Document ID: SEC-2022-0477-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq PHLX, LLC
Posted Date: 2022-04-07T04:00Z

[Federal Register Volume 87, Number 67 (Thursday, April 7, 2022)]
[Notices]
[Pages 20475-20479]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-07340]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94573; File No. SR-Phlx-2022-14]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, 
Section 4 of the Pricing Schedule

April 1, 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 March 22, 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.
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    \1\ 15 U.S.C. 78a.
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Phlx's Pricing Schedule at Options 
7, Section 4, ``Multiply Listed Options Fees (Includes options 
overlying equities, ETFs, ETNs and indexes which are Multiply Listed) 
(Excludes SPY).''
    Additionally, the Exchange proposes to make a technical amendment 
and add descriptions of three additional terms within Options 7, 
Section 1, General Provisions.
    The Exchange originally filed SR-Phlx-2022-08 on March 1, 2022. On 
March 10, 2022, the Exchange withdrew SR-Phlx-2022-08 and submitted SR-
Phlx-2022-12. On March 22, 2022, the Exchange withdrew SR-Phlx-2022-12 
and submitted this filing.
    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
    Phlx proposes to amend its Pricing Schedule within Options 7, 
Section 4, ``Multiply Listed Options Fees (Includes options overlying 
equities, ETFs, ETNs and indexes which are Multiply Listed) (Excludes 
SPY).'' Specifically, Phlx proposes to decrease the Professional \3\ 
Floor \4\ Options Transaction Charges \5\ in multiply-listed Penny and 
non-Penny Symbols. Additionally, the Exchange proposes amendments to 
Options 7, Section 1, General Provisions. Each change is described 
below.
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    \3\ The 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 Phlx's Pricing Schedule at Options 7, Section 1(c).
    \4\ The term ``floor transaction'' is a transaction that is 
effected in open outcry on the Exchange's Trading Floor. See Phlx's 
Pricing Schedule at Options 7, Section 1(c).
    \5\ Floor transaction fees apply to any ``as of'' or 
``reversal'' adjustments for manually processed trades originally 
submitted electronically or through FBMS. See Phlx's Pricing 
Schedule at Options 7, Section 4, footnote 8.
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Options 7, Section 4
    Today, the Exchange assesses Options Transaction Charges in 
Multiply Listed options, including options overlying equities, ETFs, 
ETNs and indexes and excluding options in SPY. The Exchange currently 
assesses the following Floor Options Transaction Charges in multiply-
listed Penny and non-Penny Symbols: $0.25 per contract for a 
Professional, $0.35 per contract for a Floor Lead Market Maker \6\ and 
Floor Market Maker,\7\ and $0.25 per contract for a Broker-Dealer \8\ 
and Firm.\9\ Customers \10\ are not assessed an Options Transaction 
Charge in multiply-listed Penny or non-Penny Symbols.
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    \6\ 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).
    \7\ A 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).
    The term ``Streaming Quote Trader'' or ``SQT'' is defined in 
Options 1, Section 1(b)(54) as a Market Maker who has received 
permission from the Exchange to generate and submit option 
quotations electronically in options to which such SQT is assigned. 
See Phlx's Pricing Schedule at Options 7, Section 1(c). The term 
``Remote Streaming Quote Trader'' or ``RSQT'' is defined in Options 
1, Section 1(b)(49) as a Market Maker that is a member affiliated 
with an RSQTO with no physical trading floor presence who has 
received permission from the Exchange to generate and submit option 
quotations electronically in options to which such RSQT has been 
assigned. A Remote Streaming Quote Trader Organization or ``RSQTO,'' 
which may also be referred to as a Remote Market Making Organization 
(``RMO''), is a member organization in good standing that satisfies 
the RSQTO readiness requirements in Options 2, Section 1(a). See 
Phlx's Pricing Schedule at Options 7, Section 1(c).
    \8\ The term ``Broker-Dealer'' applies to any transaction which 
is not subject to any of the other transaction fees applicable 
within a particular category. See Phlx's Pricing Schedule at Options 
7, Section 1(c).
    \9\ The term ``Firm'' applies to any transaction that is 
identified by a member or member organization for clearing in the 
Firm range at OCC. See Phlx's Pricing Schedule at Options 7, Section 
1(c).
    \10\ The 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 Phlx's Pricing Schedule at Options 7, Section 1(c).
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    The Exchange proposes to decrease the Floor Options Transaction 
Charges for Professionals in multiply-listed Penny and non-Penny 
Symbols from $0.25 to $0.05 per contract. The Exchange believes the 
decreased Options Transaction Charges will attract a greater amount of 
Professional orders to Phlx's Trading Floor.
Options 7, Section 1
    The Exchange proposes to make a technical amendment within Options 
7, Section 1, General Provisions. The Exchange proposes to remove the 
words ``on and'' from description of ``Market Maker'' within Options 7, 
Section 1(c). Those words are not necessary. The amended description of 
Market Maker would state, ``The 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.''
    The Exchange proposes to add three additional descriptions to 
Options 7, Section 1(c). Specifically, the Exchange

[[Page 20476]]

proposes to define the terms ``Floor Broker,'' ``Floor Lead Market 
Maker,'' and ``Floor Market Maker.'' These terms are currently defined 
within Options 8, Section 2(a)(2)-(4). The Exchange proposes to add 
these terms to Options 7, Section 1(c) for greater transparency when 
referencing the Pricing Schedule.
     The Exchange proposes to define a ``Floor Broker'' to mean 
an individual who is registered with the Exchange for the purpose, 
while on the Options Floor, of accepting and handling options orders.
     The Exchange proposes to define a ``Floor Lead Market 
Maker'' to mean 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.
     The Exchange propose to define a ``Floor Market Maker'' to 
mean a Market Maker who is neither an SQT or an RSQT. A Floor Market 
Maker may provide a quote in open outcry.

The Exchange believes that these amendments to Options 7, Section 1 
will bring greater clarity to the Pricing Schedule.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
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    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.'' \13\
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    \13\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    Likewise, in NetCoalition v. Securities and Exchange Commission 
\14\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of 
a market-based approach in evaluating the fairness of market data fees 
against a challenge claiming that Congress mandated a cost-based 
approach.\15\ As the court emphasized, the Commission ``intended in 
Regulation NMS that `market forces, rather than regulatory 
requirements' play a role in determining the market data . . . to be 
made available to investors and at what cost.'' \16\
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    \14\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \15\ See NetCoalition, at 534-535.
    \16\ Id. at 537.
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    Further, ``[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\ Although the court and 
the SEC were discussing the cash equities markets, the Exchange 
believes that these views apply with equal force to the options 
markets.
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    \17\ Id. at 539 (quoting Securities Exchange Act Release No. 
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008) 
(SR-NYSEArca-2006-21)).
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Options 7, Section 4
    The Exchange's proposal to decrease the Floor Options Transaction 
Charges for Professionals in multiply-listed Penny and non-Penny 
Symbols from $0.25 to $0.05 per contract is reasonable because the 
decreased fee should attract a greater amount of Professional orders to 
Phlx's Trading Floor. Today, BOX Exchange LLC (``BOX'') assesses a 
Professional Customer Fee of $0.10 per contract in Penny and Non-Penny 
Symbols for manual transactions.\18\ By decreasing its Professional 
Floor Options Transaction Charge, the Exchange believes it will be able 
to compete more effectively with BOX for options order flow because of 
the lower Professional fee.
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    \18\ In addition to the Professional fee of $0.10 per contract, 
BOX assesses the following Penny and Non-Penny Interval Classes 
manual transactions fees: $0.25 per contract to Broker Dealers and 
$0.35 per contract to Market Makers. BOX does not assess Public 
Customers or Broker Dealers facilitating a Public Customer a Penny 
and Non-Penny Interval Classes manual transactions fee. See BOX's 
Fee Schedule at Section II.
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    The Exchange's proposal to decrease the current Floor Options 
Transaction Charges for Professionals in multiply-listed Penny and non-
Penny Symbols from $0.25 to $0.05 per contract is equitable and not 
unfairly discriminatory. Today, Customers are not assessed an Options 
Transaction Charge in multiply-listed Penny or non-Penny Symbols 
because Customer order flow is unique. Customer liquidity benefits all 
market participants by providing more trading opportunities, which 
attracts Floor Lead Marker Makers and Floor 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 Exchange believes 
that lowering the Professional Floor Options Transaction Charges is 
similarly beneficial as the lower fees may cause market participants to 
select Phlx's Trading Floor as a venue to send Professional order flow, 
which benefits all market participants by attracting valuable liquidity 
to the market and thereby enhancing the trading quality and efficiency 
for all market participants.
    Today, Floor Lead Market Makers and Floor Market Makers are 
assessed the highest Penny and non-Penny Options Transaction Charges. 
Customers are not assessed a Penny or non-Penny Options Transaction 
Charge. Today, Professionals, Broker-Dealers and Firms pay a Floor 
Options Transaction Charge of $0.25 per contract. With this proposal, 
Professionals would continue to be assessed a lower Options Transaction 
Charges in multiply-listed Penny and non-Penny Symbols as compared to 
Floor Lead Market Makers and Floor Market Makers. Floor Lead Market 
Makers and Floor Market Makers have a time and place advantage on the 
Trading Floor with respect to orders, unlike other market participants. 
A Professional, Broker-Dealer or a Firm would necessarily require a 
Floor Broker to represent their trading interest on the Trading Floor 
as compared to a Floor Lead Market Maker or Floor Market Maker that 
could directly transact such orders on the Trading Floor. Further, the 
Exchange believes that in order to attract orders from a Professionals, 
Broker-Dealers or a Firm, via a Floor Broker, the rates must be 
competitive with rates at other trading floors. With respect to Firms, 
the Exchange notes that Firms are subject to a Monthly Firm Fee Cap of 
$75,000. Firm Floor Option Transaction Charges along with Qualified 
Contingent Cross Transaction Fees, in the aggregate, for one billing 
month may not exceed the Monthly Firm Fee Cap per member organization 
when such members are trading in their own proprietary

[[Page 20477]]

account.\19\ Finally, with respect to Broker-Dealers, today the 
Exchange waives the Floor Options Transaction Charge for Broker-Dealers 
executing facilitation orders pursuant to Options 8, Section 30 when 
such members would otherwise incur this charge for trading in their own 
proprietary account contra to a Customer (``BD-Customer 
Facilitation''), if the member's BD-Customer Facilitation average daily 
volume (including both FLEX and non-FLEX transactions) exceeds 10,000 
contracts per day in a given month.\20\ The Exchange notes that both 
Firms and Broker-Dealers have the ability to reduce their Options 
Transaction Charges as compared to Professionals.
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    \19\ See Options 7, Section 4, which states, ``Firms are subject 
to a maximum fee of $75,000 (`Monthly Firm Fee Cap'). Firm Floor 
Option Transaction Charges and QCC Transaction Fees, as defined in 
this section above, in the aggregate, for one billing month will not 
exceed the Monthly Firm Fee Cap per member organization when such 
members are trading in their own proprietary account. All dividend, 
merger, and short stock interest strategy executions (as defined in 
this Options 7, Section 4) will be excluded from the Monthly Firm 
Fee Cap. NDX, NDXP, and XND Options Transactions will be excluded 
from the Monthly Firm Fee Cap. Reversal and conversion, jelly roll 
and box spread strategy executions (as defined in this Options 7, 
Section 4) will be included in the Monthly Firm Fee Cap. QCC 
Transaction Fees are included in the calculation of the Monthly Firm 
Fee Cap. Member organizations must notify the Exchange in writing of 
all accounts in which the member is not trading in its own 
proprietary account. The Exchange will not make adjustments to 
billing invoices where transactions are commingled in accounts which 
are not subject to the Monthly Firm Fee Cap.''
    \20\ See Options 7, Section 4, which states, ``. . . In 
addition, the Broker-Dealer Floor Options Transaction Charge 
(including Cabinet Options Transaction Charges) will be waived for 
members executing facilitation orders pursuant to Options 8, Section 
30 when such members would otherwise incur this charge for trading 
in their own proprietary account contra to a Customer (`BD-Customer 
Facilitation'), if the member's BD-Customer Facilitation average 
daily volume (including both FLEX and non-FLEX transactions) exceeds 
10,000 contracts per day in a given month. NDX, NDXP, and XND 
Options Transactions will be excluded from each of the waivers set 
forth in the above paragraph.''
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    The Exchange believes it is equitable and not unfairly 
discriminatory to assess a Professional Floor Options Transaction 
Charge that is less favorable than Customers but more favorable than 
Firms, and Broker-Dealers and continue to assess a lower fee as 
compared to Floor Lead Market Makers, Floor Market Makers. 
Professionals have access to more information than Customers and 
therefore are being assessed a less favorable Options Transaction 
Charge \21\ as compared to Customers. While Professionals may have the 
same technological and informational advantages as Broker-Dealers 
trading for their own account,\22\ the Exchange believes that lowering 
the current Professional Floor Options Transaction Charges to range 
between that of a Customer and other non-Customer participants (Floor 
Lead Market Makers, Floor Market Makers, Firms, and Broker-Dealers) is 
equitable and not unfairly discriminatory because the potential 
increased volume would create better trading opportunities that benefit 
all market participants.\23\ Specifically, greater volume and liquidity 
from increased order flow could create more trading opportunities and 
tighter spreads. Finally, assessing lower fees for Professional 
Customers compared to Floor Lead Market Makers, Floor Market Makers, 
Firms, and Broker-Dealers is not novel as BOX currently assesses lower 
fees for Professional Customers as compared to Broker Dealers and 
Market Makers.\24\ Additionally, with respect to Qualified Contingent 
Cross Fees, Phlx currently assesses Customers and Professional no fee, 
while a Lead Market Maker, Market Maker, Firm and Broker-Dealer are 
assessed $0.20 per contract.\25\
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    \21\ Customers are not assessed Options Transaction Charges for 
multiply-listed options in Penny and non-Penny Symbols.
    \22\ A Professional by definition enters 390 orders per day on 
average over a calendar month which the Exchange believes exceeds 
the number of retail Customer orders in a single day.
    \23\ The Exchange notes that BOX assesses the same fees for 
Professionals and Broker-Dealers for non-auction transactions within 
Section I, A of BOX's Fee Schedule, PIP and COPIP transactions 
within Section I, B of BOX's Fee Schedule, Facilitation and 
Solicitation transactions within Section I, C of BOX's Fee Schedule, 
and Complex Orders within Section III, A of BOX's Fee Schedule. See 
BOX's Fee Schedule. BOX has stated in prior rule changes that, 
``Professional Customers, while Public Customers by virtue of not 
being Broker Dealers, generally engage in trading activity more 
similar to Broker Dealer proprietary trading accounts (submitting 
more than 390 standard orders per day on average).'' See Securities 
Exchange Act Release No. 73547 (November 6, 2014), 79 FR 67520 at 
67523 (November 13, 2014) (SR-BOX-2014-25) (Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the Fee 
Schedule on the BOX Market LLC (``BOX'') Options Facility). 
Notwithstanding this justification, BOX assesses lower Professional 
manual transactions as compared to Broker-Dealers and Market Makers.
    \24\ BOX assess a Professional a manual fee of $0.10 per 
contract in Penny and Non-Penny Interval Classes, while assessing 
$0.25 per contract to Broker Dealers and $0.35 per contract to 
Market Makers for manual transactions in Penny and Non-Penny 
Interval Classes. See BOX's Fee Schedule at Section II.
    \25\ See Options 7, Section 4 which states, ``QCC Transaction 
Fees for a Lead Market Maker, Market Maker, Firm and Broker-Dealer 
are $0.20 per contract. Customers and Professionals are not assessed 
a QCC Transaction Fee. QCC Transaction Fees apply to electronic QCC 
Orders, as defined in Options 3, Section 12, and Floor QCC Orders, 
as defined in Options 8, Section 30(e).''
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Options 7, Section 1
    The Exchange's proposal to amend the description of ``Market 
Maker'' within Options 7, Section 1(c) is consistent with the Act. The 
proposed non-substantive amendment removes unnecessary words.
    The Exchange's proposal to define the terms ``Floor Broker,'' 
``Floor Lead Market Maker,'' and ``Floor Market Maker'' within Options 
7, Section 1(c) is consistent with the Act. The addition of these 
terms, which are currently defined within Options 8, Section 2(a)(2)-
(4), will bring greater transparency to the Pricing Schedule.

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.
Inter-Market Competition
    The proposal does not impose an undue burden on inter-market 
competition. The Exchange believes its proposal remains competitive 
with other options markets and will offer market participants with 
another choice of where to transact options. 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 fees to remain competitive with other 
exchanges that have been exempted from compliance with the statutory 
standards applicable to exchanges. Because competitors are free to 
modify their own fees in response, and because market participants may 
readily adjust their order routing practices, the Exchange believes 
that the degree to which fee changes in this market may impose any 
burden on competition is extremely limited.
    Moreover, the proposal is designed to encourage market participants 
to execute a greater amount of Professional orders on Phlx's Trading 
Floor. To the extent that the proposed change attracts additional 
Professional orders to Phlx's Trading Floor, this increased order flow 
would continue to make the Exchange a more competitive venue for order 
execution.
Intra-Market Competition
    The proposed amendments do not impose an undue burden on intra-
market competition.
    The Exchange's proposal to decrease the Floor Options Transaction 
Charges for Professionals in multiply-listed Penny and non-Penny 
Symbols from

[[Page 20478]]

$0.25 to $0.05 per contract does not create an undue burden on 
competition. Today, Customers are not assessed an Options Transaction 
Charge in multiply-listed Penny or non-Penny Symbols because Customer 
order flow is unique. Customer liquidity benefits all market 
participants by providing more trading opportunities, which attracts 
Floor Lead Marker Makers and Floor 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 Exchange believes that 
lowering the Professional Floor Options Transaction Charges is 
similarly beneficial as the lower fees may cause market participants to 
select Phlx's Trading Floor as a venue to send Professional order flow, 
which benefits all market participants by attracting valuable liquidity 
to the market and thereby enhancing the trading quality and efficiency 
for all market participants.
    Today, Floor Lead Market Makers and Floor Market Makers are 
assessed the highest Penny and non-Penny Options Transaction Charges. 
Customers are not assessed a Penny or non-Penny Options Transaction 
Charge. Today, Professionals, Broker-Dealers and Firms pay a Floor 
Options Transaction Charge of $0.25 per contract. With this proposal, 
Professionals would continue to be assessed a lower Options Transaction 
Charges in multiply-listed Penny and non-Penny Symbols as compared to 
Floor Lead Market Makers and Floor Market Makers. Floor Lead Market 
Makers and Floor Market Makers have a time and place advantage on the 
Trading Floor with respect to orders, unlike other market participants. 
A Professional, Broker-Dealer or a Firm would necessarily require a 
Floor Broker to represent their trading interest on the Trading Floor 
as compared to a Floor Lead Market Maker or Floor Market Maker that 
could directly transact such orders on the Trading Floor. Further, the 
Exchange believes that in order to attract orders from a Professionals, 
Broker-Dealers or a Firm, via a Floor Broker, the rates must be 
competitive with rates at other trading floors. With respect to Firms, 
the Exchange notes that Firms are subject to a Monthly Firm Fee Cap of 
$75,000. Firm Floor Option Transaction Charges along with Qualified 
Contingent Cross Transaction Fees, in the aggregate, for one billing 
month may not exceed the Monthly Firm Fee Cap per member organization 
when such members are trading in their own proprietary account.\26\ 
Finally, with respect to Broker-Dealers, today the Exchange waives the 
Floor Options Transaction Charge for Broker-Dealers executing 
facilitation orders pursuant to Options 8, Section 30 when such members 
would otherwise incur this charge for trading in their own proprietary 
account contra to a Customer (``BD-Customer Facilitation''), if the 
member's BD-Customer Facilitation average daily volume (including both 
FLEX and non-FLEX transactions) exceeds 10,000 contracts per day in a 
given month.\27\ The Exchange notes that both Firms and Broker-Dealers 
have the ability to reduce their Options Transaction Charges as 
compared to Professionals.
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    \26\ See note 20 above.
    \27\ See note 21 above.
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    Assessing a Professional Floor Options Transaction Charge that is 
less favorable than Customers but more favorable than Firms, and 
Broker-Dealers and continuing to assess a lower fee as compared to 
Floor Lead Market Makers, Floor Market Makers does not impose an undue 
burden on competition. Professionals have access to more information 
than Customers and therefore are being assessed a less favorable 
Options Transaction Charge \28\ as compared to Customers. While 
Professionals may have the similar technological and informational 
advantages as Broker-Dealers trading for their own account,\29\ the 
Exchange believes that lowering the current Professional Floor Options 
Transaction Charges to range between that of a Customer and other non-
Customer participants (Floor Lead Market Makers, Floor Market Makers, 
Firms, and Broker-Dealers) does not impose an undue burden on 
competition because the potential increased volume would create better 
trading opportunities that benefit all market participants.\30\ 
Specifically, greater volume and liquidity from increased order flow 
could create more trading opportunities and tighter spreads. Finally, 
assessing lower fees for Professional Customers compared to Floor Lead 
Market Makers, Floor Market Makers, Firms, and Broker-Dealers is not 
novel as BOX currently assesses lower fees for Professional Customers 
as compared to Broker Dealers and Market Makers.\31\ Additionally, with 
respect to Qualified Contingent Cross Fees, Phlx currently assesses 
Customers and Professional no fee, while a Lead Market Maker, Market 
Maker, Firm and Broker- Dealer are assessed $0.20 per contract.\32\
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    \28\ See note 22 above.
    \29\ See note 23 above.
    \30\ See note 24 above.
    \31\ See note 25 above.
    \32\ See note 26 above.
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Options 7, Section 1
    The Exchange's proposal to amend the description of ``Market 
Maker'' within Options 7, Section 1 does not impose an undue burden on 
competition. The proposed non-substantive amendment removes unnecessary 
words.
    The Exchange's proposal to define the terms ``Floor Broker,'' 
``Floor Lead Market Maker,'' and ``Floor Market Maker'' within Options 
7, Section 1(c) does not impose an undue burden on competition. The 
addition of these terms, which are currently defined within Options 8, 
Section 2(a)(2)-(4), will bring greater transparency to the Pricing 
Schedule.

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.\33\
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    \33\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    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 [email protected]. Please include 
File Number SR-Phlx-2022-14 on the subject line.

[[Page 20479]]

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-2022-14. 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-2022-14, and should be submitted on 
or before April 28, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
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    \34\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-07340 Filed 4-6-22; 8:45 am]
BILLING CODE 8011-01-P