starting value of 105.500 in April 2016 and an ending value of 115.902 in October 2024, a 10.40% increase. For purposes of this proposed rule change, with respect to the SQF Fee Cap, the Exchange examined the Data PPI value for the period from November 2014 to October 2024 (when the subject pricing was adopted). The Data PPI had a starting value of 103.500 in November 2014 and an ending value of 115.902 in October 2024, a 12.40% increase. This data indicates that companies who are also in the data storage and processing business have generally increased prices for a specified service covered under NAICS 518210 by an average of 12.10%, 10.40% and 12.40%, respectively, during the periods noted above. Based on that percentage change, the Exchange proposes to make a one-time fee increase of only 10%, which reflects an increase covering roughly the entire period since the last price adjustments were made to the SQF Port Fee, the SQF Purge Port Fee, and the related SQF Fee Cap. The Exchange further believes the Data PPI is an appropriate measure for purposes of the proposed rule change on the basis that it is a stable metric with limited volatility, unlike other consumer-side inflation metrics. In fact, the Data PPI has not experienced a greater than 2.16% increase for any one calendar year period since Data PPI was introduced into the PPI in January 2002. The average calendar year change from January 2002 to December 2023 was .62%, with a cumulative increase of 15.67% over this 21-year period. The Exchange believes the Data PPI is considerably less volatile than other inflation metrics such as CPI, which has had individual calendar-year increases of more than 6.5%, and a cumulative PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 104599 increase of over 73% over the same period.16 The Exchange believes the Data PPI, and significant investments into, and enhanced performance of, the Exchange support the reasonableness of the proposed pricing increases.17 As a technical amendment, the Exchange proposes to add the words ‘‘active port’’ in parenthesis at the end of the description of the SQF Port Fee to tie the definition of an active port to the description for the port. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,18 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,19 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. This belief is based on two factors. First, the current pricing does not properly reflect the quality of the SQF Ports and SQF Purge Ports, as pricing for these port offerings have been static in nominal terms, and therefore falling in real terms due to inflation. Second, the Exchange believes that investments made in enhancing the risk protections and capacity of SQF Ports and SQF Purge Ports has increased the performance of these port offerings. The Proposed Rule Change Is Reasonable As noted above, the Exchange has not increased any of the fees included in the proposal since 2014, 2015 and 2016, respectively. However, in the years following the last fee increases, the Exchange has made significant investments in upgrades to its SQF Ports and SQF Purge Ports, enhancing the quality of its services, as measured by, among other things, increased capacity. In other words, Exchange customers have greatly benefitted, while the Exchange’s ability to recoup its investments has been hampered. Between 2014 and 2024, the inflation rate is 2.92% per year, on average, 16 See https://www.usinflationcalculator.com/. supra discussion of SQF Port and SQF Purge Port enhancements. Additionally, other exchanges have filed for increases in certain fees, based in part on comparisons to inflation. See, e.g., Securities Exchange Act Release Nos. 34–100994 (September 10, 2024), 89 FR 75612 (September 16, 2024) (SR–NYSEARCA–2024–79); and 34–101519 (November 5, 2024), 89 FR 89071 (November 12, 2024) (SR–CboeBYX–2024–039). 18 15 U.S.C. 78f(b). 19 15 U.S.C. 78f(b)(4) and (5). 17 See E:\FR\FM\23DEN1.SGM 23DEN1 khammond on DSK9W7S144PROD with NOTICES 104600 Federal Register / Vol. 89, No. 246 / Monday, December 23, 2024 / Notices producing a cumulative inflation rate of 33.34%.20 Between 2015 and 2024, the inflation rate is 3.24% per year, on average, producing a cumulative inflation rate of 33.18%.21 Also, between 2016 and 2024, the inflation rate is 3.48% per year, on average, producing a cumulative inflation rate of 31.52%.22 Using the more targeted inflation number of Data PPI, the cumulative inflation rate was 12.40% between 2014 and 2024, 12.10% between 2015 and 2024, and 10.40% between 2016 and 2024. The Exchange believes the Data PPI is a reasonable metric to base this fee increase on because it is targeted to producer-side increases in the data processing industry. Notwithstanding inflation, as noted above, the Exchange has not increased its pricing of these port fees for over eight, nine, and ten years, respectively, for the SQF Port, the SQF Purge Port, or the corresponding SQF Fee Cap. The proposed SQF Port Fee and SQF Purge Port Fee represent a modest increase from the current SQF Port Fee and SQF Purge Port Fee. Further, the proposed increase to the SQF Fee Cap aligns with the increase to the port offerings. The Exchange believes the proposed SQF Port Fee, SQF Purge Port Fee, and SQF Fee Cap increases are reasonable in light of the Exchange’s continued expenditure in maintaining a robust technology ecosystem. Furthermore, the Exchange continues to invest in maintaining and enhancing its port products—for the benefit and often at the behest of its customers and global investors. Such enhancements include refreshing several aspects of the technology ecosystem including software, hardware, and network while introducing new and innovative products. The goal of the enhancements discussed above, among other things, is to provide more modern connectivity to the match engine. Accordingly, the Exchange continues to expend resources to innovate and modernize its technology so that it may benefit its members in offering SQF Ports and SQF Purge Ports. pricing has fallen in real terms during the relevant period. The Exchange also believes that the proposed pricing increases are equitably allocated and not unfairly discriminatory because they would apply uniformly to all Market Makers that subscribe to the SQF Ports and SQF Purge Ports to quote on the Exchange. Market Makers are the only market participants that are assessed the SQF Port Fee and SQF Purge Port Fee (and subject to the related SQF Fee Cap) because they are the only market participants that are permitted to quote on the Exchange.23 These liquidity providers are critical market participants in that they are the only market participants that provide liquidity to the Exchange on a continuous basis. SQF Ports and SQF Purge Ports are only utilized in a Market Maker’s assigned options series. The Proposed Fees Are Equitably Allocated and Not Unfairly Discriminatory The Exchange believes that the proposal represents an equitable allocation of reasonable dues, fees and other charges because the Exchange Intermarket Competition The Exchange believes that the proposed pricing does not impose an undue burden on intermarket competition or on other SROs that is not necessary or appropriate. In determining the proposed pricing, the Exchange 20 See https://www.officialdata.org/us/inflation/ 2015?amount=1. 21 See https://www.officialdata.org/us/inflation/ 2015?amount=1. 22 See https://www.officialdata.org/us/inflation/ 2015?amount=1. VerDate Sep<11>2014 17:03 Dec 20, 2024 Jkt 265001 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed pricing changes will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Intra-market Competition The Exchange believes that the proposed pricing does not put any market participants at a relative disadvantage compared to other market participants. As noted above, the Exchange would apply the proposed 10% increase to the SQF Port, the SQF Purge Port fee (and related SQF Fee Cap) to all Market Makers uniformly. Market Makers are the only market participants that are assessed an SQF Port Fee and an SQF Purge Port Fee (and subject to the related SQF Fee Cap) because they are the only market participants that are permitted to quote on the Exchange.24 These liquidity providers are critical market participants in that they are the only market participants that provide liquidity to the Exchange on a continuous basis. SQF Ports and SQF Purge Ports are only utilized in a Market Maker’s assigned options series. 23 Unlike other market participants, Market Makers are subject to market making and quoting obligations. See Options 2, Sections 4 and 5. 24 Unlike other market participants, Market Makers are subject to market making and quoting obligations. See Options 2, Sections 4 and 5. PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 utilized an objective and stable metric with limited volatility. Utilizing Data PPI over a specified period of time is a reasonable means of recouping the Exchange’s investment in maintaining and enhancing its port offerings such as the SQF Ports and SQF Purge Ports. The Exchange believes utilizing Data PPI, a tailored measure of inflation, to increase the fees for the SQF Port and the SQF Purge Port (and the related SQF Fee Cap) to recoup the Exchange’s investment in maintaining and enhancing such offerings does not impose a 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 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.25 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–2024–69 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. 25 15 E:\FR\FM\23DEN1.SGM U.S.C. 78s(b)(3)(A)(ii). 23DEN1 Federal Register / Vol. 89, No. 246 / Monday, December 23, 2024 / Notices All submissions should refer to file number SR–Phlx–2024–69. 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–Phlx–2024–69 and should be submitted on or before January 13, 2025. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–30526 Filed 12–20–24; 8:45 am] BILLING CODE 8011–01–P and to allow 60 days for public comment in response to the notice. This notice complies with that requirement. SOCIAL SECURITY ADMINISTRATION To ensure consideration, comments regarding this information collection must be received on or before February 21, 2025. Rate for Assessment on Direct Payment of Fees to Representatives in 2025 Send all comments by email to oii.policy@sba.gov, Paul Van Eyl, Policy Division, Office of Investment and Innovation, Small Business Administration. (SSA). DATES: ADDRESSES: Paul Van Eyl, Policy Division, 202–798– 7537, oii.policy@sba.gov, or Curtis B. Rich, Agency Clearance Officer, 202– 205–7030, curtis.rich@sba.gov. FOR FURTHER INFORMATION CONTACT: To obtain the information needed to carry out its oversight and risk management responsibilities under the Small Business Investment Act of 1958, as amended (the Act), the SBA requires applicants to the Small Business Investment Company (SBIC) program to submit information necessary for SBA to make decisions regarding the approval or denial of an applicant for an SBIC license. SBA uses this information to assess an applicant’s ability to successfully operate an SBIC within the scope of the Act. Solicitation of Public Comments: SBA is requesting comments on (a) Whether the collection of information is necessary for the agency to properly perform its mission and functions with respect to the SBIC program; (b) whether the burden estimates are accurate; (c) whether there are ways to minimize the burden, including through the use of automated techniques or other forms of information technology; and (d) whether there are ways to enhance the quality, utility, and clarity of the information. SUPPLEMENTARY INFORMATION: OMB Control Number 3245–0063 SMALL BUSINESS ADMINISTRATION Data Collection Available for Public Comments 60-Day notice and request for comments. ACTION: The Small Business Administration (SBA) intends to request approval from the Office of Management and Budget (OMB) for a modification to the collection of information described below. The Paperwork Reduction Act (PRA) requires federal agencies to publish a notice in the Federal Register concerning each proposed collection of information before submission to OMB khammond on DSK9W7S144PROD with NOTICES SUMMARY: Title: SBIC Management Assessment Questionnaire (MAQ) and License Application. SBA Form Number: 2181 (Short Form, Long Form, and Subsequent Fund MAQ). Description of Respondents: Small Business Investment Company Applicants. Estimated Number of Respondents: 275. Estimated Annual Responses: 275. Estimated Annual Burden: 17,750. Curtis Rich, Agency Clearance Officer. [FR Doc. 2024–30519 Filed 12–20–24; 8:45 am] 26 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:03 Dec 20, 2024 BILLING CODE 8026–09–P Jkt 265001 104601 PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 [Docket No. SSA–2024–0041] AGENCY: ACTION: Social Security Administration Notice. We are announcing the assessment percentage rate under the Social Security Act (Act) is 6.3 percent for 2025. FOR FURTHER INFORMATION CONTACT: Mona B. Ahmed, Associate General Counsel for Program Law, Office of the General Counsel, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235–6401. Phone: (410) 965–0600, email Mona.Ahmed@ssa.gov. SUPPLEMENTARY INFORMATION: A claimant may appoint a qualified individual as a representative to act on their behalf in matters before the Social Security Administration (SSA). If the claimant is entitled to past-due benefits and was represented either by an attorney or by a non-attorney representative who has met certain prerequisites, the Act provides that we shall withhold up to 25 percent of the past-due benefits and use that money to pay the representative’s approved fee directly to the representative. When we pay the representative’s authorized fee directly to the representative, we must collect from that fee payment an assessment to recover the costs we incur in determining and paying representatives’ fees. The Act provides that the assessment we collect will be the lesser of two amounts: a specified dollar limit; or the amount determined by multiplying the fee we are paying by the assessment percentage rate. (Sections 206(d), 206(e), and 1631(d)(2) of the Act, 42 U.S.C. 406(d), 406(e), and 1383(d)(2).) The Act initially set the dollar limit at $75 in 2004 and provides that the limit will be adjusted annually based on changes in the cost-of-living. (Sections 206(d)(2)(A) and 1631(d)(2)(C)(ii)(I) of the Act, 42 U.S.C. 406(d)(2)(A) and 1383(d)(2)(C)(ii)(I).) The maximum dollar limit for the assessment currently is $120, as we announced in the Federal Register on October 25, 2024 (89 FR 85276). The Act requires us each year to set the assessment percentage rate at the lesser of 6.3 percent or the percentage rate necessary to achieve full recovery of the costs we incur to determine and pay SUMMARY: E:\FR\FM\23DEN1.SGM 23DEN1

Agencies

[Federal Register Volume 89, Number 246 (Monday, December 23, 2024)]
[Notices]
[Pages 104597-104601]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30526]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101941; File No. SR-Phlx-2024-69]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, 
Section 9

December 17, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 104598]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 3, 2024, 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to increase the Exchange's port pricing in 
Options 7, Section 9 for the Specialized Quote Feed (``SQF'') \3\ Ports 
and SQF Purge Ports.
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    \3\ ``Specialized Quote Feed'' or ``SQF'' is an interface that 
allows Lead Market Makers, Streaming Quote Traders (``SQTs'') and 
Remote Streaming Quote Traders (``RSQTs'') to connect, send, and 
receive messages related to quotes, Immediate-or-Cancel Orders, and 
auction responses into and from the Exchange. Features include the 
following: (1) options symbol directory messages (e.g., underlying 
and complex instruments); (2) system event messages (e.g., start of 
trading hours messages and start of opening); (3) trading action 
messages (e.g., halts and resumes); (4) execution messages; (5) 
quote messages; (6) Immediate-or-Cancel Order messages; (7) risk 
protection triggers and purge notifications; (8) opening imbalance 
messages; (9) auction notifications; and (10) auction responses. The 
SQF Purge Interface only receives and notifies of purge requests 
from the Lead Market Maker, SQT or RSQT. Lead Market Makers, SQTs 
and RSQTs may only enter interest into SQF in their assigned options 
series. Immediate-or-Cancel Orders entered into SQF are not subject 
to the Order Price Protection, the Market Order Spread Protection, 
or Size Limitation in Options 3, Section 15(a)(1), (a)(2) and 
(b)(2), respectively. See Options 3, Section 7(a)(i)(B).
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    While these amendments are effective upon filing, the Exchange has 
designated the proposed amendments to be operative on January 1, 2025.
    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.\4\
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    \4\ The Exchange initially filed this fee proposal as SR7-Phlx-
2024-55 on October 18, 2024. On December 3, 2024, the Exchange 
withdrew SR-Phlx-2024-55 and replaced it with this fee change.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The purpose of the proposed rule change is to amend Options 7, 
Section 9, B to increase the Exchange's SQF Port Fee, SQF Purge Port 
Fee and SQF Fee Cap (as defined below) by 10%.
    Options 7, Section 9, B includes the Exchange's fees that relate to 
the SQF Ports, SQF Purge Ports, and the SQF Fee Cap (as defined below) 
that Market Makers \5\ use to connect to the Exchange to send quotes. 
Today, Phlx assesses $1,250 per port, per month up to a maximum of 
$42,000 per month for an SQF Port that receives inbound quotes at any 
time within that month (``SQF Fee Cap'').\6\ Also, today, Phlx assesses 
$500 per port, per month for each of the first 5 SQF Purge Ports and 
$100 per port, per month for each port thereafter. With this proposal, 
Phlx would assess Market Makers $1,375 per port, per month (a 10% 
increase from $1,250) with an SQF Fee Cap of $46,200 per month (a 10% 
increase from $42,000). With this proposal, Phlx would assess Market 
Makers $550 per port, per month for each of the first 5 SQF Purge Ports 
(a 10% increase from $500) and $110 per port, per month for each port 
thereafter (a 10% increase from $100).\7\
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    \5\ 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).
    \6\ An active port shall mean that the port was utilized to 
submit a quote to the System during a given month. See Options 7, 
Section 9, B. Today, Market Makers are not assessed an active SQF 
Port Fee for additional ports acquired for ten business days for the 
purpose of transitioning technology. The member organization is 
required to provide the Exchange with written notification of the 
transition and all additional ports, provided at no cost, will be 
removed at the end of the ten business days. See Options 7, Section 
9, B.
    \7\ Phlx proposes to add commas between per port and per month 
on the Pricing Schedule for the SQF Purge Port Fee.
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    The proposed SQF Port Fee and SQF Purge Port Fee increases would 
enable the Exchange to maintain and improve its market technology and 
services to remain competitive with its peers. Over the years, customer 
demand for risk protections and capacity has increased. The Exchange 
continues to invest in maintaining, improving, and enhancing its port 
protocols like SQF Ports and SQF Purge Ports--for the benefit and often 
at the behest of its customers. Such enhancements include refreshing 
hardware, upgrading risk protections and information security, and 
offering customers additional capacity. Nevertheless, the Exchange has 
not increased Phlx's SQF Port Fee since 2015,\8\ has not increased its 
SQF Purge Port Fee since 2016,\9\ and has not increased its SQF Fee Cap 
since 2014,\10\ where inflation has been roughly 12.10%, 10.40% and 
12.40%, respectively, as measured using the metric described below. As 
such, the Exchange proposes to increase its SQF Port Fee by 10%, with 
respect to inflation that has occurred since 2015, its SQF Purge Port 
Fee by 10%, with respect to inflation that has occurred since 2016, and 
its SQF Fee Cap by 10%, with respect to inflation that has occurred 
since 2014, so as to align with the foregoing fee increases.
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    \8\ See Securities Exchange Act Release No. 74833 (April 29, 
2015), 80 FR 25749 (May 5, 2015) (SR-Phlx-2015-36).
    \9\ See Securities Exchange Act Release No. 77613 (April 13, 
2016), 81 FR 23023 (April 19, 2016) (SR-Phlx-2016-45).
    \10\ See Securities Exchange Act Release No. 73687 (November 25, 
2014), 79 FR 71485 (December 2, 2014) (SR-Phlx-2014-73).
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    As discussed below, the Exchange proposes to adjust its pricing by 
an industry- and product-specific inflationary measure. It is 
reasonable and consistent with the Act for the Exchange to recoup its 
investments, at least in part, by adjusting its pricing. Continuing to 
operate at pricing frozen at 2014, 2015 and 2016 levels, respectively, 
impacts the Exchange's ability to enhance its offerings and the 
interests of market participants and investors.
    The pricing increases the Exchange proposes are based on an 
industry-specific Producer Price Index (``PPI''), which is a tailored 
measure of inflation.\11\ As a general matter, the Producer Price Index 
is a family of indexes that measures the average change over time in 
selling prices received by domestic producers of goods and services. 
PPI measures price change from the perspective of the seller. This 
contrasts with other metrics, such as the Consumer Price Index 
(``CPI''), that measure price change from the purchaser's 
perspective.\12\ About 10,000 PPIs for individual products and groups 
of products are tracked and released each month.\13\ PPIs are available 
for the output of nearly all

[[Page 104599]]

industries in the goods-producing sectors of the U.S. economy--mining, 
manufacturing, agriculture, fishing, and forestry--as well as natural 
gas, electricity, and construction, among others. The PPI program 
covers approximately 69 percent of the service sector's output, as 
measured by revenue reported in the 2017 Economic Census.
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    \11\ See https://fred.stlouisfed.org/seriesBeta/PCU51825182#0.
    \12\ See https://www.bls.gov/ppi/overview.htm.
    \13\ See id.
---------------------------------------------------------------------------

    For purposes of this proposal, the relevant industry-specific PPI 
is the Data Processing and Related Services PPI (``Data PPI''), which 
is an industry net-output PPI that measures the average change in 
selling prices received by companies that provide data processing 
services.
    The Data PPI industry was introduced in January 2002 by the Bureau 
of Labor Statistics (``BLS'') as part of an ongoing effort to expand 
Producer Price Index coverage of the services sector of the U.S. 
economy and is identified as NAICS--518210 in the North American 
Industry Classification System.\14\ According to the BLS ``[t]he 
primary output of NAICS 518210 is the provision of electronic data 
processing services. In the broadest sense, computer services companies 
help their customers efficiently use technology. The processing 
services market consists of vendors who use their own computer 
systems--often utilizing proprietary software--to process customers' 
transactions and data. Companies that offer processing services 
collect, organize, and store a customer's transactions and other data 
for record-keeping purposes. Price movements for the NAICS 518210 index 
are based on changes in the revenue received by companies that provide 
data processing services. Each month, companies provide net transaction 
prices for a specified service. The transaction is an actual contract 
selected by probability, where the price-determining characteristics 
are held constant while the service is repriced. The prices used in 
index calculation are the actual prices billed for the selected service 
contract.'' \15\
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    \14\ NAICS appears in table 5 of the PPI Detailed Report and is 
available at https://data.bls.gov/timeseries/PCU518210518210.
    \15\ See https://www.bls.gov/ppi/factsheets/producer-price-index-for-the-data-processing-and-related-servicesindustry-naics-518210.htm.
---------------------------------------------------------------------------

    The Exchange believes the Data PPI is an appropriate measure to be 
considered in the context of the proposed pricing changes because the 
Exchange uses its ``own computer systems'' and ``proprietary 
software,'' i.e., its own data center and proprietary matching engine 
software, respectively, to collect, organize, store and report 
customers' transactions in U.S. options securities on the Exchange's 
proprietary trading platform. In other words, the Exchange is in the 
business of data processing and related services via its data center 
and proprietary matching engine software.
    For purposes of this proposed rule change, with respect to the SQF 
Port Fee, the Exchange examined the Data PPI value for the period from 
April 2015 to October 2024 (when the subject pricing was adopted). The 
Data PPI had a starting value of 103.800 in April 2015 and an ending 
value of 115.902 in October 2024, a 12.10% increase. For purposes of 
this proposed rule change, with respect to the SQF Purge Port Fee, the 
Exchange examined the Data PPI value for the period from April 2016 to 
October 2024(when the subject pricing was adopted). The Data PPI had a 
starting value of 105.500 in April 2016 and an ending value of 115.902 
in October 2024, a 10.40% increase. For purposes of this proposed rule 
change, with respect to the SQF Fee Cap, the Exchange examined the Data 
PPI value for the period from November 2014 to October 2024 (when the 
subject pricing was adopted). The Data PPI had a starting value of 
103.500 in November 2014 and an ending value of 115.902 in October 
2024, a 12.40% increase. This data indicates that companies who are 
also in the data storage and processing business have generally 
increased prices for a specified service covered under NAICS 518210 by 
an average of 12.10%, 10.40% and 12.40%, respectively, during the 
periods noted above. Based on that percentage change, the Exchange 
proposes to make a one-time fee increase of only 10%, which reflects an 
increase covering roughly the entire period since the last price 
adjustments were made to the SQF Port Fee, the SQF Purge Port Fee, and 
the related SQF Fee Cap.
    The Exchange further believes the Data PPI is an appropriate 
measure for purposes of the proposed rule change on the basis that it 
is a stable metric with limited volatility, unlike other consumer-side 
inflation metrics. In fact, the Data PPI has not experienced a greater 
than 2.16% increase for any one calendar year period since Data PPI was 
introduced into the PPI in January 2002. The average calendar year 
change from January 2002 to December 2023 was .62%, with a cumulative 
increase of 15.67% over this 21-year period. The Exchange believes the 
Data PPI is considerably less volatile than other inflation metrics 
such as CPI, which has had individual calendar-year increases of more 
than 6.5%, and a cumulative increase of over 73% over the same 
period.\16\
---------------------------------------------------------------------------

    \16\ See https://www.usinflationcalculator.com/.
---------------------------------------------------------------------------

    The Exchange believes the Data PPI, and significant investments 
into, and enhanced performance of, the Exchange support the 
reasonableness of the proposed pricing increases.\17\
---------------------------------------------------------------------------

    \17\ See supra discussion of SQF Port and SQF Purge Port 
enhancements. Additionally, other exchanges have filed for increases 
in certain fees, based in part on comparisons to inflation. See, 
e.g., Securities Exchange Act Release Nos. 34-100994 (September 10, 
2024), 89 FR 75612 (September 16, 2024) (SR-NYSEARCA-2024-79); and 
34-101519 (November 5, 2024), 89 FR 89071 (November 12, 2024) (SR-
CboeBYX-2024-039).
---------------------------------------------------------------------------

    As a technical amendment, the Exchange proposes to add the words 
``active port'' in parenthesis at the end of the description of the SQF 
Port Fee to tie the definition of an active port to the description for 
the port.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\18\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\19\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    This belief is based on two factors. First, the current pricing 
does not properly reflect the quality of the SQF Ports and SQF Purge 
Ports, as pricing for these port offerings have been static in nominal 
terms, and therefore falling in real terms due to inflation. Second, 
the Exchange believes that investments made in enhancing the risk 
protections and capacity of SQF Ports and SQF Purge Ports has increased 
the performance of these port offerings.
The Proposed Rule Change Is Reasonable
    As noted above, the Exchange has not increased any of the fees 
included in the proposal since 2014, 2015 and 2016, respectively. 
However, in the years following the last fee increases, the Exchange 
has made significant investments in upgrades to its SQF Ports and SQF 
Purge Ports, enhancing the quality of its services, as measured by, 
among other things, increased capacity. In other words, Exchange 
customers have greatly benefitted, while the Exchange's ability to 
recoup its investments has been hampered. Between 2014 and 2024, the 
inflation rate is 2.92% per year, on average,

[[Page 104600]]

producing a cumulative inflation rate of 33.34%.\20\ Between 2015 and 
2024, the inflation rate is 3.24% per year, on average, producing a 
cumulative inflation rate of 33.18%.\21\ Also, between 2016 and 2024, 
the inflation rate is 3.48% per year, on average, producing a 
cumulative inflation rate of 31.52%.\22\ Using the more targeted 
inflation number of Data PPI, the cumulative inflation rate was 12.40% 
between 2014 and 2024, 12.10% between 2015 and 2024, and 10.40% between 
2016 and 2024. The Exchange believes the Data PPI is a reasonable 
metric to base this fee increase on because it is targeted to producer-
side increases in the data processing industry.
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    \20\ See https://www.officialdata.org/us/inflation/2015?amount=1.
    \21\ See https://www.officialdata.org/us/inflation/2015?amount=1.
    \22\ See https://www.officialdata.org/us/inflation/2015?amount=1.
---------------------------------------------------------------------------

    Notwithstanding inflation, as noted above, the Exchange has not 
increased its pricing of these port fees for over eight, nine, and ten 
years, respectively, for the SQF Port, the SQF Purge Port, or the 
corresponding SQF Fee Cap. The proposed SQF Port Fee and SQF Purge Port 
Fee represent a modest increase from the current SQF Port Fee and SQF 
Purge Port Fee. Further, the proposed increase to the SQF Fee Cap 
aligns with the increase to the port offerings. The Exchange believes 
the proposed SQF Port Fee, SQF Purge Port Fee, and SQF Fee Cap 
increases are reasonable in light of the Exchange's continued 
expenditure in maintaining a robust technology ecosystem. Furthermore, 
the Exchange continues to invest in maintaining and enhancing its port 
products--for the benefit and often at the behest of its customers and 
global investors. Such enhancements include refreshing several aspects 
of the technology ecosystem including software, hardware, and network 
while introducing new and innovative products. The goal of the 
enhancements discussed above, among other things, is to provide more 
modern connectivity to the match engine. Accordingly, the Exchange 
continues to expend resources to innovate and modernize its technology 
so that it may benefit its members in offering SQF Ports and SQF Purge 
Ports.
The Proposed Fees Are Equitably Allocated and Not Unfairly 
Discriminatory
    The Exchange believes that the proposal represents an equitable 
allocation of reasonable dues, fees and other charges because the 
Exchange pricing has fallen in real terms during the relevant period. 
The Exchange also believes that the proposed pricing increases are 
equitably allocated and not unfairly discriminatory because they would 
apply uniformly to all Market Makers that subscribe to the SQF Ports 
and SQF Purge Ports to quote on the Exchange. Market Makers are the 
only market participants that are assessed the SQF Port Fee and SQF 
Purge Port Fee (and subject to the related SQF Fee Cap) because they 
are the only market participants that are permitted to quote on the 
Exchange.\23\ These liquidity providers are critical market 
participants in that they are the only market participants that provide 
liquidity to the Exchange on a continuous basis. SQF Ports and SQF 
Purge Ports are only utilized in a Market Maker's assigned options 
series.
---------------------------------------------------------------------------

    \23\ Unlike other market participants, Market Makers are subject 
to market making and quoting obligations. See Options 2, Sections 4 
and 5.
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed pricing changes 
will impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
Intra-market Competition
    The Exchange believes that the proposed pricing does not put any 
market participants at a relative disadvantage compared to other market 
participants. As noted above, the Exchange would apply the proposed 10% 
increase to the SQF Port, the SQF Purge Port fee (and related SQF Fee 
Cap) to all Market Makers uniformly. Market Makers are the only market 
participants that are assessed an SQF Port Fee and an SQF Purge Port 
Fee (and subject to the related SQF Fee Cap) because they are the only 
market participants that are permitted to quote on the Exchange.\24\ 
These liquidity providers are critical market participants in that they 
are the only market participants that provide liquidity to the Exchange 
on a continuous basis. SQF Ports and SQF Purge Ports are only utilized 
in a Market Maker's assigned options series.
---------------------------------------------------------------------------

    \24\ Unlike other market participants, Market Makers are subject 
to market making and quoting obligations. See Options 2, Sections 4 
and 5.
---------------------------------------------------------------------------

Intermarket Competition
    The Exchange believes that the proposed pricing does not impose an 
undue burden on intermarket competition or on other SROs that is not 
necessary or appropriate. In determining the proposed pricing, the 
Exchange utilized an objective and stable metric with limited 
volatility. Utilizing Data PPI over a specified period of time is a 
reasonable means of recouping the Exchange's investment in maintaining 
and enhancing its port offerings such as the SQF Ports and SQF Purge 
Ports. The Exchange believes utilizing Data PPI, a tailored measure of 
inflation, to increase the fees for the SQF Port and the SQF Purge Port 
(and the related SQF Fee Cap) to recoup the Exchange's investment in 
maintaining and enhancing such offerings does not impose a 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 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.\25\
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    \25\ 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-2024-69 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.


[[Page 104601]]


All submissions should refer to file number SR-Phlx-2024-69. 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-Phlx-2024-69 and should be 
submitted on or before January 13, 2025.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-30526 Filed 12-20-24; 8:45 am]
BILLING CODE 8011-01-P
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