Document ID: SEC-2021-1791-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq PHLX, LLC
Posted Date: 2021-12-23T05:00Z

[Federal Register Volume 86, Number 244 (Thursday, December 23, 2021)]
[Notices]
[Pages 73033-73038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-27808]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93823; File No. SR-Phlx-2021-74]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Pricing Schedule at Equity 7, Section 3

December 17, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 9, 2021, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III below, 
which Items have been prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Equity 7, Section 3 to restate the 
Exchange's schedule of transaction credits and charges, to eliminate 
the Qualified Market Maker Program (the ``QMM Program''), and to 
eliminate the Enhanced Market Quality Program (the ``EMQ Program''), 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 purpose of the proposed rule change is to amend Equity 7, 
Section 3 to restate the Exchange's schedule of credits and charges, to 
eliminate the QMM Program, which the Exchange established in 2019 and 
amended in 2021,\3\ and to eliminate the EMQ Program, which the 
Exchange both established and modified in 2021.\4\ The Exchange also 
proposes to eliminate obsolete text from Equity 7, Section 3(a).
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    \3\ See Securities Exchange Act Release No. 34-91159 (February 
18, 2021), 86 FR 11343 (February 24, 2021) (SR-Phlx-2021-09); 
Securities Exchange Act Release No. 34-85862 (May 15, 2019), 84 FR 
23112 (May 21, 2019) (SR-Phlx-2019-19).
    \4\ See Securities Exchange Act Release No. 34-93406 (October 
22, 2021), 86 FR 59767 (October 28, 2021) (SR-Phlx-2021-64); 
Securities Exchange Act Release No. 34-92754 (August 25, 2021), 86 
FR 48789 (August 31, 2021) (SR-Phlx-2021-47).
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Restatement of Schedule of Credits and Charges
    Pursuant to Equity 7, Section 3, and under the heading ``Order 
Execution and Routing,'' the Exchange presently provides a series of 
credits to member organizations that enter displayed and non-displayed 
orders/quotes that execute on the Exchange and impose charges upon 
member organizations that remove liquidity from the Exchange. To the 
extent that member organizations satisfy additional volume-based 
criteria, they may qualify for credits that are higher than or charges 
that are lower than standard transaction rates. As part of its periodic 
efforts to invigorate and grow the Exchange by increasing the 
attractiveness and effectiveness of the incentives it offers to its 
member organizations, the Exchange proposes to substantially restate 
its schedule of credits and charges. These changes will provide 
increased overall rebate opportunities available to members that

[[Page 73034]]

add liquidity to the Exchange, while imposing a single flat fee for 
member organizations that remove liquidity from the Exchange.
    Presently, member organizations that enter orders that execute on 
the Exchange pay the following fees: (i) $0.0024 per share executed in 
securities entered by a member organization that accesses 0.055% or 
more of Consolidated Volume \5\ during the month and adds 0.025% or 
more of Consolidated Volume during the month; (ii) $0.0025 per share 
executed in securities entered by a member organization that accesses 
0.01% or more of Consolidated Volume during the month and adds 5,000 
shares or more to the Exchange during the month; and (iii) $0.0030 per 
share executed for all other member organizations. The Exchange 
proposes to eliminate all but the last of these fee tiers, such that 
going forward, the Exchange will charge all member organizations that 
remove liquidity from the Exchange a flat fee of $0.0030 per share 
executed. This change will allow the Exchange to reallocate its limited 
resources to increase incentives for adding liquidity to the Exchange--
an activity it believes is needed to improve the quality of the 
Exchange's market.
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    \5\ Pursuant to Equity 7, Section 3, the term ``Consolidated 
Volume'' means the total consolidated volume reported to all 
consolidated transaction reporting plans by all exchanges and trade 
reporting facilities during a month in equity securities, excluding 
executed orders with a size of less than one round lot. For purposes 
of calculating Consolidated Volume and the extent of a member 
organization's trading activity, the date of the annual 
reconstitution of the Russell Investments Indexes is excluded from 
both total Consolidated Volume and the member organization's trading 
activity.
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    The Exchange presently offers the following credits to member 
organizations that add displayed liquidity to the Exchange: (i) $0.0026 
per share executed for Quotes/Orders entered by a member organization 
that provides 0.10% or more of total Consolidated Volume during the 
month; (ii) $0.0024 per share executed for Quotes/Orders entered by a 
member organization that provides 0.07% or more of total Consolidated 
Volume during the month; and (iii) $0.0020 per share executed for all 
other quotes/orders. The Exchange proposes to restate this schedule, as 
follows, with the overall aims of increasing incentives for member 
organizations to add substantial volumes of displayed liquidity to the 
Exchange and providing a new incentive for member organizations to grow 
the extent of their liquidity adding activity relative to a baseline 
month.
    First, the Exchange proposes modify its top $0.0026 per share 
executed credit by increasing the amount of that credit to $0.0035 per 
share executed. It also proposes to modify its $0.0024 per share 
executed credit by: (i) Increasing the amount of the credit to $0.0034 
per share executed; (ii) decreasing the liquidity add volume threshold 
to qualify for the credit from 0.07% to 0.05% of Consolidated Volume; 
and (iii) by adding a requirement that the member organization must 
remove at least 0.02% of total Consolidated Volume during the month.\6\ 
Third, the Exchange proposes to establish a new growth tier that will 
reward a member organization with a credit of $0.0030 per share 
executed to the extent that it adds a daily average of at least 1 
million shares of liquidity in all securities on the Exchange during 
the month and increases its average daily volume of quotes/orders added 
to the Exchange by 100% or more during the month relative to the month 
of October 2021. Finally, the Exchange notes that it will not change 
its existing baseline credit of $0.0020 per share executed for the 
addition of displayed liquidity to the Exchange.
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    \6\ By tying receipt of this liquidity adding credit to a member 
organization also achieving a baseline level of liquidity removal 
activity, the Exchange intends to continue incenting member 
organizations to remove liquidity even as it focuses more of its 
resources on adding liquidity to the Exchange.
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    The Exchange presently offers the following credits to member 
organizations that add non-displayed liquidity to the Exchange: (i) A 
$0.0023 per share executed credit for all orders with midpoint pegging 
that provide liquidity; (ii) a $0.0004 per share executed credit for 
orders entered by a member organization that provides 0.01% or more of 
total Consolidated Volume during the month through non-displayed orders 
(other than midpoint orders) that provide liquidity; (iii) a $0.0007 
per share executed credit for orders entered by a member organization 
that provides 0.02% or more of total Consolidated Volume during the 
month through non-displayed orders (other than midpoint orders) that 
provide liquidity; (iv) a $0.0012 per share executed credit for orders 
entered by a member organization that provides 0.05% or more of total 
Consolidated Volume during the month through non-displayed orders 
(other than midpoint orders) that provide liquidity; and (v) a $0.0000 
per share executed credit for other non-displayed orders that provide 
liquidity. The Exchange proposes to restate this schedule of credits 
with the aim of increasing overall incentives to add non-displayed 
liquidity, while simplifying the credit structure by collapsing the 
schedule to three non-displayed tiers.
    First, the Exchange will continue to provide a $0.0023 per share 
executed credit for all orders with midpoint pegging that provide 
liquidity. Second, the Exchange will continue to provide a credit to a 
member organization that provides 0.01% or more of total Consolidated 
Volume during the month through non-displayed orders (other than 
midpoint orders) that provide liquidity, but it will increase the 
amount of that credit from $0.0004 to $0.0015 per share executed. 
Third, the Exchange will increase from $0.0000 to $0.0005 the base 
credit it provides to member organizations that add non-displayed 
liquidity to the Exchange.
    The proposed restatement of the Exchange's schedule of credits will 
focus the Exchange's limited resources to incenting member 
organizations to add and increase the extent to which they add 
liquidity to the Exchange. To the extent that this effort is 
successful, the Exchange hopes that additional liquidity will improve 
the quality of the market and help to grow it over time.
Elimination of the QMM Program
    As set forth in Equity 7, Section 3, the QMM Program provides 
supplemental incentives to member organizations that qualify as 
``Qualified Market Makers'' or ``QMMs'' \7\ by making significant 
contribution to market quality by providing liquidity at the national 
best bid and offer (``NBBO'') \8\ in a large number of securities for a 
significant portion of the day. A QMM may be, but is not required to 
be, a registered market maker in any security; thus, the QMM 
designation does not by itself impose a two-sided quotation obligation 
or convey any of the benefits associated with being a registered market 
maker.
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    \7\ To be designated as a QMM, a member organization must quote 
at the NBBO at least 15% of the time during regular market hours in 
an average of at least 400 securities per day during a month.
    \8\ For purposes of the QMM Program, a member organization is 
deemed to quote at the NBBO in a security if one of its MPIDs has a 
displayed order at either the national best bid or the national best 
offer or both the national best bid and offer.
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    The QMM program is designed to attract liquidity both from 
traditional market makers and from other firms that are willing to 
commit capital to support liquidity at the NBBO. In return for 
providing the required contribution of market-improving liquidity, the 
Exchange provides a QMM with the following non-cumulative supplemental 
credits for executions of displayed orders in securities priced at $1 
or more

[[Page 73035]]

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per share that provide liquidity on the Exchange:

    1. $0.0001 per share executed with respect to all displayed 
orders of a QMM in securities priced at $1 or more per share that 
provide liquidity; or
    2. $0.0002 per share executed with respect to all displayed 
orders of a QMM in securities priced at $1 or more per share that 
provide liquidity, provided that the QMM quotes the NBBO at least 
10% of the time during Market Hours in an average of at least 650 
securities per day during a month; or
    3. $0.0003 per share executed in Tape A securities and a credit 
of $0.0002 per share executed in Tape B and Tape C securities with 
respect to all displayed orders of a QMM in securities priced at $1 
or more per share that provide liquidity, provided that the QMM 
provides 0.12% or more of total Consolidated Volume during the month 
and quotes the NBBO at least 10% of the time during Market Hours in 
an average of at least 800 securities per day during a month.

    The QMM credits are in addition to any credit that the Exchange 
provides under Equity 7, Section 3.
    Through the use of the QMM Program, the Exchange hoped to provide 
improved trading conditions for all market participants through 
narrower bid-ask spreads and increased depth of liquidity available at 
the inside market. In addition, the QMM Program reflected an effort to 
use financial incentives to encourage a wider variety of members to 
make positive commitments to promote market quality.
    Unfortunately, the QMM Program did not accomplish its objectives, 
as it did not meaningfully improve market quality on the Exchange. 
Accordingly, and because the Exchange has limited resources to allocate 
to incentive programs like this one, the Exchange proposes to eliminate 
the QMM Program. Going forward, it plans to develop new incentive 
programs that it hopes will be more impactful.
Elimination of the Enhanced Market Quality Program
    The EMQ Program provides supplemental incentives to member 
organizations that meet certain quality standards in acting as market 
makers for securities on the Exchange. It rewards member organizations 
that make significant contributions to market quality by providing 
liquidity at the NBBO in a large number of securities for a significant 
portion of the day.\9\
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    \9\ For purposes of the Enhanced Market Quality Program, a 
member organization is deemed to quote at the NBBO in a security if 
it quotes a displayed order of at least 100 shares in the security 
and prices the order at either the national best bid or the national 
best offer or both the national best bid and offer for the security.
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    Specifically, the Exchange makes a lump sum payment at the end of 
each month (a ``Fixed Payment'') to a member organization to the extent 
that the member organization, through one or more of its MPIDs, quotes 
at the NBBO for at least a threshold percentage of the time during 
Market Hours in an average number of qualifying securities per day 
during the month, as specified below (satisfying the ``NBBO 
requirement'').
    On a daily basis, the Exchange determines the number of securities 
in which each of a member organization's MPIDs satisfies the NBBO 
requirement. The Exchange aggregates a member organization's MPIDs to 
determine the number of securities for purposes of the NBBO 
requirement.
    The Exchange determines the amount of the Fixed Payment that it 
pays to a qualifying member organization, as follows. First, it 
determines which of five Tiers a member organization meets by virtue of 
the average daily number of qualifying securities for which it meets 
the NBBO requirement during the month (rounded to the nearest whole 
number) in Tapes A and B. Qualifying securities are limited to the top 
1,500 securities in each of these Tapes, as determined by their total 
value traded during the second month prior to the current month. A 
member organization meets the NBBO requirement for a qualifying Tape A 
security on a given day to the extent that it quotes at the NBBO for at 
least 30% of the time during Market Hours on that day, and for a 
qualifying Tape B security, a member organization must quote such 
security at the NBBO for at least 50% of the time during Market Hours 
on that day.
    For each tier of the EMQ Program, the Exchange has three groupings 
or ``Classes.'' The Exchange establishes the Classes by dividing the 
qualifying 1,500 securities into three equal groups for each Tape, with 
the top 500 ranked securities placed in Class 3, the middle 500 ranked 
securities placed in Class 2, and the lowest ranked 500 securities 
placed in Class 1.
    The Exchange assigns Fixed Payment amounts to each of the three 
Classes in each Tape and in each of five Tiers, with these amounts 
generally increasing from Class 1 to Class 3, and from Tiers 1-5.
    In sum, a member organization that meets the NBBO requirement for a 
requisite number of qualifying securities during a month to qualify for 
a particular Tier is entitled to receive the Fixed Payment that 
corresponds to the combination of: (i) That Tier; and (ii) the Class in 
which the Exchange has placed the qualifying securities for that month.
    A member organization that qualifies for a Fixed Payment for 
securities in each of Tapes A and B and in multiple Classes within each 
Tape receive Fixed Payments covering qualifying securities in both 
Tapes, and within each Tape, for the each of the applicable Classes, 
but within each Tape and Class, a member organization may only qualify 
for one Tier during a month. The Exchange makes the Fixed Payment in 
addition to other rebates or fees provided under Equity 7, Sections 3 
(a)-(c).
    The existing schedules of Tiers, Classes, and Fixed Payments are as 
follows:

                                                Tape A Securities
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                      Average daily number of
                   securities quoted at the NBBO    Fixed payment for    Fixed payment for    Fixed payment for
      Tiers         for at least 30% of the time  securities in Tape A   securities in Tape   securities in Tape
                     during Market Hours during        in Class 1           A in Class 2         A in Class 3
                             the month
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1................  0-24.........................  $0 per qualified      $0 per qualified     $0 per qualified
                                                   security per month.   security per month.  security per
                                                                                              month.
2................  25-49........................  $0 per qualified      $0 per qualified     $200 per qualified
                                                   security per month.   security per month.  security over 24
                                                                                              per month.

[[Page 73036]]

 
3................  50-149.......................  $50 per qualified     $200 per qualified   $5,000 + ($450 per
                                                   security [sic] per    security over 49     qualified security
                                                   month.                per month.           over 49) per
                                                                                              month.
4................  150-249......................  $5,000 + ($100 per    $20,000 + ($300 per  $50,000 + ($600 per
                                                   qualified security    qualified security   qualified security
                                                   over 149) per month.  over 149) per        over 149) per
                                                                         month.               month.
5................  250 or greater...............  $15,000 + ($150 per   $50,000 + ($350 per  $50,000 + ($600 per
                                                   qualified security    qualified security   qualified security
                                                   over 249) per month.  over 249) per        over 149) per
                                                                         month.               month.
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                                                Tape B Securities
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                      Average daily number of
                   securities quoted at the NBBO    Fixed payment for    Fixed payment for    Fixed payment for
      Tiers         for at least 50% of the time  securities in Tape B   securities in Tape   securities in Tape
                     during Market Hours during        in Class 1           B in Class 2         B in Class 3
                             the month
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1................  0-24.........................  $0 per qualified      $0 per qualified     $0 per qualified
                                                   security per month.   security per month.  security per
                                                                                              month.
2................  25-49........................  $0 per qualified      $0 per qualified     $100 per qualified
                                                   security per month.   security per month.  security over 24
                                                                                              per month.
3................  50-149.......................  $0 per qualified      $25 per qualified    $2,500 + ($150 per
                                                   security per month.   security over 49     qualified security
                                                                         per month.           over 49) per
                                                                                              month.
4................  150-249......................  $50 per qualified     $2,500 + ($50 per    $17,500 + ($300 per
                                                   security over 149     qualified security   qualified security
                                                   per month.            over 149) per        over 149) per
                                                                         month.               month.
5................  250 or greater...............  $5,000 + ($75 per     $7,500 + ($150 per   $17,500 + ($300 per
                                                   qualified security    qualified security   qualified security
                                                   over 249) per month.  over 249) per        over 149) per
                                                                         month.               month.
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    A member organization may, but is not required to be, a registered 
market maker in any security to qualify for the EMQ Program; thus, the 
EMQ Program does not by itself impose a two-sided quotation obligation 
or convey any of the benefits associated with being a registered market 
maker. Accordingly, the EMQ Program is designed to attract liquidity 
both from traditional market makers and from other firms that are 
willing to commit capital to support liquidity at the NBBO.
    In establishing the EMQ Program, the Exchange hoped to provide 
improved trading conditions for all market participants through 
narrower bid-ask spreads and increased depth of liquidity available at 
the inside market. In addition, the EMQ Program reflected an effort by 
the Exchange to use its financial incentives to encourage a wider 
variety of member organizations other than market makers to make 
positive commitments to promote market quality.
    Unfortunately, the Exchange's hopes for the EMQ Program have not 
been realized, notwithstanding refinements made to the EMQ Program 
earlier this year in an attempt to enhance its effectiveness. Indeed, 
while the EMQ Program has succeeded in incenting market participants to 
increase their quoting at the NBBO in qualifying securities, the number 
of EMQ Program participants has been small, as has been the 
corresponding impact on the market quality. Because the EMQ Program has 
not been effective in achieving its intended purposes, and because the 
Exchange has limited resources to allocate to incentive programs like 
this one, the Exchange proposes to eliminate the Enhanced Market 
Quality Program. Going forward, it plans to develop new incentive 
programs that it hopes will be more impactful.
Deletion of Obsolete Text
    Finally, the Exchange proposes to eliminate text from this Rule 
that has become obsolete as it applied solely to Consolidated Volume 
calculations during the month of October 2020. The text that the 
Exchange proposes to delete is as follows:

    (For purposes of determining which of the execution charges and 
credits listed below a member organization qualifies for during the 
month of October 2020, the Exchange will calculate the member 
organization's total Consolidated Volume on the Exchange for the 
full month of October as well as for the month of October excluding 
the week of October 26-30, 2020. The Exchange will then assess which 
total Consolidated Volume calculations would qualify the member 
organization for the most advantageous credits and charges for the 
month of October and then it will apply those credits and charges to 
the member organization.)
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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

[[Page 73037]]

unfair discrimination between customers, issuers, brokers, or dealers.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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.'' \12\
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    \12\ 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 
\13\ (``NetCoalition'') 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'. . . .'' \14\
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    \13\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \14\ 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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    The Exchange believes that the proposed elimination of the QMM and 
EMQ Programs is reasonable and is an equitable allocation of Exchange 
credits because neither program has proven to be effective in meeting 
its objectives, which include increasing the extent to which member 
organizations quote securities on the Exchange at the NBBO and 
improving overall market quality. Insofar as the Exchange has limited 
resources to devote to its incentive programs, the Exchange believes 
that it is reasonable and equitable for it to eliminate these two 
Programs and to reallocate its resources for other, more productive 
purposes. For similar reasons, the proposal is not unfairly 
discriminatory. The Exchange does not believe that the benefits enjoyed 
by the member organizations that participate in the QMM and EMQ Program 
are sufficient to justify maintaining them, as the resources the 
Exchange allocates to it could be put to broader and more productive 
use.
    The Exchange also believes that its proposal is reasonable, 
equitable, and not unfairly discriminatory to restate its schedule of 
transaction credits and charges. As discussed above, the Exchange 
assesses a particular need to increase the extent to which its member 
organizations add liquidity to the Exchange as a means of improving 
market quality. The proposals serve that purpose by directly increasing 
credits for adding displayed and non-displayed liquidity, and by 
reallocating some resources that it currently devotes to providing 
discounted fees to member organizations which remove liquidity from the 
Exchange. Although the proposals will benefit net adders of liquidity 
at the expense of net removers of liquidity, the Exchange believes that 
this is equitable and not unfairly discriminatory because all market 
participants stand to benefit to the extent that the proposals are 
successful in increasing liquidity on the Exchange and improving market 
quality. The Exchange also believes that it is reasonable, equitable, 
and not unfairly discriminatory to simplify its schedule of credits and 
charges insofar as the Exchange believes that a simpler credit/fee 
structure may be more comprehensible and administrable and thus, more 
appealing to, member organizations.
    Finally, the Exchange believes that it is reasonable, equitable, 
and not unfairly discriminatory to delete text from the Rule that has 
become obsolete insofar as it applied only to calculations of 
Consolidated Volume for the month of October 2020. Deletion of obsolete 
rule text ensures that the Rulebook remains current and free from 
extraneous and potentially confusing text.

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 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 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 fee changes 
in this market may impose any burden on competition is extremely 
limited.
    In this instance, the proposals do not impose a burden on 
competition because the Exchange's execution services are completely 
voluntary and subject to extensive competition both from other 
exchanges and from off-exchange venues. Thus, the proposed restatement 
of the Exchange's schedule of credits and charges will not unduly 
burden competition, even as it will increase overall incentives to net 
adders of liquidity to the Exchange and reduce overall incentives to 
net removers of liquidity from the Exchange. The Exchange believes that 
its need to refocus its limited resources on increasing liquidity on 
the Exchange as a means of improving its overall market quality 
justifies the costs of this proposal to member organizations that are 
net liquidity removers.
    Additionally, given that neither the QMM nor the EMQ Program has 
been utilized as extensively as the Exchange expected, the proposed 
elimination of those two Programs will not impact more than a handful 
of its member organizations. To the extent that elimination of the EMQ 
and QMM Programs do impact these member organizations, the Exchange 
notes that it continues to provide other financial incentives for 
member organizations to participate on the Exchange.
    The Exchange does not believe that any competitive impact will 
ensue from its proposal to eliminate obsolete rule text relating to the 
calculation of Consolidated Volume in October 2020. Given that the text 
no longer applies, its deletion will have no effect on member 
organizations or the Exchange whatsoever.
    In sum, the proposals are designed to render the Exchange more 
efficient in the allocation of its limited resources and more effective 
in improving the quality of the Exchange's market; however, if the 
changes proposed herein are unattractive to market participants, it is 
likely that the Exchange will lose market share as a result. 
Accordingly, the Exchange does not believe that the proposed changes 
will impair the ability of member organizations or competing order 
execution venues to maintain their competitive standing in the 
financial markets.

[[Page 73038]]

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.\15\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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-2021-74 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-2021-74. 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-2021-74 and should be submitted on 
or before January 13, 2022.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-27808 Filed 12-22-21; 8:45 am]
BILLING CODE 8011-01-P