```

[Federal Register Volume 89, Number 238 (Wednesday, December 11, 2024)]
[Notices]
[Pages 99925-99930]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29040]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101822; File No. SR-Phlx-2024-67]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
of Proposed Rule Change To Amend the Exchange's Fees for Top of PHLX 
Options (TOPO), PHLX Orders, and TOPO Plus Orders

December 5, 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 November 27, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's proprietary data fees 
for Top of PHLX Options (``TOPO''), PHLX Orders, and TOPO Plus Orders 
at Options 7, Section 10, as described further below.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the 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.
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    \3\ See Options 3, Section 23(a)(1) (``Top of PHLX Options 
(`TOPO') is a direct data feed product that includes the Exchange's 
best bid and offer price, with aggregate size, based on displayable 
order and quoting interest on Phlx and last sale information for 
trades executed on Phlx. 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. The data provided for each 
options series includes the symbols (series and underlying 
security), put or call indicator, expiration date, the strike price 
of the series, and whether the option series is available for 
trading on Phlx and identifies if the series is available for 
closing transactions only.'').
    \4\ See Options 3, Section 23(a)(1) (``PHLX Orders is a real-
time full Limit Order book data feed that provides pricing 
information for orders on the PHLX Order book for displayed order 
types as well as market participant capacity. PHLX Orders is 
currently provided as part of the TOPO Plus Orders data product. 
PHLX Orders provides real-time information to enable users to keep 
track of the single and complex order book(s). The data provided for 
each options series includes the symbols (series and underlying 
security), put or call indicator, expiration date, the strike price 
of the series, leg information on complex strategies and whether the 
option series is available for trading on Phlx and identifies if the 
series is available for closing transactions only. The feed also 
provides auction and exposure notifications and order imbalances on 
opening/reopening (size of matched contracts and size of the 
imbalance)'').
    \5\ The 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 SR-Phlx 2024-03. On 
March 20, 2024, SR-Phlx-2024-03 was withdrawn and replaced with SR-
Phlx-2024-15. On May 16, 2024, the Commission instituted proceedings 
to determine whether to approve or disapprove the proposed rule 
change. See Securities Exchange Act Release No. 100160 (May 16, 
2024), 89 FR 45036 (May 22, 2024). On November 19, 2024, SR-Phlx-
2024-15 was withdrawn and replaced with SR-Phlx-2024-60. On November 
27, 2024, SR-Phlx-2024-60 was withdrawn and replaced with the 
instant filing.
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A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Exchange's 
proprietary data fees for Top of PHLX Options (``TOPO''),\3\ PHLX 
Orders,\4\ and TOPO Plus Orders at Options 7, Section 10.\5\
Top of PHLX Options (``TOPO'')
    TOPO is a direct data feed that provides subscribers with PHLX Best 
Bid and Offer (``BBO'') \6\ and last sale information.\7\ The data 
distributed on TOPO is identical to the data simultaneously sent to the 
Options Price Reporting Authority (``OPRA'').\8\ 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.\9\ 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.
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    \6\ The Best Bid and Offer includes aggregate size information 
based on displayable order and quoting interest on the Exchange.
    \7\ See PHLX, ``Top of Phlx Options,'' available at https://
www.nasdaqtrader.com/
Micro.aspx?id=TOPO#:~:text=Top%20of%20PHLX%20Options%20(TOPO,in%20the
%20consolidated%20market%20feed.
    \8\ See 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.'').
    \9\ See, e.g., Nasdaq, ``Top of Phlx Options Interface 
Specifications, Version 3.4'' Section 4.3 available at https://www.nasdaqtrader.com/content/technicalsupport/specifications/dataproducts/topofphlx.pdf (describing the start of day options 
directory message, which lists all symbols eligible for the auction 
process).

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[[Page 99926]]

    Monthly fees for TOPO are currently $2,000 for Internal 
Distributors,\10\ $2,500 for External Distributors,\11\ $1 for a Non-
Professional Subscriber,\12\ and $40 for a Professional Subscriber.\13\ 
None of these fees have changed for over a decade, since January 
2013.\14\
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    \10\ See 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.'').
    \11\ See id.
    \12\ See 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.'').
    \13\ See 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.'').
    \14\ See Securities Exchange Act Release No. 68576 (January 3, 
2013), 78 FR 1886 (January 9, 2013) (SR-Phlx-2012-145).
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PHLX Orders
    PHLX Orders is a real-time order book feed with pricing information 
for displayed orders on the PHLX order book.\15\ 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 \16\ on the order book, including new orders and 
changes to orders resting on the PHLX book for all PHLX-listed 
options.\17\ The PHLX Orders feed includes data on the opening 
imbalance, Price Improvement XL (PIXL),\18\ and Complex Order Live 
Auction (COLA).\19\ A notification message is sent for symbols entering 
an auction.\20\ 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.\21\
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    \15\ See Options 3 (Options Trading Rules), Section 23(a)(2) 
(Data Feeds and Trade Information).
    \16\ See 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.'').
    \17\ See Nasdaq, ``PHLX Orders,'' available at https://www.nasdaqtrader.com/Micro.aspx?id=PHLXOrders.
    \18\ See 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.'').
    \19\ See Options 3, Section 14(e) (describing the process for 
the Complex Order Live Auction (``COLA'')).
    \20\ Nasdaq, ``PHLX Orders Interface Specification,'' (Version 
1.92) available at https://www.nasdaqtrader.com/content/technicalsupport/specifications/dataproducts/topoplusorders.pdf 
(describing auction notification message).
    \21\ See 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/5ba40927ac854d8c97bc92d7/5d0bd57d87d3ccca102102d7_OPRA%20Plan%20with%20Updated%20Exhibit%20A%20-%2006-19-2019.pdf (describing last sale and best bid and offer 
information disseminated by OPRA).
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    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.\22\
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    \22\ See 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).
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    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 market participant orders 
(setting aside symbols where participants have not placed 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,\23\ 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%.
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    \23\ See 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.
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    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 orders to gauge 
market sentiment in the underlying equity. For such customers, there is 
relatively little utility in the full depth feed.

[[Page 99927]]

    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.
    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.\24\
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    \24\ See Securities Exchange Act Release No. 68576 (January 3, 
2013), 78 FR 1886 (January 9, 2013) (SR-Phlx-2012-145).
---------------------------------------------------------------------------

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.\25\
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    \25\ See PHLX, TOPO Plus PHLX Orders, available at https://www.nasdaqtrader.com/Micro.aspx?id=TOPOPlusOrders.
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    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,\26\ but the other TOPO Plus Orders 
fees have not changed since January 2013.\27\
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    \26\ See Securities Exchange Act Release No. 82495 (January 12, 
2018), 83 FR 2839 (January 19, 2018) (SR-Phlx-2018-08).
    \27\ See Securities Exchange Act Release No. 68576 (January 3, 
2013), 78 FR 1886 (January 9, 2013) (SR-Phlx-2012-145).
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Usage of TOPO, PHLX Orders, and TOPO Plus Orders
    Different types of market participants purchase TOPO, PHLX Orders 
and TOPO Plus Orders, including market makers, vendors, banks, 
proprietary traders, agency brokers (brokers that route trades on 
behalf of other market participants), hedge funds, index providers and 
other firms.
    In characterizing market participants, we must be clear that firms 
use data feeds for multiple tasks. A market maker, for example, may use 
market data for order routing, or for risk analysis used in quoting in 
their assigned option series. Banks may use market data for prime 
brokerage services, proprietary trading, or risk management. Market 
data vendors do not directly use the data at all, but rather 
disseminate data to market participants that use the data for a 
multiplicity of purposes. Other firms purchase options data to assess 
the value of equity securities.\28\
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    \28\ We do not include ``High Frequency Trading Firm'' as a 
distinct category because many market participants may engage in low 
latency trading strategies to some degree, but the Exchange does not 
have sufficient information to be able to characterize any 
particular firm as a high frequency trader.
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    Characterizing firms based on what we understand to be their 
primary market activity, and understanding that firms play multiple 
roles, we estimate that approximately half of the customers that take 
top of book data in any form, in combination with other products or 
alone, are market makers, and the remaining half are market data 
vendors, banks, proprietary traders, agency brokers, hedge funds, index 
providers, and others. Roughly the same distribution applies to 
customers that purchase PHLX Orders, whether alone or in combination 
with other products. Although the distributions are roughly similar, 
different customers are purchasing different products in different 
combinations.
    As explained above, firms generally purchase PHLX Orders rather 
than depth of book data to lower technology costs and reduce processing 
time, while still providing customers insight into open executable 
orders that could impact the BBO.
    A more specific explanation of how TOPO, PHLX Orders and TOPO Plus 
Orders is used will vary based on use case, with many firms employing 
multiple use cases. Market makers, banks, hedge funds, and proprietary 
traders often use top of book and orders feeds for trading, order 
routing and analysis. Banks may use market data for prime brokerage 
services, proprietary trading, or risk management. The clients of 
market data vendors will utilize the data for many different purposes. 
We do not have sufficient visibility into our customers' businesses and 
proprietary processes to be able to determine precise data usage by 
customer category.
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 Non-Professional 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.
    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.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\29\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\30\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \29\ 15 U.S.C. 78f(b).
    \30\ 15 U.S.C. 78f(b)(4) and (5).
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    The proposal provides for the equitable allocation of reasonable 
dues, fees and other charges because the proposed fees are comparable 
to, and in some cases less than, those of similarly situated exchanges.
    The proposal is not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers because: (i) it is not 
unfair discrimination to charge external distributors more for the 
product because external distributors receive additional value not 
available to internal distributors by disseminating information 
externally and typically charging for the service; and (ii) the market 
data feeds subject to the proposed fee will be available to

[[Page 99928]]

customers on a non-discriminatory basis.
Equitable Allocation of Reasonable Dues, Fees and Other Charges
    The Exchange assesses the market share for each of the eighteen 
options markets utilizing total options contracts traded in 2024 
through October 28, 2024, as set forth in the following graph: \31\
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    \31\ Market share is the percentage of volume on a particular 
exchange relative to the total volume across all exchanges, and 
indicates the amount of order flow directed to that exchange. High 
levels of market share enhance the value of trading and ports. Total 
contracts include both multi-list options and proprietary options 
products. Proprietary options products are products with 
intellectual property rights that are not multi-listed. BX does not 
list proprietary products.
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Figure 1
[GRAPHIC] [TIFF OMITTED] TN11DE24.030

    The proposed fees for Top of PHLX Options are comparable to those 
charged by Miami International Securities Exchange, LLC (``MIAX''), 
MIAX Emerald (for both internal and external distribution) and Cboe 
Exchange, Inc. (``Cboe'') (for external distribution), as summarized in 
Table 1:

                                                     Table 1
----------------------------------------------------------------------------------------------------------------
                                                                      Monthly fees (top of book)
                 Exchange                    Market  -----------------------------------------------------------
                                            share %       Internal distribution         External distribution
----------------------------------------------------------------------------------------------------------------
PHLX.....................................        9.1  $2,500......................  $3,000.
MIAX.....................................        5.7  $4,000......................  $6,000
                                                      ($2,000 for simple orders;    ($3,000 for simple orders;
                                                       $2,000 for complex orders).   $3,000 for complex orders).
MIAX Emerald.............................        3.6  $2,500......................  $3,500.
                                                      ($1,250 for simple orders;    ($1,750 for simple orders;
                                                       $1,250 for complex orders).   $1,750 for complex orders).
Cboe.....................................       17.9  N/A.........................  $8,000.
                                                      (fee is part of a package of  ($5,000 for simple orders;
                                                       multiple products).           $3,000 for complex orders).
----------------------------------------------------------------------------------------------------------------

    A more detailed discussion of the comparison follows.
MIAX
    MIAX, with a market share of approximately 5.7%, provides less 
information in its top of book feeds than PHLX, yet charges more for 
those feeds than the PHLX proposal.
    MIAX charges different fees for internal distribution of its simple 
and complex top of book feeds: $2,000 for its Top of Market feed, and 
another $2,000 for its complex Top of Market feed, for a total of 
$4,000.\32\ PHLX TOPO includes both simple and complex orders in a 
single feed, and therefore the proposed fee of $2,500 for internal 
distribution is much less than the $4,000 charged by MIAX for less 
information.
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    \32\ See MIAX Options Exchange Fee Schedule (October 1, 2024), 
available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Options_Fee_Schedule_10012024.pdf.
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    For external distribution, MIAX charges $3,000 for Top of Market 
feed, and another $3,000 for its complex top

[[Page 99929]]

of market feed,\33\ for a total of $6,000. The proposed fees of $3,000 
for the PHLX TOPO feed, which includes both simple and complex orders, 
is far less than the fees charged by MIAX for less information.
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    \33\ See id.
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MIAX Emerald
    The same analysis applies to MIAX Emerald, with a market share of 
3.6%. Similar to MIAX, MIAX Emerald charges different fees for simple 
and complex top of book feeds: $1,250 for internal distribution of its 
Top of Market feed, and another $1,250 for internal distribution of its 
Complex Top of Market feed, for a total of $2,500.\34\ This is the same 
amount proposed for TOPO internal distribution, for less information.
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    \34\ See MIAX Emerald Options Schedule (December 8, 2022), 
available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Emerald_Fee_Schedule_12082022c.pdf.
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    MIAX Emerald charges $1,750 for external distribution of its Top of 
Market feed, and another $1,750 for external distribution of its 
complex Top of Market feed, for a total of $3,500.\35\ MIAX Emerald 
therefore charges more than PHLX's proposed monthly charges of $3,000 
for external distribution of TOPO, notwithstanding the fact that MIAX 
Emerald provides less market information.
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    \35\ See id.
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    This supports the proposition that the proposed PHLX fees are 
comparable to those of other exchanges and therefore reasonable.
Cboe
    Cboe has an approximately 17.9% market share, nearly twice the PHLX 
market share of 9.1%.\36\
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    \36\ See Nasdaq, Options Market Statistics (Last updated 
November 3, 2023), available at https://www.nasdaqtrader.com/Trader.aspx?id=OptionsVolumeSummary.
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    The Cboe fee for external distribution of the top of book feed is 
$5,000 per month.\37\ If a customer also wants Cboe's Complex Order 
Book (``COB''), the customer would pay an additional $3,000.\38\ These 
fees are comparable to the proposed PHLX fee of $3,000 per month for 
external distribution of a combined simple and complex orders feed 
because the higher fee for Cboe reflects the higher market share of the 
Cboe exchange.
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    \37\ See id.
    \38\ As explained in note 32, Cboe waives its Complex Order Book 
feed for internal distribution of top of book and depth, but not for 
external distribution of top of book.
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PHLX Orders
    The proposed fees for PHLX Orders are comparable to the fees 
charged by MIAX, MIAX Emerald, and Nasdaq ISE, LLC (``ISE''), an 
affiliate of PHLX, as set forth in Table 2 below.

                                                     Table 2
----------------------------------------------------------------------------------------------------------------
                                                                         Monthly fees (orders)
                 Exchange                    Market  -----------------------------------------------------------
                                            share %       Internal distribution         External distribution
----------------------------------------------------------------------------------------------------------------
PHLX.....................................        9.1  $3,500......................  $4,000.
MIAX.....................................        5.7  3,000.......................  $3,500.
MIAX Emerald.............................        3.6  3,000.......................  $3,500.
ISE......................................        6.2  3,000.......................  $3,000 per month plus $20
                                                                                     per month per controlled
                                                                                     device.
----------------------------------------------------------------------------------------------------------------

MIAX
    MIAX has a market share of approximately 5.7%, somewhat more than 
half of PHLX's market share of 9.1%.
    MIAX charges $3,000 for internal distribution of its orders 
feed.\39\ PHLX, with a market share over 50 percent more than MIAX, 
proposes to charge $3,500 for the same service. The PHLX fee is only 
about 17% more than the MIAX fee.
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    \39\ See MIAX Options Exchange Fee Schedule (October 1, 2024), 
available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Options_Fee_Schedule_10012024.pdf.
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    MIAX charges $3,500 for external distribution of its orders 
feed.\40\ PHLX, with a market share over 50 percent more than MIAX, 
proposes to charge $4,000 for the same service. The PHLX fee is only 
about 14% more than the MIAX fee.
---------------------------------------------------------------------------

    \40\ See id.
---------------------------------------------------------------------------

MIAX Emerald
    MIAX Emerald also has a market share of 3.6%, less than half of 
PHLX's market share of 9.1%.
    Like MIAX, MIAX Emerald charges $3,000 for internal distribution of 
its orders feed.\41\ PHLX, with a market share over twice that of MIAX 
Emerald, proposes to charge $3,500 for the same service. The PHLX fee 
is only about 17% more than the MIAX fee.
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    \41\ See MIAX Emerald Options Schedule (December 8, 2022), 
available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Emerald_Fee_Schedule_12082022c.pdf.
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    MIAX Emerald also charges $3,500 for external distribution of its 
orders feed.\42\ PHLX, with a market share over twice that of MIAX 
Emerald, proposes to charge $4,000 for the same service. The PHLX fee 
is only about 14% more than the MIAX Emerald fee.
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    \42\ See id.
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ISE
    ISE has a market share of approximately 6.2%, below PHLX's market 
share of 9.1%.
    ISE charges $3,000 for internal distribution of its Order Feed.\43\ 
This is comparable to the proposed PHLX Orders feed for internal 
distribution of $3,500 because PHLX has a larger share and the ISE feed 
does not include information on complex orders.
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    \43\ See Nasdaq ISE, LLC Rules, Options 7, Section 10(G) (Nasdaq 
ISE Order Feed). The ISE Order feed differs from the PHLX Orders 
feed in that it provides information only on simple orders, whereas 
the PHLX Orders feed provides information on both simple and complex 
orders.
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    For external distribution, ISE charges $3000 per month, plus an 
additional $20 per month for each controlled device, up to a maximum 
fee of $5,000 per month.\44\ This is comparable to the proposed PHLX 
fee of $4,000 (the ISE fee may be above or below the PHLX fee, 
depending on the number of controlled devices) and the proposed fee is 
reasonable given PHLX's larger market share.
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    \44\ See id.
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TOPO Plus Orders
    The separate fees for TOPO and PHLX Orders are each reasonable 
because, as shown above, they are comparable to other SRO fees. The 
TOPO Plus Orders product offers a discount for the purchase of these 
two separate feeds together. A discount from fees that have already 
been shown to be reasonable is

[[Page 99930]]

reasonable and consistent with the Exchange Act.
    In summary, (i) the proposed fees for Top of PHLX Options are 
comparable to those of MIAX, MIAX Emerald and Cboe; (ii) the proposed 
fees for PHLX Orders are comparable to those of MIAX, MIAX Emerald, and 
ISE; and (iii) the proposed PHLX TOPO Plus Orders fees offer a discount 
from the amount the customer would pay for TOPO and Orders separately, 
and, because these separate fees are comparable to those charged by 
other exchanges, the proposed discount for TOPO Plus Orders is 
reasonable.
No Unfair Discrimination Between Customers, Issuers, Brokers, or 
Dealers
    The proposal is not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers because: (i) external 
distributors receive additional value not available to internal 
distributors; and (ii) these market data feeds will be available on a 
non-discriminatory basis.
    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.
    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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) by order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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-2024-67 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-2024-67. 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-2024-67 and should be 
submitted on or before December 31, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\45\
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    \45\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-29040 Filed 12-10-24; 8:45 am]
BILLING CODE 8011-01-P
```