36906 Federal Register / Vol. 87, No. 118 / Tuesday, June 21, 2022 / Notices 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) by order approve or disapprove 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2022–22 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–2022–22. 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 

Number SR–Phlx–2022–22, and should 

be submitted on or before July 12, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–13148 Filed 6–17–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95103; File No. SR–Phlx– 

2022–24] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend its Schedule of 

Credits, at Equity 7, Section 3 

June 14, 2022. 

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 June 1, 

2022, 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, 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 schedule of credits, at 

Equity 7, Section 3, 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. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

pricing schedule, at Equity 7, Section 3, 

to: (1) adopt a new $0.0025 per share 

executed credit for member 

organizations that provide nondisplayed liquidity with midpoint 

pegging of at least one million shares 

average daily value during the month; 

and (2) modify the per share executed 

credit for member organizations that 

provide non-displayed liquidity with 

midpoint pegging for all other orders 

from $0.0023 to $0.0018. 

Pursuant to Equity 7, Section 3, the 

Exchange currently provides a credit of 

$0.0023 per share executed to member 

organizations for all non-displayed 

orders with midpoint pegging that 

provide liquidity. The Exchange 

proposes to establish credit tiers for 

member organizations providing 

liquidity for non-displayed orders with 

midpoint pegging to provide an 

incentive for member organizations to 

engage in a significant amount of 

liquidity adding activity on the 

Exchange. 

The Exchange proposes establishing a 

new credit that will reward a member 

organization with a credit of $0.0025 per 

share executed to the extent that it 

provides a daily average volume of at 

least one million shares of nondisplayed liquidity with midpoint 

pegging during the month. The 

proposed new credit for non-displayed 

orders with midpoint pegging will 

provide an additional incentive to 

member organizations to add liquidity 

to the Exchange. Insofar as the proposed 

new credit will require a qualifying 

member organization to provide at least 

one million shares average daily value 

during the month in order to qualify for 

the $0.0025 per share credit, the 

Exchange believes it is reasonable for 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 118 / Tuesday, June 21, 2022 / Notices 36907 

3 15 U.S.C. 78f(b). 

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

5NetCoalition v. SEC, 615 F.3d 525, 539 (DC Cir. 

2010) (quoting Securities Exchange Act Release No. 

59039 (December 2, 2008), 73 FR 74770, 74782–83 

(December 9, 2008) (SR–NYSEArca–2006–21)). 

6Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 

(‘‘Regulation NMS Adopting Release’’). 

the amount of the proposed credit to be 

larger than the credit for other nondisplayed orders with midpoint 

pegging, which the Exchange proposes 

to modify to $0.0018. To the extent that 

the proposed new credit structure 

succeeds in increasing liquidity on the 

Exchange, the quality of the Exchange’s 

market will improve, to the benefit of all 

participants. 

In addition, the Exchange proposes 

lowering the credit to member 

organizations for all other nondisplayed orders with midpoint pegging 

that provide liquidity during the month 

from $0.0023 to $0.0018 per share 

executed. The Exchange has limited 

resources available to it to offer its 

member organizations marketimproving incentives, and it allocates 

those limited resources to those 

segments of the market where it 

perceives the need to be greatest and/or 

where it determines that the incentive is 

likely to achieve its intended objective, 

such as the proposed new credit and 

away from those that are less effective, 

such as this existing credit for midpoint 

pegged orders that add liquidity to the 

Exchange. Accordingly, the Exchange is 

reducing the amount of this credit from 

$0.0023 to $0.0018 per share executed. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,3 in general, and furthers the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,4 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among member organizations and 

issuers and other persons using any 

facility, and is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange’s proposed changes to 

its schedule of credits are reasonable in 

several respects. As a threshold matter, 

the Exchange is subject to significant 

competitive forces in the market for 

equity securities transaction services 

that constrain its pricing determinations 

in that market. The fact that this market 

is competitive has long been recognized 

by the courts. In NetCoalition v. 

Securities and Exchange Commission, 

the D.C. Circuit stated as follows: ‘‘[n]o 

one disputes that competition for order 

flow is ‘fierce.’ . . . As the SEC 

explained, ‘[i]n the U.S. national market 

system, buyers and sellers of securities, 

and the broker-dealers that act as their 

order-routing agents, have a wide range 

of choices of where to route orders for 

execution’; [and] ‘no exchange can 

afford to take its market share 

percentages for granted’ because ‘no 

exchange possesses a monopoly, 

regulatory or otherwise, in the execution 

of order flow from broker 

dealers’. . . .’’ 5

The Commission and the courts have 

repeatedly expressed their preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. In Regulation NMS, while 

adopting a series of steps to improve the 

current market model, the Commission 

highlighted the importance of market 

forces in determining prices and SRO 

revenues and, also, recognized that 

current regulation of the market system 

‘‘has been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 6

Numerous indicia demonstrate the 

competitive nature of this market. For 

example, clear substitutes to the 

Exchange exist in the market for equity 

security transaction services. The 

Exchange is only one of several equity 

venues to which market participants 

may direct their order flow. Competing 

equity exchanges offer similar tiered 

pricing structures to that of the 

Exchange, including schedules of 

rebates and fees that apply based upon 

member organizations achieving certain 

volume thresholds. 

Within this environment, market 

participants can freely and often do shift 

their order flow among the Exchange 

and competing venues in response to 

changes in their respective pricing 

schedules. As such, the proposal 

represents a reasonable attempt by the 

Exchange to increase its liquidity and 

market share relative to its competitors. 

The Exchange believes that its 

proposals are reasonable, equitable, and 

not unfairly discriminatory to: (1) 

establish a new $0.0025 per share 

executed credit for non-displayed orders 

with midpoint pegging that provide 

liquidity of at least one million shares 

average daily value during the month; 

and (2) reduce from $0.0023 to $0.0018 

per share executed its existing credit for 

all other non-displayed orders with 

midpoint pegging that provide liquidity 

to the Exchange. The Exchange assesses 

a particular need to increase liquidity 

on the Exchange as a means of 

improving market quality. The proposal 

is reasonable in serving that purpose by 

providing a new incentive for member 

organizations to add a substantial 

amount of liquidity to the Exchange, 

while reducing an existing incentive for 

member organizations that add a lesser 

amount of liquidity to the Exchange. As 

noted above, the Exchange has limited 

resources available to it to offer its 

member organizations marketimproving incentives, and it allocates 

those limited resources to those 

segments of the market where it 

perceives the need to be greatest and/or 

where it determines that the incentive is 

likely to achieve its intended objective. 

It is reasonable and equitable to address 

the need for increased liquidity on the 

Exchange by allocating its limited 

resources to establish a new credit that 

rewards member organizations that 

provide a substantial volume of 

liquidity to the Exchange and reduce an 

existing credit that rewards member 

organizations for providing a lesser 

volume of liquidity to the Exchange. 

The Exchange also believes that these 

proposals are an equitable allocation 

and not unfairly discriminatory because 

all market participants stand to benefit 

to the extent that the proposal is 

successful in increasing liquidity on the 

Exchange and improving market quality. 

Insofar as the $0.0025 credit will require 

a member organization to provide a 

daily average volume of at least one 

million shares of liquidity on the 

Exchange during the month, the 

Exchange believes it is reasonable, 

equitable, and not unfairly 

discriminatory for the amount of the 

proposed credit to be larger than the 

credit for all other non-displayed orders 

with midpoint pegging. 

Any member organization that is 

dissatisfied with the proposed credits is 

free to shift their order flow to 

competing venues that provide more 

favorable rates or less stringent 

qualifying criteria. 

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. 

Intramarket Competition 

The Exchange does not believe that its 

proposal will place any category of 

Exchange participants at a competitive 

disadvantage. As noted above, all 

member organizations of the Exchange 

will benefit from an increase in activity 

on the Exchange. Moreover, member 

organizations are free to trade on other 

venues to the extent they believe that 

the credits provided are not attractive or 


jspears on DSK121TN23PROD with NOTICES1
36908 Federal Register / Vol. 87, No. 118 / Tuesday, June 21, 2022 / Notices 

7 15 U.S.C. 78s(b)(3)(A)(ii). 8 17 CFR 200.30–3(a)(12). 

the qualifying criteria for such credits is 

too stringent. As one can observe by 

looking at any market share chart, price 

competition between exchanges is 

fierce, with liquidity and market share 

moving freely between exchanges in 

reaction to fee and credit changes. 

Intermarket Competition 

The Exchange believes that the 

proposed changes to its schedule of 

credits for non-displayed orders with 

midpoint pegging will not impose a 

burden on competition because the 

Exchange’s execution services are 

completely voluntary and subject to 

extensive competition both from the 

other live exchanges and from offexchange venues, which include 

alternative trading systems that trade 

national market system stock. The 

Exchange notes that it operates in a 

highly competitive market in which 

market participants can readily favor 

competing venues if they deem fee 

levels at a particular venue to be 

excessive, or rebate opportunities 

available at other venues to be more 

favorable. In such an environment, the 

Exchange must continually adjust its 

credits to remain competitive with other 

exchanges and with alternative trading 

systems that have been exempted from 

compliance with the statutory standards 

applicable to exchanges. Because 

competitors are free to modify their own 

credits and fees in response, and 

because market participants may readily 

adjust their order routing practices, the 

Exchange believes that the degree to 

which credit changes in this market may 

impose any burden on competition is 

extremely limited. 

The proposed changes to the 

Exchange’s credits for non-displayed 

orders with midpoint pegging are 

reflective of this competition because, as 

a threshold issue, the Exchange is a 

relatively small market so its ability to 

burden intermarket competition is 

limited. In this regard, even the largest 

U.S. equities exchange by volume only 

has 17–18% market share, which in 

most markets could hardly be 

categorized as having enough market 

power to burden competition. Moreover, 

as noted above, price competition 

between exchanges is fierce, with 

liquidity and market share moving 

freely between exchanges in reaction to 

fee and credit changes. This is in 

addition to free flow of order flow to 

and among off-exchange venues which 

comprises more than 40% of industry 

volume in recent months. 

In sum, the Exchange intends for the 

proposed changes to credits for nondisplayed orders with midpoint pegging 

to incent member organizations to add 

liquidity to the Exchange and to thereby 

contribute to market quality, which is 

reflective of fierce competition for order 

flow noted above; however, if the 

change proposed herein is unattractive 

to market participants, it is likely that 

the Exchange will either fail to increase 

its market share or even lose market 

share as a result. Accordingly, the 

Exchange does not believe that the 

proposed change will impair the ability 

of member organizations or competing 

order execution venues to maintain 

their competitive standing in the 

financial markets. 

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.7

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2022–24 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–2022–24. 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 

Number SR–Phlx–2022–24 and should 

be submitted on or before July 12, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–13151 Filed 6–17–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–255, OMB Control 

No.3235–0305] 

Proposed Collection; Comment 

Request: Extension; Rule 13e–1 

Upon Written Request Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the collection of information 


jspears on DSK121TN23PROD with NOTICES1