Federal Register / Vol. 87, No. 128 / Wednesday, July 6, 2022 / Notices 40295 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4 VOLQ a new index that measures changes in 30- 

day implied volatility of the Nasdaq-100® Index. 

See Securities Exchange Act Release No. 91781 

(May 5, 2021), 86 FR 25918 (May 11, 2021) (SR– 

Phlx–2020–41) (Notice of Filing of Amendment 

Nos. 1 and 2 and Order Granting Accelerated 

Approval of a Proposed Rule Change, as Modified 

by Amendment Nos. 1 and 2, To List and Trade 

Options on a Nasdaq-100 Volatility Index). See also 

Securities Exchange Act Release No. 93628 

(November 19, 2021), 86 FR 67555 (November 26, 

2021) (SR–Phlx–2021–56) (Order Approving a 

Proposed Rule Change To Amend Options 4A, 

Section 12 Regarding the Calculation of the Closing 

Volume Weighted Average Price for Options on the 

Nasdaq-100 Volatility Index in Certain 

Circumstances). 

5See note 3 above. 

6The term ‘‘floor transaction’’ is a transaction that 

is effected in open outcry on the Exchange’s 

Trading Floor. See Options 7, Section 1(c). 

7The term ‘‘Professional’’ applies to transactions 

for the accounts of Professionals, as defined in 

Options 1, Section 1(b)(45) means any person or 

entity that (i) is not a broker or dealer in securities, 

and (ii) places more than 390 orders in listed 

options per day on average during a calendar month 

for its own beneficial account(s). See Options 7, 

Section 1(c). 

8The term ‘‘Lead Market Maker’’ applies to 

transactions for the account of a Lead Market Maker 

(as defined in Options 2, Section 12(a)). A Lead 

Market Maker is an Exchange member who is 

registered as an options Lead Market Maker 

pursuant to Options 2, Section 12(a). An options 

Lead Market Maker includes a Remote Lead Market 

Maker which is defined as an options Lead Market 

Maker in one or more classes that does not have a 

physical presence on an Exchange floor and is 

approved by the Exchange pursuant to Options 2, 

Section 11. See Options 7, Section 1(c). The term 

‘‘Floor Lead Market Maker’’ is a member who is 

registered as an options Lead Market Maker 

pursuant to Options 2, Section 12(a) and has a 

physical presence on the Exchange’s trading floor. 

See Options 8, Section 2(a)(3). 

9The term ‘‘Market Maker’’ is defined in Options 

1, Section 1(b)(28) as a member of the Exchange 

who is registered as an options Market Maker 

pursuant to Options 2, Section 12(a). A Market 

Maker includes SQTs and RSQTs as well as Floor 

Market Makers. See Options 7, Section 1(c). The 

term ‘‘Floor Market Maker’’ is a Market Maker who 

is neither an SQT or an RSQT. A Floor Market 

Maker may provide a quote in open outcry. See 

Options 8, Section 2(a)(4). 

10The term ‘‘Broker-Dealer’’ applies to any 

transaction which is not subject to any of the other 

transaction fees applicable within a particular 

category. See Options 7, Section 1(c). 

11The term ‘‘Firm’’ applies to any transaction that 

is identified by a member or member organization 

for clearing in the Firm range at The Options 

Clearing Corporation. See Options 7, Section 1(c). 

12The term ‘‘Customer’’ applies to any 

transaction that is identified by a member or 

member organization for clearing in the Customer 

range at The Options Clearing Corporation (‘‘OCC’’) 

which is not for the account of a broker or dealer 

or for the account of a ‘‘Professional’’ (as that term 

is defined in Options 1, Section 1(b)(45)). See 

Options 7, Section 1(c). 

13The surcharge is assessed because VOLQ is a 

proprietary product and there is a license associated 

with this product. 

14 The term ‘‘Non-Customer’’ applies to 

transactions for the accounts of Lead Market 

Makers, Market Makers, Firms, Professionals, 

Broker-Dealers and JBOs. The term ‘‘Joint Back 

Office’’ or ‘‘JBO’’ applies to any transaction that is 

identified by a member or member organization for 

clearing in the Firm range at OCC and is identified 

with an origin code as a JBO. A JBO will be priced 

the same as a Broker-Dealer. A JBO participant is 

a member, member organization or non-member 

organization that maintains a JBO arrangement with 

a clearing broker-dealer (‘‘JBO Broker’’) subject to 

the requirements of Regulation T Section 220.7 of 

the Federal Reserve System as further discussed at 

Options 6D, Section 1. See Options 7, Section 1(c). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95170; File No. SR–Phlx– 

2022–27] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Adopt Pricing for 

Options on a Nasdaq-100® Volatility 

Index 

June 29, 2022. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),2 and Rule 19b–4 thereunder,3

notice is hereby given that, on June 16, 

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 Pricing Schedule at Options 

7, Section 5, Index and Singly Listed 

Options (Includes options overlying FX 

Options, equities, ETFs, ETNs, and 

indexes not listed on another exchange), 

to adopt pricing for options on a 

Nasdaq-100® Volatility Index 

(‘‘VOLQ’’).4

Additionally, the proposal amends 

Options 7, Section 2, Customer Rebate 

Program; Options 7, Section 4, Multiply 

Listed Options Fees (Includes options 

overlying equities, ETFs, ETNs and 

indexes which are Multiply Listed) 

(Excludes SPY); and Options 7, Section 

6, Other Transaction Fees. 

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 received approval to 

list index options on VOLQ.5 The 

Exchange will commence listing VOLQ 

options on June 14, 2022. At this time, 

the Exchange proposes to amend its 

Pricing Schedule at Options 7, Section 

5.A., Broad-Based Index Options, to 

adopt pricing for VOLQ Options for 

transactions executed electronically and 

on the floor.6

Additionally, the proposal amends 

Options 7, Section 2, Customer Rebate 

Program; Options 7, Section 4, Multiply 

Listed Options Fees (Includes options 

overlying equities, ETFs, ETNs and 

indexes which are Multiply Listed) 

(Excludes SPY); and Options 7, Section 

6, Other Transaction Fees. Each change 

is described below. 

The Exchange proposes to assess 

Professionals,7 Lead Market Makers,8

Market Makers,9 Broker-Dealers 10 and 

Firms 11 a $0.40 per contract fee to 

transact simple and complex VOLQ 

options electronically and on the floor. 

Customers 12 will not be assessed a 

transaction fee to transact VOLQ options 

electronically or on the floor. 

Additionally, the Exchange will 

assess a surcharge 13 of $0.10 per 

contract to Non-Customers 14 who 

transact VOLQ options, in addition to 

the transaction fees. 

The Exchange proposes to pay a 

rebate of $0.40 per contract to Lead 

Market Makers and Market Makers who 

add liquidity in VOLQ. The Exchange 

proposes to note within the rule text 

that, with respect to Section 5 of this 

Options 7 Pricing Schedule, the order 

that is received by the trading system 

first in time shall be considered an order 

adding liquidity and an order that trades 

against that order shall be considered an 

order removing liquidity. 

The Exchange also proposes to amend 

various sections of the Pricing Schedule 

to make clear that pricing for broadbased index options symbols listed 

within Options 7, Section 5.A. is 


jspears on DSK121TN23PROD with NOTICES1
40296 Federal Register / Vol. 87, No. 128 / Wednesday, July 6, 2022 / Notices 

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

16 15 U.S.C. 78f(b)(4) and (5). 

17See NetCoalition, 615 F.3d at 539 (D.C. Cir. 

2010) (quoting Securities Exchange Act Release No. 

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

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

18See Securities Exchange Act Release No. 51808 

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

(‘‘Regulation NMS Adopting Release’’). 

19See NetCoalition, 615 F.3d at 534–35; see also 

H.R. Rep. No. 94–229 at 92 (1975) (‘‘[I]t is the intent 

of the conferees that the national market system 

evolve through the interplay of competitive forces 

as unnecessary regulatory restrictions are 

removed.’’). 

20See Securities Exchange Act Release No. 59039 

(December 2, 2008), 73 FR 74770 (December 9, 

2008) (SR–NYSEArca–2006–21). 

21 Id. 

governed by the pricing within Options 

7, Section 5.A. Today, the Pricing 

Schedule makes note where options 

symbols currently listed within Options 

7, Section 5.A. (NDX, NDXP and XND) 

are excluded from pricing. For example, 

Options 7, Section 2 Customer Rebates 

are not paid on NDX, NDXP, or XND 

contracts. The Exchange proposes to 

also exclude VOLQ options from 

Customer Rebates, similar to NDX, 

NDXP, and XND. The pricing for certain 

broad-based proprietary index options, 

NDX, NDXP, and XND, and now VOLQ, 

is specified within Options 7, Section 

5.A. and other pricing within Options 7 

does not apply to these products. The 

Exchange specifically makes clear 

within Options 7, Sections 2, 4, and 6 

that the pricing within Options 7, 

Section 5.A. will govern for NDX, 

NDXP, XND and now VOLQ. 

Also, today, a member’s transacted 

options volume for broad-based options 

symbols currently listed within Options 

7, Section 5.A. (NDX, NDXP, and XND) 

may count toward certain volume 

requirements despite these symbols not 

being eligible for corresponding rebates. 

For example, NDX, NDXP, and XND 

contracts count toward the volume 

requirement to qualify for a Customer 

Rebate Tier within Options 7, Section 2, 

and continue to not be eligible for 

Customer rebates. VOLQ will also count 

toward the volume requirement to 

qualify for a Customer Rebate Tier 

within Options 7, Section 2, and not be 

eligible for Customer rebates. 

The Exchange is replacing rule text 

within Options 7 concerning NDX, 

NDXP, and XND with rule text that 

instead refers to ‘‘broad-based index 

options symbols within Options 7, 

Section 5.A.’’ which exclusively 

includes NDX, NDXP, XND and now 

VOLQ. Within Options 7, Section 4, the 

Exchange proposes to amend the title of 

the rule to state that broad-based index 

options symbols listed within Options 

7, Section 5.A are excluded in place of 

noting the exclusion by symbol within 

the table in that section. Additionally, 

the Exchange proposes to note that 

broad-based index options symbols 

listed within Options 7, Section 5.A are 

excluded from the $0.12 per contract 

surcharge assessed to Non-Customer 

electronic Complex Orders that remove 

liquidity from the Complex Order Book 

and auctions within Options 7, Section 

4. The surcharges for NDX, NDXP, XND, 

and VOLQ are noted within Options 7, 

Section 5.A. Likewise, broad-based 

index options symbols listed within 

Options 7, Section 5.A are excluded 

from the Monthly Market Maker Cap, 

Monthly Firm Fee Cap, Firm Floor 

Options Transaction Charge and BrokerDealer Floor Options Transaction 

Charge waivers, Monthly Strategy Cap, 

and Marketing Fees within Options 7, 

Section 4 and the PIXL Pricing, FLEX 

Transaction Fees and MARS pricing 

within Options 7, Section 6. Making 

clear which section of the Options 7 

Pricing Schedule governs for particular 

products will provide members and 

member organizations easy references to 

how Phlx’s pricing will be applied. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,15 in general, and furthers the 

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

of the Act,16 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. 

The proposed changes to the pricing 

schedule are reasonable in several 

respects. As a threshold matter, the 

Exchange is subject to significant 

competitive forces in the market for 

order flow, which constrains its pricing 

determinations. The fact that the market 

for order flow is competitive has long 

been recognized by the courts. In 

NetCoalition v. Securities and Exchange 

Commission, the D.C. Circuit stated, 

‘‘[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’. . . .’’ 17

The Commission and the courts have 

repeatedly expressed their preference 

for competition over regulatory 

intervention to determine 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.’’ 18

Congress directed the Commission to 

‘‘rely on ‘competition, whenever 

possible, in meeting its regulatory 

responsibilities for overseeing the SROs 

and the national market system.’ ’’ 19 As 

a result, the Commission has 

historically relied on competitive forces 

to determine whether a fee proposal is 

equitable, fair, reasonable, and not 

unreasonably or unfairly discriminatory. 

‘‘If competitive forces are operative, the 

self-interest of the exchanges themselves 

will work powerfully to constrain 

unreasonable or unfair behavior.’’ 20

Accordingly, ‘‘the existence of 

significant competition provides a 

substantial basis for finding that the 

terms of an exchange’s fee proposal are 

equitable, fair, reasonable, and not 

unreasonably or unfairly 

discriminatory.’’ 21

Proposed Pricing Is Reasonable 

The Exchange believes that it is 

reasonable to assess Professionals, Lead 

Market Makers, Market Makers, BrokerDealers and Firms a $0.40 per contract 

fee to transact simple and complex 

VOLQ options electronically and on the 

floor while assessing Customers no such 

fee. Additionally, the Exchange believes 

that it is reasonable to assess a surcharge 

of $0.10 per contract to Non-Customers 

who transact VOLQ options, in addition 

to transaction fees. Finally, the 

Exchange believes that it is reasonable 

to offer a rebate of $0.40 per contract to 

Lead Market Makers and Market Makers 

who add liquidity in VOLQ. The 

proposed pricing is reasonably designed 

because it is intended to incentivize 

market participants to transact VOLQ 

index options on the Exchange, which 

enables the Exchange to improve its 

overall competitiveness and strengthen 

its market quality for all market 

participants. 

VOLQ is subject to significant 

substitution-based competitive forces; 

market participants can substitute 

options on VOLQ for products offered 

by other exchanges, for example, the 

options on the Cboe Volatility Index®


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 128 / Wednesday, July 6, 2022 / Notices 40297 

22The VIX Index is a financial benchmark 

designed to be an up-to-the-minute market estimate 

of expected volatility of the S&P 500 Index, and is 

calculated by using the midpoint of real-time S&P 

500® Index (SPX) option bid/ask quotes. 

23The SPIKES Volatility Index is a measure of the 

expected 30-day volatility in the SPDR S&P 500 

ETF. 

24See Cboe’s Fee Schedule. Transactions fees will 

be waived for Customer orders executed in VIX 

options during GTH through December 31, 2022. 

25See Cboe’s Fee Schedule. 

26See Cboe’s Fee Schedule. 

27See Cboe’s Fee Schedule. 

28See Cboe’s Fee Schedule. The Surcharge Fees 

apply to all non-public customer transactions (i.e., 

Cboe Options and non-Trading Permit Holder 

market-maker, Clearing Trading Permit Holder, JBO 

participant, and broker-dealer), including 

professionals. 

29Taker fees for options with a premium price of 

$0.10 or less will be charged $0.05 per contract. See 

MIAX’s Options Exchange Fee Schedule. 

30See MIAX’s Options Exchange Fee Schedule. 

31The compensation pool for Incentive 1 is 

capped at a total of $40,000 per month. If more than 

four (4) Market Makers satisfy the requirements for 

Incentive 1, each Market Maker will receive a prorata share of the compensation pool based on the 

total number of Market Makers that qualify in that 

particular month. Each Market Maker that meets or 

exceeds all the requirements of Incentive 1, 

(‘‘qualifying Market Maker’’), may earn an 

additional rebate each month. Each qualifying 

Market Maker’s spread width for eligible ITM and 

OTM SPIKES options is calculated and ranked 

relative to each other qualifying Market Maker. 

Market Makers with the highest quality width 

spread (i.e., the tightest spread) are eligible for 

compensation under Incentive 2. Each qualifying 

Market Maker receives a rebate, capped at $25,000 

per Member per month, based on their relative 

ranking to each other qualifying Market Maker, with 

the top performer receiving the largest rebate 

amount and the bottom performer receiving the 

smallest rebate amount. The compensation pool 

size for Incentive 2 is generated by the market 

quality that is created by qualifying Market Makers, 

where $5,000 per basis point improvement over the 

market quality baseline, as established by MIAX, is 

contributed to fund Incentive Pool 2, which is 

capped at $100,000 per month. 

32The order that is received by the trading system 

first in time shall be considered an order adding 

liquidity and an order that trades against that order 

shall be considered an order removing liquidity. 

(‘‘VIX’’) 22 and options on the SPIKES 

Volatility Index (‘‘SPIKES®’’).23 The 

proposed fees and rebates are in line 

with those of other options markets for 

similar products. The Exchange notes 

that if the fees are not within the range 

of fees offered by competitors, the 

proposed pricing may cause market 

participants to select other substitutes to 

Phlx’s VOLQ product, so the most 

efficient price-setting strategy is to set 

prices at the same level as competing 

products. 

Today, Cboe Exchange, Inc. (‘‘Cboe’’) 

assesses Customers VIX simple order 

fees based on tiered premium price 

which ranges from $0.10 to $0.45 per 

contract and complex order fees based 

on tiered premium price which ranges 

from $0.05 to $0.45 per contract.24 A 

Clearing Trading Permit Holder 

Proprietary is assessed a VIX fee based 

on a VIX sliding scale which ranges 

from $0.25 to $0.01 per contract.25 A 

Cboe Options Market-Maker/DPM/LMM 

are assessed fees based on tiered 

premium price which ranges from $0.05 

to $0.23 per contract.26 Joint Back 

Office, Non-Trading Permit Holder 

Market Makers, and Professionals are 

assessed a VIX $0.40 per contract fee.27

VIX transactions are assessed a 

Surcharge Fee/Index License of $0.10 

($0.00 for capacity codes F and L for 

VIX transactions where the VIX 

Premium is ≤$0.10 and the related series 

has an expiration of seven (7) calendar 

days or less).28

Miami International Securities 

Exchange, LLC (‘‘MIAX’’) assesses 

SPIKE fees as follows: Priority 

Customers are assessed no fees; Market 

Makers are assessed a $0.20 per contract 

simple/complex taker fee and a $0.15 

per contract simple opening fee; NonMIAX Market Makers are assessed a 

$0.10 per contract simple/complex 

maker fee, a $0.25 per contract simple/ 

complex taker fee and a $0.15 per 

contract simple opening fee; BrokerDealers are assessed a $0.10 per contract 

simple/complex maker fee, a $0.25 per 

contract simple/complex taker fee and a 

$0.15 per contract simple opening fee; 

Firm Proprietary are assessed a $0.00 

per contract simple/complex maker fee, 

a $0.20 per contract simple/complex 

taker fee 29 and a $0.15 per contract 

simple opening fee; and Public 

Customer that is not a Priority Customer 

are assessed a $0.10 per contract simple/ 

complex maker fee, a $0.25 per contract 

simple/complex taker fee and a $0.15 

per contract simple opening fee.30 MIAX 

also offers a SPIKES Market Maker 

Incentive Program wherein Market 

Makers that satisfy the quote width 

requirement, 70% time in market 

requirement, and average quote size of 

25 contracts are entitled to receive 

Incentive 1 for that particular month 

($10,000 per Market Maker).31

Unlike Cboe’s Customer fees for VIX, 

VOLQ will assess no fees to Customers. 

Today, Customers are not assessed fees 

for NDX, NDXP or XND. The $0.40 per 

contract fee proposed for Professionals, 

Lead Market Makers, Market Makers, 

Broker-Dealers and Firms to transact 

VOLQ simple and complex options 

electronically and on the floor is within 

the range of fees assessed by Cboe for 

VIX. Also, Phlx currently assesses a 

$0.75 per contract fee to Non-Customers 

for options transacted in NDX, a broadbased index. VOLQ is similarly a broadbased index. Because VOLQ is a new 

index, the Exchange proposes a lower 

fee as compared to NDX, a more mature 

product ($0.40 per contract for VOLQ 

vs. $0.75 per contract for NDX). 

The $0.10 per contract surcharge 

proposed for Non-Customers who 

transact VOLQ options is within the 

range of the VIX surcharge. Customers 

would not pay a VOLQ surcharge as is 

the case today for all index option 

surcharges assessed by Phlx. Today, the 

Exchange assesses a $0.25 per contract 

surcharge for options transactions in 

NDX. The proposed VOLQ options 

surcharge is less than half the surcharge 

for NDX. The Exchange believes this 

surcharge is appropriate for options 

transactions on this new broad based 

index. 

Finally, today MIAX offers a SPIKES 

Market Maker Incentive Program. The 

Exchange proposes offering Lead Market 

Makers and Market Makers a $0.40 per 

contract rebate when adding liquidity in 

VOLQ to offset the proposed transaction 

fee.32 The Exchange believes that this 

rebate would incentivize Lead Market 

Makers and Market Makers to add 

liquidity to the Exchange in VOLQ. 

The Exchange believes that there are 

many factors that may cause a market 

participant to decide to become a 

member of a particular exchange. 

Among various factors, the Exchange 

believes market participants consider 

when deciding to become a member are 

product offerings. Introducing new and 

innovative products to the marketplace 

designed to meet customer demands 

may attract market participants to 

become a member of a particular 

options venue. New products in the 

options industry may allow market 

participants greater trading and hedging 

opportunities, as well as new avenues to 

manage risks. The listing of new options 

products enhances competition among 

market participants by providing 

investors with additional investment 

vehicles, as well as competitive 

alternatives, to existing investment 

products. An exchange’s proprietary 

product offering may attract order flow 

to a particular exchange to trade a 

particular options product and generally 

make that exchange a more desirable 

venue to transaction options, thereby 

attracting membership to that exchange. 

Specifically, VOLQ introduces a cashsettled options contract focused on 

equity exposure using options on the 

NDX, which are actively traded equity 

option products, into the marketplace. 

The Exchange believes that VOLQ’s 

novel structure will enhance 

competition among market participants, 

to the benefit of investors and the 

marketplace. The introduction of VOLQ 

is intended to attract market 


jspears on DSK121TN23PROD with NOTICES1
40298 Federal Register / Vol. 87, No. 128 / Wednesday, July 6, 2022 / Notices 

33 Broad-based index options symbols within 

Options 7, Section 5.A are excluded from Customer 

Rebates within Options 7, Section 2, the $0.12 per 

contract surcharge assessed to Non-Customer 

electronic Complex Orders that remove liquidity 

from the Complex Order Book and auctions, 

Monthly Market Maker Cap, Monthly Firm Fee Cap, 

Firm Floor Options Transaction Charge and BrokerDealer Floor Options Transaction Charge waivers, 

Monthly Strategy Cap, and Marketing Fees within 

Options 7, Section 4 and the PIXL Pricing, FLEX 

Transaction Fees and MARS pricing within Options 

7, Section 6. 

34 Today, Phlx prices options in SPY differently 

than other multiply-listed options symbols. 

35 Today, Cboe, MIAX and Phlx assess different 

pricing for singly-listed options and multiply-listed 

options. 

36 See pricing NQX on Nasdaq ISE, LLC. 

37 See Options 2, Section 4. 

38 See Options 2, Section 5 and Options 3, 

Section 8. 

participants to Phlx in order to transact 

this solely listed product. 

The Exchange’s proposal to amend 

Options 7, Sections 2, 4, and 6 to make 

clear that the pricing within Options 7, 

Section 5.A. will govern for NDX, 

NDXP, XND and now VOLQ is 

reasonable, equitable and not unfairly 

discriminatory. Also, making clear 

within Options 7, Section 2, where 

VOLQ options volume would count 

toward the volume requirement to 

qualify for a Customer Rebate Tier 

within Options 7, Section 2, and not be 

eligible for Customer rebates, is 

reasonable, equitable and not unfairly 

discriminatory. The proposed rule text 

will make clear to members and member 

organizations how Phlx’s pricing will be 

applied. Also, applying VOLQ options 

volume in the Customer Rebate Tiers is 

consistent with the manner in which 

other index options currently listed on 

Phlx are treated. The Exchange believes 

that excluding the broad-based index 

options symbols within Options 7, 

Section 5.A from other multiply-listed 

options pricing 33 on the Exchange is 

reasonable, equitable, and not unfairly 

discriminatory because multiply-listed 

options pricing assesses fees, pays 

rebates, waives pricing or discounts 

pricing for most multiply-listed option 

symbols generally, regardless of 

symbol.34 In contrast, pricing for 

proprietary broad-based index options is 

specific to the product. It is not novel 

to assess different pricing for multiplylisted options as compared to 

proprietary singly-listed options.35

Finally, pricing by symbol is a 

common practice on many U.S. options 

exchanges as a means to incentivize 

order flow to be sent to an exchange for 

execution in particular products. Other 

options exchanges price by symbol.36

Finally, it is reasonable, equitable and 

not unfairly discriminatory to assess the 

proposed fees and rebates for both 

simple and complex executions in 

VOLQ options, as is the case for other 

index options currently listed on Phlx. 

Proposed Pricing Is Equitable and Not 

Unfairly Discriminatory 

The Exchange believes that it is 

equitable and not unfairly 

discriminatory to assess Professionals, 

Lead Market Makers, Market Makers, 

Broker-Dealers and Firms a $0.40 per 

contract fee to transact simple and 

complex VOLQ options electronically 

and on the floor, and a $0.10 per 

contract surcharge, while assessing 

Customers no such transaction fee or 

surcharge. Customer order flow 

enhances liquidity on the Exchange for 

the benefit of all market participants. 

Customer liquidity provides more 

trading opportunities, which attracts 

Market Makers. An increase in the 

activity of these market participants in 

turn facilitates tighter spreads, which 

may cause an additional corresponding 

increase in order flow from other market 

participants. The proposed pricing for 

Customer orders in VOLQ is intended to 

attract Customer trading volume to the 

Exchange. In addition, the proposed 

VOLQ pricing for Customers will apply 

equally to all Customer orders. NonCustomers (Professionals, Lead Market 

Makers, Market Makers, Broker-Dealers 

and Firms) would be uniformly assessed 

a $0.40 per contract fee to transact 

simple and complex VOLQ options 

electronically and on the floor and a 

$0.10 per contract surcharge in VOLQ. 

All Non-Customers may transact VOLQ 

options and would be assessed the same 

fees. 

The Exchange believes that it is 

equitable and not unfairly 

discriminatory to pay Lead Market 

Makers and Market Makers a $0.40 per 

contract rebate when adding liquidity in 

VOLQ. Maker Makers take on a number 

of obligations,37 including quoting 

obligations,38 unlike other market 

participants. Further, the proposed 

pricing for Lead Market Makers and 

Market Makers in VOLQ is intended to 

incentivize them to quote and trade 

more on the Exchange, thereby 

providing more trading opportunities 

for all market participants. As noted 

above, the $0.40 per contract rebate 

when adding liquidity in VOLQ is 

intended to offset the $0.40 per contract 

VOLQ transaction fee. The Exchange 

believes the proposed pricing will 

incentivize Lead Market Makers and 

Market Makers to provide liquidity in 

the new product. Additionally, the 

proposed VOLQ rebate will be applied 

equally to all Lead Market Makers and 

Market Makers. 

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. 

In terms of inter-market competition, 

the Exchange believes its proposal 

remains competitive with other options 

markets that offer similar substitute 

products, and will offer market 

participants with another choice of 

venue to transact options. While VOLQ 

options are singly-listed on Phlx, 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. The Exchange notes that there 

are other volatility products available 

today on other options markets, such as 

VIX and SPIKES, which allow investors 

to gauge volatility. In sum, if the 

changes proposed herein are 

unattractive to market participants, it is 

likely that the Exchange will lose 

market share as a result. 

In terms of intra-market competition, 

the Exchange believes that the proposed 

pricing does not impose an undue 

burden on competition. Assessing no 

transaction fees or surcharge fees to 

Customer orders in VOLQ does not 

impose an undue burden on 

competition because Customer order 

flow enhances liquidity on the 

Exchange for the benefit of all market 

participants. Customer liquidity 

provides more trading opportunities, 

which attracts Market Makers. An 

increase in the activity of these market 

participants in turn facilitates tighter 

spreads, which may cause an additional 

corresponding increase in order flow 

from other market participants. The 

proposed pricing for Customer orders in 

VOLQ is intended to attract Customer 

trading volume to the Exchange. In 

addition, the proposed VOLQ pricing 

for Customers will apply equally to all 

Customer orders. Further, uniformly 

assessing Non-Customers (Professionals, 

Lead Market Makers, Market Makers, 

Broker-Dealers and Firms) a $0.40 per 

contract fee to transact simple and 

complex VOLQ options electronically 

and on the floor and a $0.10 per contract 

surcharge in VOLQ does not impose an 

undue burden on competition. All NonCustomers may transact VOLQ options 

and would be assessed the same fees. 

Finally, paying Lead Market Makers and 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 128 / Wednesday, July 6, 2022 / Notices 40299 

39 See Options 2, Section 4. 

40 See Options 2, Section 5 and Options 3, 

Section 8. 

41 15 U.S.C. 78s(b)(3)(A)(ii). 42 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 93504 

(Nov. 2, 2021), 86 FR 61804. Comments received on 

the proposed rule change are available at: https:// 

www.sec.gov/comments/sr-nysearca-2021-90/ 

srnysearca202190.htm. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 93788, 

86 FR 72291 (Dec. 21, 2021). 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 94151, 

87 FR 7889 (Feb. 10, 2022). 

8See Securities Exchange Act Release No. 94844, 

87 FR 28043 (May 10, 2022) (‘‘Amendment No. 1’’). 

Amendment No. 1 to the proposed rule change can 

Continued 

Market Makers a $0.40 per contract 

rebate when adding liquidity in VOLQ 

does not impose an undue burden on 

competition. Maker Makers take on a 

number of obligations,39 including 

quoting obligations,40 unlike other 

market participants. Further, the 

proposed pricing for Lead Market 

Makers and Market Makers in VOLQ is 

intended to incentivize them to quote 

and trade more on the Exchange, 

thereby providing more trading 

opportunities for all market 

participants. As noted above, the $0.40 

per contract rebate when adding 

liquidity in VOLQ is intended to offset 

the $0.40 per contract VOLQ transaction 

fee. The Exchange believes the proposed 

pricing will incentivize Lead Market 

Makers and Market Makers to provide 

liquidity in the new product. 

Additionally, the proposed VOLQ rebate 

will be applied equally to all Lead 

Market Makers and Market Makers. 

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.41

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–2022–27 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–2022–27. 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–2022–27, and should 

be submitted on or before July 27, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2022–14293 Filed 7–5–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95180; File No. SR– 

NYSEArca–2021–90] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Disapproving a 

Proposed Rule Change, as Modified by 

Amendment No. 1, to List and Trade 

Shares of Grayscale Bitcoin Trust 

Under NYSE Arca Rule 8.201–E 

(Commodity-Based Trust Shares) 

June 29, 2022. 

I. Introduction 

On October 19, 2021, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Exchange 

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

proposed rule change to list and trade 

shares (‘‘Shares’’) of Grayscale Bitcoin 

Trust (‘‘Trust’’) under NYSE Arca Rule 

8.201–E (Commodity-Based Trust 

Shares). The proposed rule change was 

published for comment in the Federal 

Register on November 8, 2021.3

On December 15, 2021, pursuant to 

Section 19(b)(2) of the Exchange Act,4

the Commission designated a longer 

period within which to approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether to 

disapprove the proposed rule change.5

On February 4, 2022, the Commission 

instituted proceedings under Section 

19(b)(2)(B) of the Exchange Act 6 to 

determine whether to approve or 

disapprove the proposed rule change.7

On April 21, 2022, the Exchange filed 

Amendment No. 1, which replaced and 

superseded the proposed rule change in 

its entirety, and on May 4, 2022, the 

Commission provided notice of 

Amendment No. 1 to the proposed rule 

change and designated a longer period 

for Commission action on the proposed 

rule change, as modified by Amendment 

No. 1.8


jspears on DSK121TN23PROD with NOTICES1