Federal Register / Vol. 89, No. 30 / Tuesday, February 13, 2024 / Notices 10117 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The proposed changes were initially filed on 

November 16, 2023, as SR–Phlx–2023–51. On 

December 5, 2023, SR–Phlx–2023–51 was 

withdrawn and replaced with SR–Phlx–2023–57. 

On January 29, 2024, SR–Phlx–2023–57 was 

withdrawn and replaced with the instant filing to 

provide additional detail regarding the proposal. 

4The Best Bid and Offer includes aggregate size 

information based on displayable order and quoting 

interest on the Exchange. 

5See PHLX, ‘‘Top of Phlx Options,’’ available at 

https://www.nasdaqtrader.com/Micro.aspx?id=

TOPO#:∼:text=Top%20of%20PHLX%20

Options%20(TOPO,in%20the%20

consolidated%20market%20feed. 

6See Options 3 (Options Trading Rules), Section 

23(a)(1) (Data Feeds and Trade Information) (‘‘The 

data contained in the TOPO data feed is identical 

to the data simultaneously sent to the processor for 

the OPRA and subscribers of the data feed.’’). 

7See, e.g., Nasdaq, ‘‘Top of Phlx Options Interface 

Specifications, Version 3.4’’ Section 4.3 available at 

https://www.nasdaqtrader.com/content/technical

support/specifications/dataproducts/topofphlx.pdf 

(describing the start of day options directory 

message, which lists all symbols eligible for the 

auction process). 

8See Options 7, Section 10 (Proprietary Data Feed 

Fees) (Top of PHLX Options) (‘‘A ‘distributor’ of 

Nasdaq PHLX data is any entity that receives a feed 

or data file . . . directly from Nasdaq PHLX or 

indirectly through another entity and then 

distributes it either internally (within that entity) or 

externally (outside that entity). All distributors 

execute a Nasdaq PHLX distributor agreement.’’). 

9See id. 

10See id. (‘‘A Non-Professional Subscriber is a 

natural person who is neither: (i) registered or 

qualified in any capacity with the Commission, the 

Commodities Futures Trading Commission, any 

state securities agency, any securities exchange or 

association, or any commodities or futures contract 

market or association; (ii) engaged as an ‘investment 

adviser’ as that term is defined in Section 201(11) 

of the Investment Advisors Act of 1940 (whether or 

not registered or qualified under that Act); nor (iii) 

employed by a bank or other organization exempt 

from registration under federal or state securities 

laws to perform functions that would require 

registration or qualification if such functions were 

performed for an organization not so exempt. A 

Non-Professional Subscriber may only use the data 

provided for personal purposes and not for any 

commercial purpose.’’). 

11See id. (‘‘A Professional Subscriber is any 

Subscriber that is not a Non-Professional 

Subscriber. If the Nasdaq Subscriber agreement is 

signed in the name of a business or commercial 

entity, such entity would be considered a 

Professional Subscriber.’’). 

12See Securities Exchange Act Release No. 68576 

(January 3, 2013), 78 FR 1886 (January 9, 2013) (SR– 

Phlx–2012–145). 

13See Options 3 (Options Trading Rules), Section 

23(a)(2) (Data Feeds and Trade Information). 

14See Options 3 (Options Trading Rules), Section 

23(a)(2) (Data Feeds and Trade Information); 

Section 14(a)(i) (‘‘Complex Order. For purposes of 

the electronic trading of Complex Orders, a 

Complex Order is an order involving the 

simultaneous purchase and/or sale of two or more 

different options series in the same underlying 

security, priced as a net debit or credit based on the 

relative prices of the individual components, for the 

same account, for the purpose of executing a 

particular investment strategy.’’). 

15See Nasdaq, ‘‘PHLX Orders,’’ available at 

https://www.nasdaqtrader.com/Micro.aspx?id=

PHLXOrders. 

16See Options 3 (Options Trading Rules), Section 

23(a)(2); Section 13 (Price Improvement XL) (‘‘A 

member may electronically submit for execution an 

order it represents as agent on behalf of a Public 

Customer, broker-dealer, or any other entity (‘PIXL 

Order’) against principal interest or against any 

other order (except as provided in sub-paragraph 

(a)(6) below) it represents as agent (an ‘Initiating 

Order’) provided it submits the PIXL Order for 

electronic execution into the PIXL Auction 

(‘Auction’) pursuant to this Rule.’’). 

17See Options 3, Section 14(e) (describing the 

process for the Complex Order Live Auction 

(‘‘COLA’’)). 

DC 20549 or send an email to: PRA_

Mailbox@sec.gov. 

Dated: February 7, 2024. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–02856 Filed 2–12–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99491; File No. SR–Phlx– 

2024–03] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the Exchanges 

Fees for Top of PHLX Options (TOPO), 

PHLX Orders, and TOPO Plus Orders 

February 7, 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 January 

29, 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 amend the 

Exchange’s fees for Top of PHLX 

Options (TOPO), PHLX Orders, and 

TOPO Plus Orders. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s 

proprietary data fees for Top of PHLX 

Options (‘‘TOPO’’), PHLX Orders, and 

TOPO Plus Orders at Options 7, Section 

10.3

Top of PHLX Options (‘‘TOPO’’) 

TOPO is a direct data feed that 

provides subscribers with PHLX Best 

Bid and Offer (‘‘BBO’’) 4 and last sale 

information.5 The data distributed on 

TOPO is identical to the data 

simultaneously sent to the Options Price 

Reporting Authority (‘‘OPRA’’).6 The 

TOPO feed also provides administrative 

information to facilitate trading on the 

Exchange such as, for example, the list 

of symbols trading on a particular day.7

TOPO reduces the transmission and 

processing latencies for top of book 

information relative to the OPRA feed 

by avoiding the latencies generated by 

the latter in consolidating data. 

Monthly fees for TOPO are currently 

$2,000 for Internal Distributors,8 $2,500 

for External Distributors,9 $1 for a NonProfessional Subscriber,10 and $40 for a 

Professional Subscriber.11 None of these 

fees have changed for over a decade, 

since January 2013.12

PHLX Orders 

PHLX Orders is a real-time order book 

feed with pricing information for 

displayed orders on the PHLX order 

book.13 The data provided for each 

options series includes the symbols 

(series and underlying security), a put or 

call indicator, expiration date, and the 

strike price of the series. It also provides 

the real-time status of simple and 

complex orders 14 on the order book, 

including new orders and changes to 

orders resting on the PHLX book for all 

PHLX-listed options.15 The PHLX 

Orders feed includes data on the 

opening imbalance, Price Improvement 

XL (PIXL),16 and Complex Order Live 

Auction (COLA).17 A notification 


lotter on DSK11XQN23PROD with NOTICES1
10118 Federal Register / Vol. 89, No. 30 / Tuesday, February 13, 2024 / Notices 

18Nasdaq, ‘‘PHLX Orders Interface 

Specification,’’ (Version 1.92) available at https://

www.nasdaqtrader.com/content/technicalsupport/ 

specifications/dataproducts/topoplusorders.pdf 

(describing auction notification message). 

19See Limited Liability Company Agreement of 

Options Price Reporting Authority, LLC Article V, 

Section 5.2(c)(i) (January 1, 2010), available at 

https://assets.website-files.com/5ba40927

ac854d8c97bc92d7/5d0bd57d87d3ccca102102d7_

OPRA%20Plan%20with%20Updated

%20Exhibit%20A%20-%2006-19-2019.pdf 

(describing last sale and best bid and offer 

information disseminated by OPRA). 

20See Options 3 (Options Trading Rules), Section 

23(a)(3) (Data Feeds and Trade Information) (‘‘PHLX 

Depth of Market is a data product that provides: (i) 

order and quotation information for individual 

quotes and orders on the order book . . .’’) 

(emphasis added); Section 4(b) (Entry and display 

of Quotes) (identifying the market participants 

authorized to submit quotes to the Exchange). 

21See Nasdaq, ‘‘December 2023 Bandwidth 

Report,’’ available at https://view.officeapps.live.

com/op/view.aspx?src=https

%3A%2F%2Fwww.nasdaqtrader.com%2Fcontent

%2Ftechnicalsupport%2Fspecifications

%2Fdataproducts%2Fbandwidthreport

.xls&wdOrigin=BROWSELINK. 

22See Securities Exchange Act Release No. 68576 

(January 3, 2013), 78 FR 1886 (January 9, 2013) (SR– 

Phlx–2012–145). 

23See PHLX, TOPO Plus PHLX Orders, available 

at https://www.nasdaqtrader.com/Micro.aspx?id=

TOPOPlusOrders. 

24See Securities Exchange Act Release No. 82495 

(January 12, 2018), 83 FR 2839 (January 19, 2018) 

(SR–Phlx–2018–08). 

25See Securities Exchange Act Release No. 68576 

(January 3, 2013), 78 FR 1886 (January 9, 2013) (SR– 

Phlx–2012–145). 

message is sent for symbols entering an 

auction.18 PHLX Orders also furnishes 

an historical record of all simple and 

complex order message data from the 

PHLX Orders data feed. PHLX Orders 

information is not sent to OPRA.19

PHLX Orders is an alternative to 

PHLX Depth of Market. It is an 

optimized technical channel designed to 

lower technology costs, reduce 

processing time, and facilitate the 

ingestion of data while still providing 

customers insight beyond the top of 

book by viewing active buy and sell 

orders. PHLX Orders excludes 

quotations by market makers and other 

authorized entities that is included in 

PHLX Depth of Market.20

What is the utility of an orders-only 

data feed? It provides customers with 

the opportunity to reduce bandwidth 

(and therefore data processing costs) by 

several orders of magnitude relative to 

the full depth of book feed, while 

retaining a view of customer orders 

(setting aside liquidity offered by market 

makers that is not attracting orders). 

The December 2023 bandwidth report 

shows that the PHLX Depth of Market 

feed transmitted a maximum of 14.3 

billion messages per day during the 

month of December,21 while the PHLX 

Orders feed transmitted a maximum of 

53.6 million messages over the same 

period (41.5 million messages for simple 

orders, and 12.1 million messages for 

complex orders). The Exchange’s full 

depth of book feed requires the 

customer to process over 200 times 

more messages than the orders feed over 

the course of a day; replacing a depth 

of book feed with an orders feed allows 

a customer to reduce the maximum 

number of daily messages it receives by 

99.6%. 

To cite another example, the 

1millisecond bandwidth peak for PHLX 

Depth of Market was 13.96 million 

messages; the comparable number of 

messages for orders was 1.45 million 

(891 thousand for simple and 561 

thousand for complex orders). Replacing 

depth of book with orders can therefore 

reduce the number of messages 

processed at peak at the 1 millisecond 

bandwidth by nearly 90%. 

Approximately 56% of customers 

who take any data feed at all from the 

PHLX exchange take an orders feed 

(either Orders only or TOPO Plus 

Orders) without depth of book. Another 

38% of customers take both orders and 

depth feeds. The remaining 6% take 

either top of book or depth of book 

alone. 

What type of customer takes an orders 

feed in lieu of depth? In general, firms 

that only need information on actively 

trading options do so. There are a great 

number of use cases that fit this broad 

description, but, for purposes of 

illustration, the Exchange is aware of at 

least two such types of customers. 

The first is the market participant that 

does not engage in order routing. These 

are broker dealers that use third parties 

to route orders, either because the 

originating broker-dealer is not a 

member of the exchange or to save costs. 

Without the need for additional 

information to inform routing decisions, 

such customers often focus on active 

trading alone, and therefore purchase 

the orders feed. 

A second category of customers are 

those that use options data to analyze 

trends in other markets. One example of 

this type of customer is the equity trader 

that analyzes equity-based options to 

gauge market sentiment in the 

underlying equity. For such customers, 

there is relatively little utility in the full 

depth feed, given that market sentiment 

is best gauged using options that are 

being actively traded, rather than those 

that are dormant. 

As noted above, there are some 

customers that purchase both orders and 

depth. Vendors are one example of this 

type of customer. They purchase market 

data solely for resale, not for trading on 

behalf of themselves or others. Another 

example is the firm that uses orders for 

analysis and depth for order routing. As 

noted above, the orders feed can be 

useful for assessing sentiment in equity 

markets, while depth is often used in 

order routing decisions. Firms that 

engage in both functions can lower 

overall processing requirements by 

using orders for analytics and depth for 

routing. 

Purchase of PHLX Orders is optional. 

Customers can obtain all of the data 

contained in PHLX Orders from PHLX 

Depth of Market feed, and may purchase 

the latter if they do not realize the cost 

savings offered by PHLX Orders. 

PHLX Orders is a derivative product 

designed as a lower-cost alternative to a 

depth of book feed. It is not a 

complement to any other product 

offered by the Exchange or any of its 

competitors. Customers are free to 

purchase PHLX Orders or not, and can 

reject the feed for any reason, including 

the fee charged. 

Current monthly fees for PHLX Orders 

are $3,000 for Internal Distributors, 

$3,500 for External Distributors, $1 for 

a Non-Professional Subscriber, and $40 

for a Professional Subscriber. None of 

these fees have changes for over a 

decade, since January 2013.22

TOPO Plus Orders 

TOPO Plus is a direct market data 

product that offers subscribers both 

TOPO and PHLX Orders for a 

consolidated fee that is less than the 

combined fee of the two products.23

Monthly fees for TOPO Plus Orders 

are currently $4,500 for Internal 

Distributors, $5,000 for External 

Distributors, $1 for a Non-Professional 

Subscriber, and $40 for a Professional 

Subscriber. 

Internal Distributor fees for TOPO 

Plus Orders were modified in January 

2018, over five years ago,24 but the other 

TOPO Plus Orders fees have not 

changed since January 2013.25

Proposed Changes 

For TOPO, the Exchange proposes to 

increase the monthly charge for Internal 

Distributors from $2,000 to $2,500, and 

the monthly charge for External 

Distributors from $2,500 to $3,000. No 

changes are proposed for NonProfessional and Professional Subscriber 

fees. 

For PHLX Orders, the Exchange 

proposes to increase the monthly charge 

for Internal Distributors from $3,000 to 

$3,500, and the monthly charge for 

External Distributors from $3,500 to 

$4,000. No changes are proposed for 

Non-Professional and Professional 

Subscriber fees. 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 30 / Tuesday, February 13, 2024 / Notices 10119 

26 15 U.S.C. 78f(b). 

27 15 U.S.C. 78f(b)(4) and (5). 

28See OPRA Plan, list of OPRA Participant 

Exchanges, available at https://www.opraplan.com/ 

faqs. (All options exchanges are members of the 

OPRA Plan.). 

29See Securities Exchange Act Release No. 98388 

(September 14, 2023), 88 FR 64963 (September 20, 

2023) (File No. 4–443) (‘‘Joint Industry Plan; Notice 

of Filing and Immediate Effectiveness of 

Amendment to the Plan for the Purpose of 

Developing and Implementing Procedures Designed 

To Facilitate the Listing and Trading of 

Standardized Options To Add MEMX LLC as a Plan 

Sponsor’’). 

30See Nasdaq, Options Market Statistics (Last 

updated November 3, 2023), available at https://

www.nasdaqtrader.com/Trader.aspx?id=Options

VolumeSummary. On November 3, 2023, the total 

percentage of options market volume by exchange 

was as follows: ARCA: 11%; PHLX: 9%; CBOE: 9%; 

BOX: 8%; ISE: 7%; EDGX: 7%; AMEX: 7%; MIAX: 

7%; MPRL: 7%; NOM: 6%; BATS: 6%; C2: 5%; 

EMLD: 4%; MRX: 3%; GEMX: 3%; BXOP: 3%; 

MEMX: 0%. 

31See id. 

32See id. 

33See Securities Exchange Act Release No. 59039 

(December 2, 2008), 73 FR 74,770 (December 9, 

2008) (SR–NYSEArca–2006–21). 

34 Id. 

35See Limited Liability Company Agreement of 

Options Price Reporting Authority, LLC section 

5.2(c)(iii) (January 1, 2010), available at https://

assets.website-files.com/5ba40927ac854d8c97bc

92d7/5d0bd57d87d3ccca102102d7_OPRA%20Plan

%20with%20Updated%20Exhibit%20A%20- 

%2006-19-2019.pdf (‘‘OPRA Plan’’). 

36 Id. 

37 Id. 

38 Id. 

39As noted above, the TOPO feed includes 

administrative information (but not data) that is not 

provided on the OPRA feed, such as symbol 

directory messages. See Nasdaq, ‘‘Top of Phlx 

Options Interface Specifications, Version 3.4’’ 

Section 4.3 available at https://www.nasdaqtrader.

com/content/technicalsupport/specifications/data

products/topofphlx.pdf (describing the start of day 

options directory message, which lists all symbols 

eligible for the auction process). 

For TOPO Plus Orders, the Exchange 

proposes to increase the monthly charge 

for Internal Distributors from $4,500 to 

$5,500, and the monthly charge for 

External Distributors from $5,000 to 

$6,000. No changes are proposed for 

Non-Professional and Professional 

Subscriber fees. 

The proposed changes are designed to 

update data fees to reflect their current 

value, rather than their value when 

these fees were set 5 or 10 years ago. 

2. Statutory Basis 

The Exchange believes that its 

proposal 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 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 several factors. 

First, exchange fees are constrained 

because market participants can choose 

among seventeen different venues for 

options trading, and therefore no single 

venue can charge excessive fees without 

losing customers and market share. 

Second, fees for TOPO are 

constrained because the identical top of 

book data is sent to OPRA, and certain 

market participants may choose to rely 

exclusively on OPRA rather than 

purchasing the proprietary data product. 

Third, the purchase of PHLX Orders is 

optional. It is designed as a lower-cost 

alternative to depth of book, and, as 

such, is not a complement to any other 

product offered by the Exchange or any 

of its competitors. Customers may 

purchase PHLX Orders or not, and can 

reject the feed for any reason, including 

the fee charged. 

Fourth, the proposed fees are 

comparable to, and in some cases less 

than, those of similarly situated 

exchanges. 

Fifth, the current fees do not properly 

reflect the value of the underlying 

product, as fees for the products in 

question have been static in nominal 

terms, and therefore falling in real terms 

(due to inflation), while the amount of 

information transmitted in those fees 

have more than doubled in just the past 

five years, reflecting a substantial 

increase in customer value due to the 

significantly higher levels of liquidity 

currently available on the Exchange. 

Sixth, higher fees for the external 

distribution of TOPO, PHLX Orders, and 

TOPO Plus Orders are based on the 

additional value vendors receive from 

distributing data to their own customers 

and typically charging for the service. 

Customers Have A Choice in Trading 

Venue 

Customers face many choices in 

where to trade options. Until recently, 

sixteen exchanges have offered options 

trading services,28 and they are now 

being joined by a 17th member.29 Not a 

single options exchange trades more 

than 11 percent of the options market by 

volume.30 PHLX, the second largest 

options exchange by volume, only has 9 

percent of the options market.31 Only 

one of the 17 options exchanges have a 

market share over 10 percent.32 This 

broad dispersion of market share 

demonstrates that market participants 

can and do exercise choice in options 

trading venues. As the number of 

exchanges continues to grow, 

competition will become fiercer and 

customer choice will continue to 

expand. 

In light of the number of trading 

venues available to customers, the 

Exchange must price its products, 

including TOPO, PHLX Orders, and 

TOPO Plus Orders (as well as other 

products), competitively. If not, 

customers would move to other venues. 

‘‘If competitive forces are operative, the 

self-interest of the exchanges themselves 

will work powerfully to constrain 

unreasonable or unfair behavior.’’ 33

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.’’ 34

The Top of Book Data in TOPO Is Sent 

to OPRA 

The top of book data in TOPO is sent 

to OPRA; under OPRA rules, proprietary 

options information is available to 

customers that have equivalent access to 

OPRA information, and therefore is 

supplementary to the OPRA feed.35

Specifically, Section 5.2(c)(iii) of the 

OPRA Plan provides that ‘‘[a] Member 

[of the OPRA Plan] may disseminate its 

Proprietary Information,’’ provided that 

‘‘such dissemination is limited to other 

Members and to persons who also have 

equivalent access to consolidated 

Options Information disseminated by 

OPRA for the same classes or series of 

options that are included in the 

Proprietary Information. . . .’’ 36

‘‘Consolidated Options Information’’ 

refers to ‘‘consolidated Last Sale Reports 

combined with either consolidated 

Quotation Information or the BBO 

furnished by OPRA.’’ 37 Access is 

deemed to be ‘‘equivalent’’ ‘‘if both if 

both kinds of information are equally 

accessible on the same terminal or work 

station . . . .’’ 38

Any customer that purchases 

proprietary options data from the 

Exchange, including TOPO and TOPO 

Plus Orders, must also have equivalent 

access to the OPRA Plan. As noted 

above, the best bid and offer and last 

sale information available from TOPO 

and TOPO Plus Orders fees is identical 

to the information simultaneously sent 

to OPRA by the Exchange.39 OPRA 

provides NBBO and last sale 

information on options transactions. 

TOPO and TOPO Plus Orders provide 

additional administrative information 

unique to trading on the Exchange, and 

also reduce the transmission and 

processing latencies generated through 

the process of consolidating data into 


lotter on DSK11XQN23PROD with NOTICES1
10120 Federal Register / Vol. 89, No. 30 / Tuesday, February 13, 2024 / Notices 

40The bid and offer and last sale information 

provided with the TOPO Plus Orders product is 

identical to the data sent to OPRA, although the 

‘‘orders’’ component of TOPO Plus Orders is not. 

41See Nasdaq, Options Market Statistics (Last 

updated November 3, 2023), available at https://

www.nasdaqtrader.com/Trader.aspx?id=Options

VolumeSummary. 

42See, NYSE Arca Options Proprietary Market 

Data Fees (as of July 3, 2023), available at https:// 

www.nyse.com/publicdocs/nyse/data/NYSE_Arca_

Options_Proprietary_Data_Fee_Schedule.pdf. 

43See Options 7, Section 10 (Proprietary Data 

Feed Fees) (PHLX Depth Data). ARCA does not 

charge separately for top of book and depth of book. 

Although PHLX is not proposing to change fees for 

depth of book information, PHLX depth of book 

information is included here to maintain 

comparability. 

44See Cboe Data Services (CDS), Market Data 

Product Price List (updated July 1, 2023), available 

at https://cdn.cboe.com/resources/membership/US_

Market_Data_Product_Price_List.pdf. 

45See Options 7, Section 10 (Proprietary Data 

Feed Fees) (PHLX Depth Data). ARCA does not 

charge separately for top of book and depth of book. 

Although PHLX is not proposing to change fees for 

depth of book information, PHLX depth of book 

information is included here to ensure 

comparability. 

46See Securities Exchange Act Release No. 82495 

(January 12, 2018), 83 FR 2839 (January 19, 2018) 

(SR–Phlx–2018–08). 

47See Securities Exchange Act Release No. 68576 

(January 3, 2013), 78 FR 1886 (January 9, 2013) (SR– 

Phlx–2012–145). 

48Bureau of Economic Analysis, U.S. Department 

of Commerce, ‘‘Personal Consumption Expenditures 

Price Index,’’ available at https://www.bea.gov/ 

data/personal-consumption-expenditures-priceindex. 

49PHLX Data (Average Daily Message Count was 

2,979,919,551.32 in 2018, and 8,243,516,029.17 

thus far in 2023). The significant increases in data 

traffic have also required technological upgrades to 

manage the larger traffic volume and to respond to 

overall technological change in the industry. See, 

e.g., Securities Exchange Act Release No. 82495 

(January 12, 2018), 83 FR 2839 (January 19, 2018) 

(SR–Phlx–2018–08) (discussing a number of 

functional enhancements to both TOPO and PHLX 

Orders). 50Options Clearing Corporation, ‘‘Volume and 

Open Interest,’’ available at https://

www.theocc.com/market-data/market-data-reports/ 

volume-and-open-interest/volume-by-exchange. 

the OPRA feed.40 Because top of book 

and last sale information is available on 

OPRA as well as TOPO, and customers 

who purchase TOPO have equivalent 

access to the OPRA feed, certain 

customers may choose to rely on the 

OPRA feed in lieu of purchasing PHLX 

data, thereby limiting the ability of the 

Exchange from charging excessive fees 

for its TOPO and TOPO Plus Orders 

feeds. 

The Purchase of PHLX Orders Is 

Optional 

Purchase of PHLX Orders is optional. 

As explained above, customers can 

obtain all of the data contained in PHLX 

Orders from PHLX Depth of Market 

feed, and may purchase the latter if they 

do not realize the cost savings offered by 

PHLX Orders. PHLX Orders is not a 

complement to any other product 

offered by the Exchange or any of its 

competitors; customers are free to 

purchase PHLX Orders or not, and can 

reject the feed for any reason, including 

the fee charged. 

The Proposed Fees are Comparable to 

Those of Other Exchanges 

The proposed fees are comparable to, 

and in some cases less than, those of 

other similarly situated exchange fees. 

Options market statistics show that 

PHLX has a market share of 

approximately 9%. ARCA, with an 11% 

market share, and CBOE, with a 9% 

market share, are its closest 

competitors.41

To obtain top of book and depth of 

book information for internal 

distribution (including both simple and 

complex options) from ARCA, a 

customer would be required to pay an 

Access Fee of $3,000 per month, a NonDisplay fee of at least $5,000 per month 

for simple options, and a Non-Display 

fee of $1,000 for Complex Options, for 

a total of $9,000 per month.42 To obtain 

the same information from PHLX under 

the new proposal, a customer would pay 

the Internal Distributor fee of $2,500 for 

TOPO, and an Internal Distributor fee of 

$4,000 for PHLX Depth Data,43 for a 

total of $6,500 per month. 

To obtain comparable information for 

Cboe Options, a customer would be 

required to pay a combined fee of 

$9,000 per month.44 As noted above, a 

PHLX customer would pay the Internal 

Distributor fee of $2,500 for TOPO, and 

an Internal Distributor fee of $4,000 for 

PHLX Depth Data,45 for a total of $6,500 

per month. 

As such, the proposed fees are 

comparable to fees charged by industry 

peers, and therefore presumptively 

reasonable. 

Real Exchange Fees Have Fallen While 

Traffic Has Increased 

As explained above, the Internal 

Distributor fee for TOPO Plus Orders 

was increased in 2018,46 while none of 

the other fees have changed for over a 

decade, since January 2013.47 This 

means that fees for TOPO, PHLX Orders, 

and TOPO Plus Orders have fallen in 

real terms due to inflation. Using data 

generated by the Department of 

Commerce to estimate inflation in the 

market for portfolio management and 

investment services,48 inflation has 

increased prices by 63.9% since January 

2013, when most of the fees at issue 

were set, and 15.7% since January 2018, 

when internal distributor fees for TOPO 

Plus Orders were last modified. At the 

same time, the average daily message 

count of PHLX has more than doubled 

in just five years, from approximately 

3.0 billion messages per day in 2018 to 

approximately 8.2 billion messages in 

2023.49 PHLX grew in conjunction with 

options trading overall, which in the 

aggregate grew at a faster pace than 

PHLX alone. Between January 2018 and 

December 2023, options volume on 

PHLX grew by 31%, while options 

volume on all exchanges nearly 

doubled, from 467 million options to 

912 million instruments.50

Growth in options trading means 

better value for the consumer. The 

greater variety of options contracts 

traded means that customers have more 

choice. The greater number of buyers 

and sellers in the market means that 

there is more liquidity, resulting in 

tighter spreads and better consumer 

value on each trade. Greater choice and 

tighter spreads mean that the consumer 

obtains more value from options 

markets overall, which should be 

reflected in fees for exchange services, 

including market data. The proposal is 

therefore reasonable in light of the 

substantial increase in customer value 

generate by the higher levels of liquidity 

now available on the Exchange, coupled 

with the fall in real prices due to 

inflation. 

External Distributors Receive Additional 

Value 

External Distributors receive 

additional value not available to 

Internal Distributors by disseminating 

information externally and typically 

charging for the service. This additional 

value supports higher fees for external 

distribution for TOPO, PHLX Orders, 

and TOPO Plus Orders. Higher fees for 

external distribution of data are 

common throughout the industry, and 

nearly universal among exchanges. The 

difference in value between internal and 

external distribution is also reflected in 

the current fee schedule, which has 

previously been shown to be consistent 

with the Exchange Act. 

* * * * * 

In summary, the proposal represents 

an equitable allocation of reasonable 

dues, fees and other charges because: (i) 

customers have a choice in trading 

venue, and will exercise that choice and 

trade at another venue if exchange fees 

are not set competitively; (ii) the top of 

book data sent in the TOPO feed are also 

sent to OPRA, and customers have the 

option of relying on OPRA data; (iii) the 

purchase of PHLX Orders is entirely 

optional as it is a low-cost alternative to 

the PHLX Depth of Market product; (iv) 

the proposed fees are comparable to 

those of other exchanges; (v) exchange 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 30 / Tuesday, February 13, 2024 / Notices 10121 

51 15 U.S.C. 78s(b)(3)(A)(ii). 

52 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

fees have fallen in real terms while the 

amount of liquidity available on the 

exchange has increased, and (vi) 

external vendors receive additional 

value from distributing data to their 

own customers and typically charging 

for the service, and therefore charging 

higher fees for external distribution is 

fair and reasonable. 

No Unfair Discrimination 

The Proposal is not unfairly 

discriminatory. The three market data 

feeds at issue here—TOPO, PHLX 

Orders, and TOPO Plus Orders—are 

used by a variety of market participants 

for a variety of purposes. Users include 

regulators, market makers, competing 

exchanges, media, retail, academics, 

portfolio managers. Market data feeds 

will be available to members of all of 

these groups on a non-discriminatory 

basis. 

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. 

Nothing in the Proposal burdens 

inter-market competition (the 

competition among self-regulatory 

organizations) because approval of the 

Proposal does not impose any burden 

on the ability of other options exchanges 

to compete. PHLX fees are comparable 

to, and in some cases less than, those of 

other exchanges, as discussed above. 

Nothing in the Proposal burdens 

intra-market competition (the 

competition among consumers of 

exchange data) because PHLX market 

data is available to any customer under 

the same fee schedule as any other 

customer, and any market participant 

that wishes to purchase PHLX market 

data can do so on a non-discriminatory 

basis. 

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.51

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–2024–03 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–2024–03. 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–2024–03 and should be 

submitted on or before March 5, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.52

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–02861 Filed 2–12–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99488; File No. SR– 

CboeBZX–2024–007] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing of 

a Proposed Rule Change To Amend 

the Definition of Retail Order, and 

Codify Interpretations and Policies 

Regarding Permissible Uses of 

Algorithms by RMOs 

February 7, 2024. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 

25, 2024, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) filed with the 

Securities and Exchange Commission 

(the ‘‘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 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) is filing with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) a proposal to (i) 

amend the definition of ‘‘Retail Order’’ 

as defined by Exchange Rule 11.25(a)(2); 

(ii) codify proposed Interpretation and 

Policy. 01, which describes the meaning 

of the term, ‘‘retail investor,’’ as 

referenced in proposed Rule 11.25(a)(2); 

(iii) codify proposed Interpretation and 

Policy .02, which describes the meaning 

of the term, ‘‘natural person,’’ as 

referenced in proposed Rule 11.25(a)(2); 

(iv) codify proposed Interpretation and 

Policy .03, which describes acceptable 

uses of algorithms or other 

computerized methodology by Retail 

Member Organizations; and (v) codify 

proposed Interpretation and Policy .04 


lotter on DSK11XQN23PROD with NOTICES1