44096 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

24 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘member organization’’ means a 

corporation, partnership (general or limited), 

limited liability partnership, limited liability 

company, business trust or similar organization, 

transacting business as a broker or a dealer in 

securities and which has the status of a member 

organization by virtue of (i) admission to 

membership given to it by the Membership 

Department pursuant to the provisions of General 

3, Sections 5 and 10 or the By-Laws or (ii) the 

transitional rules adopted by the Exchange pursuant 

to Section 6–4 of the By-Laws. References herein to 

officer or partner, when used in the context of a 

member organization, shall include any person 

holding a similar position in any organization other 

than a corporation or partnership that has the status 

of a member organization. See General 1, Section 

1(17). 

4Participants must record the appropriate 

account origin code on all orders at the time of 

entry of the order. The Exchange represents that it 

has surveillances in place to verify that member 

organizations mark orders with the correct account 

origin code. 

5The Exchange uses reports from OCC when 

assessing and collecting the ORF. 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File No. 

SR–ISE–2021–16, and should be 

submitted on or before September 1, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17084 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92585; File No. SR–Phlx– 

2021–39] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change to Amend Phlx’s Options 

Regulatory Fee 

August 5, 2021. 

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 July 30, 

2021, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II, 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Phlx’s Pricing Schedule at Options 7, 

Section 6, Part D related to the Options 

Regulatory Fee or ‘‘ORF’’. 

While the changes proposed herein 

are effective upon filing, the Exchange 

has designated the amendments become 

operative on October 1, 2021. 

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 

Currently, Phlx assesses an ORF of 

$0.0042 per contract side as specified in 

Phlx’s Pricing Schedule at Options 7, 

Section 6, Part D. The Exchange 

proposes to waive its ORF from October 

1, 2021 to January 31, 2022, and then 

recommence the ORF on February 1, 

2022. 

By way of background, the options 

industry has experienced extremely 

high options trading volumes and 

volatility. This historical anomaly of 

persistent increased options volumes 

has impacted Phlx’s ORF collection 

which, in turn, has caused the Exchange 

to continue to revisit its financial 

forecast to reflect the sustained elevated 

options volumes and volatility. As the 

Exchange continues to monitor the 

amount of revenue collected from the 

ORF to ensure that our ORF collection, 

in combination with other regulatory 

fees and fines, does not exceed 

regulatory costs, the Exchange has 

found it difficult to determine when 

volumes will return to more normal 

levels. In order to avoid iterative rule 

changes to amend its ORF, the Exchange 

believes it is prudent to instead waive 

its ORF from October 1, 2021 to January 

31, 2022, to permit the Exchange to plan 

future forecasts without the need to 

account for any ORF collection during 

that timeframe. This proposal would 

ensure that revenue collected from the 

ORF, in combination with other 

regulatory fees and fines, would not 

exceed the Exchange’s total regulatory 

costs. Phlx would recommence 

assessing its current ORF rate of $0.0042 

per contract side as of February 1, 2022. 

Furthermore, prior to February 1, 2022, 

Phlx will examine its ORF rate to 

determine if the $0.0042 per contract 

side ORF is justified given the current 

volumes in 2022 as well as the current 

Exchange regulatory expenses at that 

time. Phlx would file a proposed rule 

change to amend its per contract ORF if 

changes are necessary to ensure an 

equitable allocation of reasonable ORF, 

if e.g., the Exchange believes that the 

volumes Phlx experiences in the second 

half of 2021 are likely to persist 

throughout 2022. Of note, Phlx proposes 

to continue to operate with the ORF fee 

waived in January 2022 to allow its 

member organizations and other broker 

dealers time to align their systems for 

February 1, 2022, allowing for time after 

the holiday period which traditionally 

have year-end code freezes in place. 

Collection of ORF 

Currently, Phlx assesses its ORF for 

each customer option transaction that is 

either: (1) Executed by a member 

organization 3 on Phlx; or (2) cleared by 

a Phlx member organization at The 

Options Clearing Corporation (‘‘OCC’’) 

in the customer range,4 even if the 

transaction was executed by a nonmember organization of Phlx, regardless 

of the exchange on which the 

transaction occurs.5

ORF Revenue and Monitoring of ORF 

The Exchange monitors the amount of 

revenue collected from the ORF to 

ensure that it, in combination with other 


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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 44097 

6The term ‘‘member’’ means a permit holder 

which has not been terminated in accordance with 

the By-Laws and these Rules of the Exchange. A 

member is a natural person and must be a person 

associated with a member organization. Any 

references in the rules of the Exchange to the rights 

or obligations of an associated person or person 

associated with a member organization also 

includes a member. See General 1, Section 1(16). 

7See Options Trader Alert 2021–41. 

8See data from OCC at: https://

www.businesswire.com/news/home/ 

20201202005584/en/OCC-November-2020-TotalVolume-Up-71-Percent-From-a-Year-Ago. 

9See data from OCC at: https://www.theocc.com/ 

Market-Data/Market-Data-Reports/Volume-andOpen-Interest/Volume-by-Account-Type. 

regulatory fees and fines, does not 

exceed regulatory costs. In determining 

whether an expense is considered a 

regulatory cost, the Exchange reviews 

all costs and makes determinations if 

there is a nexus between the expense 

and a regulatory function. The Exchange 

notes that fines collected by the 

Exchange in connection with a 

disciplinary matter offset ORF. 

Revenue generated from ORF, when 

combined with all of the Exchange’s 

other regulatory fees and fines, is 

designed to recover a material portion of 

the regulatory costs to the Exchange of 

the supervision and regulation of 

member 6 and member organization 

customer options business including 

performing routine surveillances, 

investigations, examinations, financial 

monitoring, and policy, rulemaking, 

interpretive, and enforcement activities. 

Regulatory costs include direct 

regulatory expenses and certain indirect 

expenses in support of the regulatory 

function. The direct expenses include 

in-house and third-party service 

provider costs to support the day-to-day 

regulatory work such as surveillances, 

investigations and examinations. The 

indirect expenses include support from 

such areas as Office of the General 

Counsel, technology, and internal audit. 

Indirect expenses are estimated to be 

approximately 42% of the total 

regulatory costs for 2021. Thus, direct 

expenses are estimated to be 

approximately 58% of total regulatory 

costs for 2021. 

The ORF is designed to recover a 

material portion of the costs to the 

Exchange of the supervision and 

regulation of its members and member 

organizations, including performing 

routine surveillances, investigations, 

examinations, financial monitoring, and 

policy, rulemaking, interpretive, and 

enforcement activities. 

Proposal 

Based on the Exchange’s most recent 

review, the Exchange proposes to waive 

ORF from October 1, 2021 to January 31, 

2022, to help ensure that revenue 

collected from the ORF, in combination 

with other regulatory fees and fines, 

does not exceed the Exchange’s total 

regulatory costs. Phlx would 

recommence assessing its current ORF 

rate of $0.0042 per contract side as of 

February 1, 2022. The Exchange issued 

an Options Trader Alert on July 2, 2021 

indicating the proposed rate change for 

October 1, 2021.7

The proposed waiver is based on 

recent options volume which has 

remained at abnormally and 

unexpectedly high levels. Options 

volume in 2021 remains significantly 

high when that volume is compared to 

2019 and 2020 options volume. For 

example, total options contract volume 

in November 2020 was 71% higher than 

the total options contract volume in 

November 2019.8 Below is industry data 

from OCC 9 which illustrates the 

significant increase in volume during 

the fourth quarter of 2020. 

Volume October 2020 November 2020 December 2020 Q4 2020 

Total ................................................................................. 633,365,184 673,660,858 753,568,354 2,060,594,396 

Customer ......................................................................... 587,707,301 630,297,252 708,037,956 1,926,042,509 

Total ADV ........................................................................ 28,789,326.55 33,683,042.90 34,253,107.00 32,196,787.44 

Customer ADV ................................................................. 26,713,968.23 31,514,862.60 32,183,543.45 30,094,414.20 


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44098 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

10 Id. 11The Exchange notes that its regulatory 

responsibilities with respect to member compliance 

with options sales practice rules have largely been 

allocated to FINRA under a 17d–2 agreement. The 

ORF is not designed to cover the cost of that options 

sales practice regulation. 

12The Exchange will provide member 

organizations with such notice at least 30 calendar 

days prior to the effective date of the change. 13The Exchange notes that in connection with 

this proposal, it provided the Commission 

confidential details regarding the Exchange’s 

projected regulatory revenue, including projected 

revenue from ORF, along with a projected 

regulatory expenses. 

14 15 U.S.C. 78f(b). 

15 15 U.S.C. 78f(b)(4). 

16 15 U.S.C. 78f(b)(5). 

Below is industry data from OCC10

which illustrates the significant increase 

in volume from January 2021 through 

March 2021. The options volume in the 

first quarter of 2021 was higher than the 

fourth quarter of 2020. Also, April and 

May 2021 volumes remain significantly 

high as compared to 2020 options 

volume in general. 

Volume January 2021 February 2021 March 2021 April 2021 May 2021 

Total ............................................. 838,339,790 823,412,827 898,653,388 711,388,828 718,368,993 

Customer ...................................... 784,399,878 782,113,450 837,247,059 667,208,963 659,913,862 

Total ADV ..................................... 44,123,146.84 43,337,517.20 39,071,886.40 33,875,658.50 35,918,449.70 

Customer ADV ............................. 41,284,204.11 41,163,865.79 36,402,046.04 31,771,855.38 32,995,693.10 

As a result of the historical anomaly 

created by these high options volumes, 

Phlx has no assurance that the 

Exchange’s final costs for 2021 will not 

differ materially from these expectations 

and prior practice, nor can the Exchange 

predict with certainty whether options 

volume will remain at the current level 

going forward. The Exchange notes 

however, that when combined with 

regulatory fees and fines, the revenue 

being generated utilizing the current 

ORF rate may result in revenue in 

excess of the Exchange’s estimated 

regulatory costs for the year. 

Particularly, as noted above, the options 

market has seen a substantial increase in 

volume in 2021 as compared to 2020, 

due in large part to the continued 

extreme volatility in the marketplace as 

a result of the COVID–19 pandemic. 

This unprecedented spike in volatility 

resulted in significantly higher volume 

than was originally projected by the 

Exchange (thereby resulting in 

substantially higher ORF revenue than 

projected). The Exchange therefore 

proposes to waive ORF from October 1, 

2021 to January 31, 2022 to ensure it 

does not exceed its regulatory costs for 

2021. Particularly, the Exchange 

believes that waiving ORF from October 

1, 2021 to January 31, 2022 and 

considering all of the Exchange’s other 

regulatory fees and fines would allow 

the Exchange to continue covering a 

material portion of its regulatory costs, 

while lessening the potential for 

generating excess revenue that may 

otherwise occur using the current rate.11

Phlx would recommence assessing its 

current ORF rate of $0.0042 per contract 

side as of February 1, 2022. Until 

October 1, 2021, the Exchange will 

continue to monitor the amount of 

revenue collected from the ORF to 

ensure that it, in combination with its 

other regulatory fees and fines, does not 

exceed regulatory costs. The Exchange 

would also continue monitoring the 

amount of revenue collected from the 

ORF when it recommences assessing 

ORF on February 1, 2022. If the 

Exchange determines regulatory 

revenues exceed regulatory costs, the 

Exchange will adjust the ORF by 

submitting a fee change filing to the 

Commission and notifying 12 its member 

organizations via an Options Trader 

Alert.13

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.14 Specifically, 

the Exchange believes the proposed rule 

change is consistent with Section 6(b)(4) 

of the Act,15 which provides that 

Exchange rules may provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

members, member organizations, and 

other persons using its facilities. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 16 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes the proposed 

fee waiver is reasonable because 

customer transactions will be subject to 

no ORF from October 1, 2021 to January 

31, 2022. Moreover, the proposed 

waiver is necessary, so the Exchange 

does not collect revenue in excess of its 

anticipated regulatory costs, in 

combination with other regulatory fees 

and fines, which is consistent with the 

Exchange’s practices. 

The Exchange designed the ORF to 

generate revenues that would be less 

than the amount of the Exchange’s 

regulatory costs to ensure that it, in 

combination with its other regulatory 

fees and fines, does not exceed 

regulatory costs, which is consistent 

with the view of the Commission that 

regulatory fees be used for regulatory 

purposes and not to support the 

Exchange’s business operations. As 

discussed above, however, after review 

of its regulatory costs and regulatory 

revenues, which includes revenues from 

ORF and other regulatory fees and fines, 

the Exchange determined that absent a 

reduction in ORF, it may be collecting 

revenue in excess of its regulatory costs. 

Indeed, the Exchange notes that when 

considering the recent options volume, 

which included an increase in customer 

options transactions, it estimates the 

ORF may generate revenues that may 

cover more than the approximated 

Exchange’s projected regulatory costs. 

As such, the Exchange believes it’s 

reasonable and appropriate to waive 

ORF from October 1, 2021 to January 31, 

2022 and recommence assessing ORF on 

February 1, 2022. 

The Exchange also believes the 

proposed fee change is equitable and 

not unfairly discriminatory as no 

member organization would be assessed 

an ORF from October 1, 2021 to January 

31, 2022. While the Exchange has 

assessed and collected ORF from 

January through September, 2021, but 

will not collect ORF, with this proposal, 

from October 2021 through January 

2022, the Exchange does not believe that 

it is unfairly discriminatory to not 

assess the ORF from October 2021 

through January 2022 because the ORF 

is designed and intended to recover a 

portion of the Exchange’s regulatory 

costs without collecting in excess of 

those costs. Unexpectedly high and 

sustained customer volume has resulted 

in higher revenues from the ORF that, 

if not suspended, will likely result in 

over-collection of ORF, which would be 

inconsistent with the Exchange’s prior 

representations and undertaking to not 

collect ORF in excess of regulatory 

expenses. Despite decreasing the 


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17 If the OCC clearing member is a Phlx member 

organization, ORF is assessed and collected on all 

cleared customer contracts (after adjustment for 

CMTA); and (2) if the OCC clearing member is not 

a Phlx member organization, ORF is collected only 

on the cleared customer contracts executed at Phlx, 

taking into account any CMTA instructions which 

may result in collecting the ORF from a nonmember organization. 

18See Securities Exchange Act Release No. 91418 

(March 26, 2021), 86 FR 17254 (April 1, 2021) (SR– 

Phlx–2021–16) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change To Amend 

Phlx’s Pricing Schedule at Options 7, Section 6, 

Part D To Reduce the Phlx Options Regulatory Fee). 

The Exchange also noted in this rule change that, 

‘‘As a result, the costs associated with 

administering the customer component of the 

Exchange’s overall regulatory program are 

materially higher than the costs associated with 

administering the non-customer component (e.g., 

member organization proprietary transactions) of its 

regulatory program. Moreover, the Exchange notes 

that it has broad regulatory responsibilities with 

respect to activities of its member organizations, 

irrespective of where their transactions take place. 

Many of the Exchange’s surveillance programs for 

customer trading activity may require the Exchange 

to look at activity across all markets, such as 

reviews related to position limit violations and 

manipulation. Indeed, the Exchange cannot 

effectively review for such conduct without looking 

at and evaluating activity regardless of where it 

transpires. In addition to its own surveillance 

programs, the Exchange also works with other SROs 

and exchanges on intermarket surveillance related 

issues. Through its participation in the Intermarket 

Surveillance Group (‘‘ISG’’) the Exchange shares 

information and coordinates inquiries and 

investigations with other exchanges designed to 

address potential intermarket manipulation and 

trading abuses. Accordingly, there is a strong nexus 

between the ORF and the Exchange’s regulatory 

activities with respect to customer trading activity 

of its member organizations.’’ See 86 FR 17256–7. 

19See Securities Exchange Act Release Nos. 

61133 (December 9, 2009), 74 FR 66715 (December 

16, 2009) (SR–Phlx–2009–100); 1529 (February 17, 

2010), 75 FR 8421 (February 24, 2010) (SR–Phlx– 

2010–17); 62619 (July 30, 2010), 75 FR 47874 

(August 9, 2010) (SR–Phlx–2010–100); 63436 

(December 6, 2010), 75 FR 77021 (December 10, 

2010) (SR–Phlx–2010–166); 65897 (December 6, 

2011), 76 FR 77277 (December 12, 2011) (SR–Phlx– 

2011–163); 66664 (March 27, 2012), 77 FR 19743 

(April 2, 2012) (SR–Phlx–2012–36); 71569 

(February 19, 2014), 79 FR 10593 (February 25, 

2014) (SR–Phlx–2014–12); 75749 (August 21, 2015), 

80 FR 52073 (August 27, 2017) (SR–Phlx–2015–71); 

77032 (February 2, 2016), 81 FR 6560 (February 8, 

2016) (SR–Phlx–2016–04); and 79751 (January 6, 

2017), 82 FR 3826 (January 12, 2017) (SR–Phlx– 

2017–02); 81343 (August 8, 2017), 82 FR 37964 

(August 14, 2017) (SR–Phlx–2017–54); and 85125 

(February 13, 2019), 84 FR 5171 (February 20, 2019) 

(SR–Phlx–2019–01). 

20 Id. 

21See Securities Exchange Act Release Nos. 

85127 (February 13, 2019), 84 FR 5173 (February 

20, 2019) (SR–MRX–2019–03). 

22Of note, prior to February 1, 2019, MRX 

assessed no ORF thereby creating a calendar year 

where member organizations were assessed no ORF 

for a period similar to what is proposed. 

amount of the ORF on April 1, 2021, the 

Exchange did not decrease the amount 

of the ORF again in 2021 because it did 

not expect, based on its prior 

experience, that customer volume 

would remain abnormally high. Also, it 

is equitable and not unfairly 

discriminatory to recommence the 

assessment of the ORF on February 1, 

2022 because assessing the ORF to each 

member organization for options 

transactions cleared by OCC in the 

customer range where the execution 

occurs on another exchange and is 

cleared by aa Phlx member organization 

is an equitable allocation of reasonable 

dues, fees, and other charges among its 

members and issuers and other persons 

using its facilities.17

The Exchange believes recommencing 

the ORF on February 1, 2022 at the same 

rate, unless options volumes at that time 

warrant a proposed rule change, 

continues to ensure fairness by 

assessing higher fees to those member 

organizations that require more 

Exchange regulatory services based on 

the amount of customer options 

business they conduct. As noted in prior 

ORF rule changes which set the current 

ORF rate of $0.0042 per contract side, 

regulating customer trading activity is 

much more labor intensive and requires 

greater expenditure of human and 

technical resources than regulating noncustomer trading activity, which tends 

to be more automated and less laborintensive. For example, there are costs 

associated with main office and branch 

office examinations (e.g., staff 

expenses), as well as investigations into 

customer complaints and the 

terminations of registered persons.18

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. The 

Exchange does not believe that this 

proposal creates an unnecessary or 

inappropriate intra-market or intermarket burden on competition for 

several reasons. First, ORF has been 

amended several times since its 

inception in 2009.19 For example, most 

recently on April 1, 2021, Phlx amended 

its ORF rate from $0.0050 to $0.0042 per 

contract side as of April 1, 2021. 

Member organizations who either 

executed a transaction on Phlx or 

cleared a transaction at OCC in the 

customer range would have been 

assessed a higher ORF for a transaction 

executed on Phlx on March 31, 2021 

($0.0050 per contract side) as compared 

to April 1, 2021 ($0.0042 per contract 

side). There have been other ORF 

amendments prior to 2021 which have 

caused Phlx to assess different ORF 

rates to member organizations for 

different time periods causing member 

organizations to have paid different 

ORFs since 2009. Second, Phlx’s 

regulatory costs have varied over time. 

For example, if Phlx received payment 

of a fine from a disciplinary action, that 

fine would offset regulatory costs and 

would cause Phlx to require less 

regulatory revenue for a particular 

period. The changing regulatory costs 

would impact the ORF assessed by Phlx 

to member organizations. In the past, 

the Exchange has amended ORF to be 

higher or lower,20 thereby impacting the 

amount paid by member organizations 

in a calendar year. Third, options 

markets assess ORF at different rates. 

For instance, today, Nasdaq MRX, LLC 

(‘‘MRX’’) assesses a lower ORF of 

$0.0004 per contract side.21 MRX has 

assessed this rate since February 1, 

2019.22 Depending on where a customer 

order is executed, a member 

organization could be assessed a much 

different ORF. For example, in the case 

where a customer order is sent to Phlx 

and routed to MRX, and a non-member 

organization cleared that transaction, 

the Phlx ORF of $0.0042 would not be 

assessed to the member organization 

who executed the transaction or cleared 

the transaction, rather the MRX rate of 

$0.0004 per contract side would be 

assessed. In that same scenario 

presuming a non-member organization 

cleared the transaction, if the customer 

order could have executed on Phlx 

instead of routing away the member 

organization would have been assessed 

the Phlx ORF of $0.0042 per contract 

side. The customer, in that instance, 

would have no knowledge of where the 

order could be executed, as the liquidity 

profile of each exchange may differ at 

that exact moment. Therefore, member 

organizations could be assessed a 

different ORF on the same day on the 

same transaction based on routing 

decisions, and in those cases the 

member organization would continue to 

benefit from the regulatory program 

available on each market and discover 

where the liquidity is available, 

irrespective of any ORF rate differentials 

across markets. 

The Exchange believes recommencing 

the ORF on February 1, 2022 at the same 

rate, unless options volumes or the 

Exchange’s regulatory expenses at that 

time warrant a proposed rule change, 

does not create an undue burden on 

competition because the ORF applies to 

all customer activity, thereby raising 

regulatory revenue to offset regulatory 

expenses. It also supplements the 

regulatory revenue derived from noncustomer activity. Recommencing the 

assessment of the current ORF does not 

create an unnecessary or inappropriate 

inter-market burden on competition 


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44100 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

23 15 U.S.C. 78s(b)(3)(A). 24 17 CFR 240.19b–4(f)(2). 25 15 U.S.C. 78s(b)(2)(B). 

26 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Capitalized terms not defined herein are defined 

in the Rules, available at http://dtcc.com/∼/media/ 

Files/Downloads/legal/rules/nscc_rules.pdf. 

4See Rule 65 (ID Net Service) and Procedure XVI 

(ID Net Service) of the Rules, supra note 3. 

because it is a regulatory fee that 

supports regulation in furtherance of the 

purposes of the Act. The Exchange is 

obligated to ensure that the amount of 

regulatory revenue collected from the 

ORF, in combination with its other 

regulatory fees and fines, does not 

exceed regulatory costs. 

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 is effective 

upon filing pursuant to Section 

19(b)(3)(A) 23 of the Act and 

subparagraph (f)(2) of Rule 19b-4 24

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 25 of the Act to 

determine whether the proposed rule 

change 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File No. SR– 

Phlx–2021–39 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 No. 

SR–Phlx–2021–39. 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 (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File No. 

SR–Phlx–2021–39, and should be 

submitted on or before September 1, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–17089 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92566; File No. SR–NSCC– 

2021–011] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing of a 

Proposed Rule Change To Remove ID 

Net Transactions From the Required 

Fund Deposit Calculations and Make 

Other Changes to the Rules 

August 5, 2021. 

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 July 27, 

2021, National Securities Clearing 

Corporation (‘‘NSCC’’) 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 clearing agency. The Commission 

is publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change consists of 

modifications to NSCC’s Rules & 

Procedures (‘‘Rules’’) to (1) remove 

transactions processed through the ID 

Net Service from the calculation of 

Members’ Required Fund Deposits to 

the Clearing Fund; (2) provide greater 

transparency regarding the status of the 

ID Net Service as a non-guaranteed 

service and how transactions processed 

through the ID Net Service are handled 

following a Member default; and (3) 

make other changes to the Rules to 

implement these proposed changes, as 

described in greater detail below.3

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, the 

clearing agency 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 

clearing agency has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

NSCC is proposing to revise its 

margining methodology to remove 

institutional delivery (‘‘ID’’) transactions 

that are processed through the ID Net 

Service from the calculation of 

Members’ Required Deposits to the 

Clearing Fund, as described in greater 

detail below.4 While ID transactions 

processed through the ID Net Service 

(‘‘ID Net Transactions’’) are netted with 

transactions that have been processed 

through NSCC’s continuous net 


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