Document ID: SEC-2021-1624-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq PHLX, LLC
Posted Date: 2021-11-19T05:00Z

[Federal Register Volume 86, Number 221 (Friday, November 19, 2021)]
[Notices]
[Pages 64976-64978]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25229]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93577; File No. SR-Phlx-2021-68]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend FINRA Fees

November 15, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on November 5, 2021, Nasdaq PHLX LLC (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the 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\ 15 U.S.C. 78a.
    \3\ 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 Equity 7, 
Section 4, Membership Fees, and Options 7, Section 9, Other Member 
Fees, to reflect adjustments to FINRA Registration Fees and 
Fingerprinting Fees.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated the amendments become operative on January 2, 
2022.\4\
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    \4\ See Securities Exchange Act Release No. 90176 (October 14, 
2020), 85 FR 66592 (October 20, 2020) (SR-FINRA-2020-032) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Adjust FINRA Fees To Provide Sustainable Funding for FINRA's 
Regulatory Mission).
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    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
    This proposal amends Phlx's Schedule at Equity 7, Section 4, 
Membership Fees, and Options 7, Section 9, Other Member Fees, to 
reflect adjustments to FINRA Registration Fees and Fingerprinting 
Fees.\5\ The FINRA fees are collected and retained by FINRA via Web CRD 
for the registration of employees of Phlx members that are not FINRA 
members (``Non-FINRA members''). The Exchange is merely listing these 
fees on its Pricing Schedule. The Exchange does not collect or retain 
these fees.
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    \5\ FINRA operates Web CRD, the central licensing and 
registration system for the U.S. securities industry. FINRA uses Web 
CRD to maintain the qualification, employment and disciplinary 
histories of registered associated persons of broker-dealers.
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Options 7
    Today, Phlx Options 7, Section 9C, provides a list of FINRA Fees. 
The Exchange proposes to amend Options 7, Section 9C to: (1) Add the 
title ``General Registration Fees:''; (2) indicate ``CRD'' is the 
``Central Registration Depository'' or ``CRD''; and (3) remove the 
numbering from (1) to (3).
    With respect to the General Registration Fees, the Exchange 
proposes to increase the $100 fee to $125 for each initial Form U4 
filed for the registration of a representative or principal. This 
amendment is made in accordance with a recent FINRA rule change to 
adjust to its fees.\6\ The Exchange also proposes to amend the 
description of the $45 registration fee from ``annually for each of the 
member's registered representatives and principals for system 
processing'' to ``FINRA Annual System Processing Fee Assessed only 
during Renewals.'' The proposed new title is more precise.
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    \6\ Id. FINRA noted in its rule change that it was adjusting its 
fees to provide sustainable funding for FINRA's regulatory mission.
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    With respect to the fingerprint processing fees, the Exchange notes 
that the current fees do not reflect the fees assessed by FINRA today. 
The Exchange proposes to amend the current fees to reflect the current 
fees that are assessed by FINRA. The proposed new rule text, with the 
title, ``Fingerprint Processing Fees:'' added, would provide,
    Fingerprint Processing Fees:

$29.50--Initial Submission (Electronic)
$44.50--Initial Submission (Paper)
$15.00--Second Submission (Electronic)
$30.00--Second Submission (Paper)
$29.50--Third Submission (Electronic)
$44.50--Third Submission (Paper)
$30.00--FINRA Processing Fee for Fingerprint Results Submitted by Self-
Regulatory Organizations other than FINRA.

    In 2012, FINRA only offered one set of fees ($27.50 for the initial 
submission, $13.00 for the second submission, and $27.50 for the third 
submission). In 2013, FINRA amended its fingerprint fees and offered 
two sets of fees. For fingerprints submitted on paper card, the fees 
are $44.50 per initial submission, $30.00 per second submission, and 
$44.50 per third submission. For fingerprints submitted electronically, 
the fees are $29.50 per initial submission, $15.00 per second 
submission, and $29.50 per third submission.\7\ By updating the

[[Page 64977]]

fingerprinting fees, the Exchange would properly reflect the fees 
assessed today by FINRA.\8\
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    \7\ See Securities Exchange Act Release No. 67247 (June 25, 
2012) 77 FR 38866 (June 29, 2012) (SR-FINRA-2012-030) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Sections 4 and 6 of Schedule A to the FINRA By-Laws Regarding Fees 
Relating to the Central Registration Depository). FINRA notes in 
this rule change that it is proposing a two-tiered fingerprint 
processing fee structure in part to reflect that the costs 
associated with processing fingerprints submitted via a hard copy 
fingerprint card are much higher than those that are submitted 
electronically. Specifically, fingerprints submitted by a hard copy 
card require additional processing by FINRA, including adding a 
barcode, if necessary, to the card for tracking purposes; scanning 
the fingerprints and converting them to a digital image for 
submission to the FBI; and, for first-time registrants, entering the 
individual's personal and demographic information into the CRD 
system. FINRA noted that members will be able to choose how they 
submit their associated persons' fingerprints and therefore will 
have some control over the fees they incur for fingerprint 
processing. FINRA also noted an FBI Fee of $11.25 is assessed as 
well.
    \8\ See https://www.finra.org/registration-exams-ce/classic-crd/fingerprints/fingerprint-fees.
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    The Exchange is deleting the fees noted within current Options 7, 
Section 9C at (4)-(7).\9\ These fingerprint fees, which are proposed to 
be deleted, were superseded by the FINRA fingerprinting fees which were 
adopted in 2013.
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    \9\ The Exchange proposes to delete the following rule text:
    (4) $15 for processing and posting to the CRD system each set of 
fingerprints submitted electronically by the member, plus a pass-
through of any other charge imposed by the United States Department 
of Justice for processing each set of fingerprints;
    (5) $30 for processing and posting to the CRD system each set of 
fingerprint cards submitted in non-electronic format by the member 
to FINRA, plus any other charge that may be imposed by the United 
States Department of Justice for processing each set of 
fingerprints;
    (6) $30 for processing and posting to the CRD system each set of 
fingerprint results and identifying information that has been 
processed through a self-regulatory organization other than FINRA; 
and
    (7) $110 for the additional processing of each initial or 
amended Form BD that includes the initial reporting, amendment, or 
certification of one or more disclosure events or proceedings.
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    The FINRA Web CRD Fees are user-based and there is no distinction 
in the cost incurred by FINRA if the user is a FINRA member or a Non-
FINRA member. Accordingly, the proposed fees mirror those currently 
assessed by FINRA.
    The Exchange also proposes to update a rule citation within the 
Continuing Education Fees from ``General 4, Section 1.1240'' to 
``General 4, Section 1240.''
Equity 7
    The Exchange also proposes to amend Equity 7, Section 4, Membership 
Fees, to add a new section ``B'' titled ``Regulatory, Registration, and 
Processing Fees.'' This new section ``B'' would inform PSX members that 
applicable FINRA fees are located within Options 7, Section 9C. Members 
of Phlx may elect to become PSX only members, therefore this new rule 
text would provide information to those members regarding FINRA Fees. 
The Exchange proposes to state, ``A list of fees that will be collected 
and retained by FINRA via the Web CRD registration system for the 
registration of associated persons of Exchange members that are not 
also FINRA members is available within Options 7, Section 9C.''
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 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5).
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Options 7
    The Exchange believes it is reasonable to increase the $100 fee for 
each initial Form U4 filed for the registration of a representative or 
principal to $125 in accordance with an adjustment to FINRA's fees.\12\ 
The Exchange's rule text will reflect the current registration rate 
that will be assessed by FINRA as of January 2, 2022. Amending the 
title of the $45 fee to be more precise will provide greater 
transparency to this fee. Updating FINRA's fingerprint processing fees 
to reflect the current charges will bring greater transparency to these 
charges that are currently assessed and collected by FINRA. The 
proposed fees are identical to those adopted by FINRA for use of Web 
CRD for disclosure and the registration of FINRA members and their 
associated persons. These costs are borne by FINRA when a Non-FINRA 
member uses Web CRD.
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    \12\ See note 3 above.
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    The Exchange believes that its proposal to increase the $100 fee 
for each initial Form U4 filed for the registration of a representative 
or principal to $125 is equitable and not unfairly discriminatory as 
the amendment will reflect the current fee that will be assessed by 
FINRA to all members who require Form U4 filings as of January 2, 2022. 
Amending the title of the $45 fee to be more precise will provide 
greater transparency to this fee. Updating the fingerprint processing 
fees to reflect the current fees is equitable and not unfairly 
discriminatory as FINRA currently assesses these rates to all members. 
Further, the proposal is also equitable and not unfairly discriminatory 
because the Exchange will not be collecting or retaining these fees, 
therefore, the Exchange will not be in a position to apply them in an 
inequitable or unfairly discriminatory manner.
Equity 7
    The Exchange's proposal to amend Equity 7, Section 4, Membership 
Fees, to add a new section ``B'' titled ``Regulatory, Registration, and 
Processing Fees'' that informs members of applicable FINRA Fees is 
reasonable. This new section ``B'' would inform PSX members that 
applicable FINRA fees are located within Options 7, Section 9C. Members 
of Phlx may elect to become PSX only members. The proposed rule text 
would provide information to those members regarding FINRA Fees.
    The Exchange's proposal to amend Equity 7, Section 4, Membership 
Fees, to add a new section ``B'' titled ``Regulatory, Registration, and 
Processing Fees'' that informs members of applicable FINRA Fees is 
equitable and not unfairly discriminatory because the Exchange will not 
be collecting or retaining these fees, therefore will not be in a 
position to apply them in an inequitable or unfairly discriminatory 
manner.

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.
Options 7
    The Exchange believes that its proposal to increase the $100 fee 
for each initial Form U4 filed for the registration of a representative 
or principal to $125 does not impose an undue burden on competition as 
the amendment will reflect the current fee that will be assessed by 
FINRA to all members who require Form U4 filings as of January 2, 2022. 
Amending the title of the $45 fee to be more precise will provide 
greater transparency to this fee. Updating the fingerprint processing 
fees to reflect the current fees does not impose an undue burden on 
competition as FINRA currently assesses these rates to all members. 
Further, the proposal does not impose an undue burden on competition 
because the Exchange will not be collecting or retaining these fees, 
therefore, the Exchange will not be in a position to apply them in an 
inequitable or unfairly discriminatory manner.
Equity 7
    The Exchange's proposal to amend Equity 7, Section 4, Membership 
Fees, to add a new section ``B'' titled ``Regulatory, Registration, and 
Processing Fees'' that informs members of applicable FINRA Fees does 
not impose an undue burden on competition because the Exchange will not 
be collecting or retaining these fees, therefore will not be in a 
position to apply them in an inequitable or unfairly discriminatory 
manner.

[[Page 64978]]

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.\13\
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    \13\ 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-2021-68 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-2021-68. 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-2021-68, and should be submitted on 
or before December 10, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25229 Filed 11-18-21; 8:45 am]
BILLING CODE 8011-01-P