Notice2026-11815
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Sections 2, 5 and 9B
Primary source
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Published
June 12, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 113 (Friday, June 12, 2026)</title>
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[Federal Register Volume 91, Number 113 (Friday, June 12, 2026)]
[Notices]
[Pages 35742-35747]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-11815]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105640; File No. SR-Phlx-2026-34]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7,
Sections 2, 5 and 9B
June 9, 2026.
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 May 27, 2026, 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 Phlx's Pricing Schedule at Options
7, Sections 2, 5 and 9B related to Customer Rebates, Index Options and
Port Fees, respectively.\3\
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\3\ On April 30, 2026, the Exchange filed SR-Phlx-2026-27. On
May 12, 2026, the Exchange withdrew SR-Phlx-2026-27 and filed this
proposal. On May 27, 2026, the Exchange withdrew SR-Phlx-2026-30 and
filed this proposal.
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The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/phlx/rulefilings">https://listingcenter.nasdaq.com/rulebook/phlx/rulefilings</a>,
and at the principal office of the Exchange.
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.
[[Page 35743]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Phlx proposes to modify its Pricing Schedule at Options 7, Section
2, Customer Rebate Program, to amend certain tier qualifications. The
Exchange also proposes to amend the current surcharge applicable to
Nasdaq-100[supreg] Index (``NDX'') options and the P.M.-Settled NDX
Options (``NDXP'') at Options 7, Section 5, Index and Singly Listed
Options (Includes options overlying FX Options, equities, ETFs, ETNs,
and indexes not listed on another exchange). Finally, the Exchange
proposes to amend Options 7, Section 9B, Port Fees, to delete text
related to a migration. Each change will be described below.
Options 7, Section 2
The Exchange proposes to amend the Pricing Schedule at Options 7,
Section 2, Customer Rebate Program.
Currently, the Exchange pays rebates on five Customer \4\ Rebate
Tiers according to four categories. The Customer Rebate Tiers below are
calculated by totaling Customer volume in Multiply Listed Options
(including SPY) that are electronically-delivered and executed, except
volume associated with electronic Qualified Contingent Cross Orders, as
defined in Options 3, Section 12. Rebates are paid on Customer Rebate
Tiers according to the below categories.\5\
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\4\ 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 Options 7, Section 1(c).
\5\ Members and member organizations under Common Ownership may
aggregate their Customer volume for purposes of calculating the
Customer Rebate Tiers and receiving rebates. Affiliated Entities may
aggregate their Customer volume for purposes of calculating the
Customer Rebate Tiers and receiving rebates. See Options 7, Section
2. Rebates are not paid on broad-based index options symbols listed
within Options 7, Section 5.A. in any Category, however broad-based
index options symbols listed within Options 7, Section 5.A. count
toward the volume requirement to qualify for a Customer Rebate Tier.
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Percentage thresholds of national customer
volume in multiply-listed equity and ETF
Customer rebate tiers options classes, excluding SPY options Category A Category B Category C Category D
(monthly)
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Tier 1.................................... 0.00%-0.60%................................. $0.00 $0.00 $0.00 $0.00
Tier 2.................................... Above 0.60%-1.50%........................... 0.10 0.10 0.16 0.21
Tier 3.................................... Above 1.50%-2.00%........................... 0.15 0.12 0.18 0.22
Tier 4.................................... Above 2.00%-2.75%........................... 0.20 0.16 0.22 0.26
Tier 5.................................... Above 2.75%................................. 0.21 0.17 0.22 0.27
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The Exchange pays a Category A Rebate to members executing
electronically-delivered Customer Simple Orders in Penny Symbols and
Customer Simple Orders in Non-Penny Symbols in Options 7, Section 4
symbols.\6\ The Exchange pays a Category B Rebate on Customer PIXL
Orders \7\ in Options 7, Section 4 symbols that execute against non-
Initiating Order interest. In the instance where member organizations
qualify for Tier 4 in the Customer Rebate Program, Customer PIXL Orders
that execute against a PIXL Initiating Order will be paid a rebate of
$0.13 per contract. In the instance where member organizations qualify
for Tier 5 in the Customer Rebate Program, Customer PIXL Orders that
execute against a PIXL Initiating Order will be paid a rebate of $0.14
per contract. All rebates on Customer PIXL Orders will be capped at
4,000 contracts per order for Simple PIXL Orders. The Exchange pays a
Category C Rebate to members executing electronically-delivered
Customer Complex Orders \8\ in Penny Symbols in Options 7, Section 4
symbols. Rebates are paid on Customer PIXL Complex Orders in Options 7,
Section 4 symbols that execute against non-Initiating Order interest.
Customer Complex PIXL Orders that execute against a Complex PIXL
Initiating Order are not paid a rebate under any circumstances. The
Category C Rebate is not paid when an electronically-delivered Customer
Complex Order, including a Customer Complex PIXL Order, executes
against another electronically-delivered Customer Complex Order.
Finally, the Exchange pays a Category D Rebate to members executing
electronically-delivered Customer Complex Orders in Non-Penny Symbols
in Options 7, Section 4 symbols. Rebates are paid on Customer PIXL
Complex Orders in Options 7, Section 4 symbols that execute against
non-Initiating Order interest. Customer Complex PIXL Orders that
execute against a Complex PIXL Initiating Order are not paid a rebate
under any circumstances. The Category D Rebate is not paid when an
electronically-delivered Customer Complex Order, including a Customer
Complex PIXL Order, executes against another electronically-delivered
Customer Complex Order.
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\6\ Options 7, Section 4 describes pricing for Multiply Listed
Options Fees (Includes options overlying equities, ETFs, ETNs and
indexes which are Multiply Listed) (Excludes SPY and broad-based
index options symbols listed within Options 7, Section 5.A).
\7\ PIXL Orders are entered into the Exchange's Price
Improvement XL (``PIXL'') Mechanism as described in Options 3,
Section 13.
\8\ Complex Orders are described in Options 3, Section 14.
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Proposal
At this time, the Exchange proposes to amend the Customer Rebate
Program at Options 7, Section 2, to modify the Percentage Thresholds of
National Customer Volume in Multiply-Listed Equity and ETF Options
Classes, excluding SPY Options (Monthly) (``Percentage Thresholds'') to
qualify for the Tier 4 and Tier 5 Customer Rebates.
Specifically, the Exchange proposes to decrease the Tier 4
Percentage Thresholds from above 2.00%-2.75% to above 2.00%-2.50%.
Additionally, the Exchange proposes to decrease the Tier 5 Percentage
Thresholds from above 2.75% to above 2.50%.
The Exchange believes that the proposed amendments to the Customer
Rebate Program to lower the Tier 4 and 5 qualifications will encourage
members and member organizations to send a greater amount of order flow
to Phlx to earn additional rebates. All members and member
organizations would have the opportunity to interact with such
increased order flow.
Options 7, Section 5
Phlx proposes to amend the current surcharge applicable to NDX
options at Options 7, Section 5, Index and Singly Listed Options
(Includes options overlying FX Options, equities, ETFs, ETNs, and
indexes not listed on another
[[Page 35744]]
exchange). Currently, note 3 of Options 7, Section 5, Index and Singly
Listed Options (Includes options overlying FX Options, equities, ETFs,
ETNs, and indexes not listed on another exchange), imposes a surcharge
of $1.50 per contract for NDX and NDXP electronic simple Non-Customer
\9\ orders that remove liquidity 3. This surcharge is in addition to
the Options Transaction Charges in NDX and NDXP for Non-Customer orders
of $0.75 per contract. Today, Customer orders pay an Options
Transaction Charge of $0.50 per contract in NDX and NDXP.\10\
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\9\ The term ``Non-Customer'' applies to transactions for the
accounts of Lead Market Makers, Market Makers, Firms, Professionals,
Broker-Dealers and JBO. See Options 7, Section 1(c).
\10\ A surcharge for NDX and NDXP of $0.25 per contract is
assessed to Non-Customers. See note 1 of Options 7, Section 5.
Additionally, a surcharge for XND of $0.10 per contract will be
assessed to Non-Customers. See note 2 of Options 7, Section 5.
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Proposal
At this time, the Exchange proposes to amend the surcharge at note
3 of Options 7, Section 5 to instead assess a surcharge on NDX and NDXP
electronic simple Non-Customer orders that remove liquidity according
to the following premium schedule:
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Less than $3.00................................................ $1.00
Greater than or equal to $3.00 and less than $10.00............ 1.50
Greater than or equal to $10.00 and less than $25.00........... 2.00
Greater than or equal to $25.00 and less than $50.00........... 2.50
Greater than or equal to $50.00................................ 3.00
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The Exchange believes its proposed scaled surcharge reflects meaningful
differences in risk and market impact across premium levels. Higher-
premium options signal greater implied volatility, carry larger
notional exposure, exhibit heightened sensitivity to index movements,
embed more consequential leverage, and approximate or exceed the
economic exposure of comparable futures contracts. Each of these
factors independently supports imposing a higher surcharge on higher-
premium transactions.
An option's premium is driven in substantial part by the market's
expectation of future movement in the underlying index (implied
volatility).\11\ Accordingly, a higher premium generally signals that
the market perceives the Nasdaq-100 Index as presenting greater risk at
that point in time. Trades executed in higher-volatility environments
carry a greater potential to disrupt orderly market functioning: each
transaction can exert more pronounced price pressure, and liquidity
providers face commensurately higher hedging costs. A surcharge tied to
premium price functions as a self-correcting mechanism--when market
conditions are riskier and premiums rise, the surcharge rises
proportionally; when conditions normalize and premiums decline, the
surcharge declines accordingly. This design ensures the pricing remains
aligned with prevailing market risk without requiring constant manual
recalibration. The Nasdaq-100 Index is particularly susceptible to
these dynamics given its heavy concentration in large-capitalization
technology companies, which can experience sharp and sudden price
dislocations that cause option premiums to escalate rapidly.
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\11\ When market participants expect larger swings in the
Nasdaq-100 Index, option premiums rise; when they expect less
volatility, premiums fall.
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The notional value \12\ of NDX options further supports the
proposed tiered surcharge. With a contract multiplier of $100, a $1.00
premium option represents $100 of premium value per contract, while a
$50.00 premium option represents $5,000 per contract--fifty times the
economic stake. A trade in a higher-premium option transfers more
capital and more risk between counterparties, requires Market Makers to
commit greater resources to hedge the resulting position, and consumes
a larger share of available liquidity on the order book. A flat
surcharge--identical regardless of premium price--would treat a $100
trade and a $5,000 trade as though they imposed equivalent market
impact. The tiered schedule, by contrast, scales the fee with the
magnitude of economic exposure, ensuring that participants trading
higher-value options bear a modestly higher surcharge commensurate with
the greater significance of their transactions. The proposed pricing is
reasonable because the scaled surcharge reflects these differences in
the economic characteristics of the underlying transactions.
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\12\ Notional value refers to the total dollar amount of
economic exposure that an option contract represents.
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Transactions in the Nasdaq-100 Index involving greater effective
leverage warrant proportionally higher fees. Leverage permits a trader
to gain exposure to a large notional amount in the underlying index for
a relatively small upfront payment; however, the significance of that
leverage varies materially with the premium price. A $1.00 premium NDX
option offers the potential for control of a large notional position
but is typically far out-of-the-money, meaning the probability that it
will deliver meaningful economic value at expiration is low. By
contrast, a $50.00 premium NDX option is likely in-the-money or near-
the-money, carrying a high probability of delivering a real economic
payoff. In this case, the market participant pays a fraction of the
cost of an equivalent direct position in the Nasdaq-100 Index while
retaining a strong likelihood of participating in the index's movement.
This combination of leverage and high probability of economic delivery
makes higher-premium options powerful instruments capable of shifting
substantial risk. The proposed tiered surcharge recognizes that higher-
premium options carry more consequential leverage and should therefore
bear a commensurately higher fee.
Finally, as the premium of NDX or NDXP options increases, the
option's economic behavior converges with that of a futures contract. A
CME-listed Nasdaq-100 future provides direct, linear one-for-one
exposure to the Nasdaq-100 Index. When an NDX option carries a high
premium and a delta approaching 1.0, it behaves substantially like a
futures contract: with a $100 multiplier and a delta near 1.0, each
one-point move in the index produces approximately $100 of profit or
loss per contract--the economic equivalent of roughly five E-mini
Nasdaq-100 futures contracts. Moreover, options introduce risk
dimensions absent from futures, including sensitivity to changes in
volatility (vega risk) and accelerating sensitivity to index movements
(gamma risk). These additional risk dimensions give high-premium
options a risk profile that can exceed that of a comparable futures
position, further supporting a higher surcharge at elevated premium
levels.
With this proposal, the lowest tier ($1.00) reduces the existing
surcharge for low-premium contracts, conferring a benefit on
participants trading less expensive series. The middle tier ($1.50)
preserves the status quo for the band that historically reflects a
substantial portion of activity in NDX and NDXP. The upper tiers
($2.00, $2.50, and $3.00) modestly increase the surcharge for high-
premium contracts, where the participant's economic exposure--and the
Exchange's correlative cost burden--is materially greater. The
graduated structure thereby ties the magnitude of the fee to an
objective, transaction-specific measure of value, which the Commission
has long recognized as a reasonable basis for differentiated pricing in
the listed options markets.
The Exchange believes that the proposed schedule of fees will
continue
[[Page 35745]]
to attract NDX and NDXP order flow to the Exchange.
Options 7, Section 9B
In 2025, Phlx underwent a technology migration \13\ wherein member
organizations maintained both legacy FIX Ports that were connected to
the legacy Phlx platform and new FIX Ports that were connected to the
new Phlx platform that was introduced as part of the migration. The
migration was completed in December 2025 and legacy FIX Ports were
sunset on February 27, 2026. The Exchange proposes to remove the
obsolete rule text that states, ``Phlx will sunset legacy FIX Ports on
February 27, 2026. The below FIX Port Fees apply to new and legacy FIX
Ports.''
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\13\ See <a href="https://www.nasdaqtrader.com/MicroNews.aspx?id=OTU2025-6">https://www.nasdaqtrader.com/MicroNews.aspx?id=OTU2025-6</a>.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\14\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\15\ 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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\14\ 15 U.S.C. 78f(b).
\15\ 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.'' \16\
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\16\ 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
\17\ (``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.\18\ 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.'' \19\
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\17\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\18\ See NetCoalition, at 534--535.
\19\ 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'. . . .'' \20\ 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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\20\ 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 2
The Exchange's proposal to decrease the Tier 4 and 5 percentage
thresholds for the Customer Rebate Program is reasonable because the
lower tier qualifications would enable members to qualify for Customer
rebates, thereby attracting more Customer order flow.
The Exchange's proposal to decrease the Tier 4 and 5 percentage
thresholds for the Customer Rebate Program is equitable and not
unfairly discriminatory because the proposed tier qualifications would
uniformly apply to all members for purposes of qualifying for Customer
rebates. Further, paying these rebates only to Customers is equitable
and not unfairly discriminatory because Customer liquidity benefits all
market participants by providing more trading opportunities, which
attracts market makers. An increase in the activity of market makers--
particularly in response to pricing--facilitates tighter spreads, which
may cause an additional corresponding increase in order flow from other
market participants.
Options 7, Section 5
The Exchange's proposal to replace the current flat surcharge of
$1.50 per contract for regular Non-Public Customer orders that remove
liquidity with a tiered structure \21\ scaled to the premium value of
each contract is reasonable because scaling the surcharge to the
premium value of the contract more accurately calibrates the fee to the
economic value that the liquidity-removing participant derives from the
transaction and to the corresponding costs and risks borne by the
Exchange and by the liquidity providers whose quotations support the
market in NDX and NDXP.\22\ These index options are proprietary
products for which the Exchange incurs licensing, market-data, and
other costs that scale, in significant part, with the notional and
premium value executed on the Exchange. A premium-based tier therefore
allocates a larger share of those costs to transactions that consume a
proportionally greater amount of Exchange resources and confer a
proportionally greater economic benefit on the participant, while
reducing the relative burden on lower-premium transactions, which are
often associated with lower-delta or hedging-oriented strategies.
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\21\ The Exchange proposes a premium schedule as follows: $1.00
per contract for premiums less than $3.00; $1.50 per contract for
premiums greater than or equal to $3.00 and less than $10.00; $2.00
per contract for premiums greater than or equal to $10.00 and less
than $25.00; $2.50 per contract for premiums greater than or equal
to $25.00 and less than $50.00; and $3.00 per contract for premiums
greater than or equal to $50.00.
\22\ With respect to NDX, the two lowest tiers ($1.00 for
premiums less than $3.00 and $1.50 for premiums of $3.00 to less
than $10.00) introduce a modest surcharge on lower-premium
executions that today bear no surcharge, in amounts commensurate
with the limited economic value of those contracts. The middle tier
($2.00 for premiums of $10.00 to less than $25.00) likewise applies
a measured surcharge to a band that is currently exempt. The upper
tiers ($2.50 for premiums of $25.00 to less than $50.00 and $3.00
for premiums of $50.00 or greater) replace the existing $0.25
surcharge with charges that more accurately reflect the materially
greater economic exposure of high-premium contracts and the
correspondingly greater cost burden borne by the Exchange and its
liquidity providers. The graduated structure thereby ties the
magnitude of the fee to an objective, transaction-specific measure
of value across the entire premium spectrum, which the Commission
has long recognized as a reasonable basis for differentiated pricing
in the listed options markets.
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The Exchange believes its proposed scaled surcharge reflects
meaningful differences in risk and market impact across premium levels.
Higher option premiums reflect elevated implied volatility in the
Nasdaq-100 Index, signaling greater market risk. A premium-based
surcharge operates as a self-correcting mechanism that scales fees with
prevailing volatility, ensuring alignment with actual market
conditions--particularly given the Nasdaq-100's concentration in
technology stocks prone to sharp price dislocations. Differences in
premium translate into significant differences in notional value and
market impact. A tiered surcharge ensures that participants whose
trades transfer greater capital and consume more
[[Page 35746]]
liquidity bear fees proportionate to the economic magnitude of their
transactions, whereas a flat surcharge would ignore these disparities.
The economic significance of an option's embedded leverage depends on
whether the option is likely to deliver a real payoff. Low-premium, far
out-of-the-money options carry leverage largely in theory, while
higher-premium options near or in the money combine meaningful leverage
with a high probability of economic delivery, justifying a
commensurately higher surcharge. As NDX or NDXP option premiums rise
and delta approaches 1.0, the option's risk profile converges with--and
can exceed--that of a comparable Nasdaq-100 futures contract, because
options also carry vega and gamma risk. This functional equivalence
(and additional complexity) at higher premium levels further supports a
scaled surcharge.
Today, market participants are offered different ways to gain
exposure to the Nasdaq-100 Index, whether through the Exchange's
proprietary products like options overlying NDX or NDXP or separately
through multi-listed options overlying Invesco QQQ Trust (``QQQ'').
Offering NDX Options provides market participants with a variety of
choices in selecting the product they desire to utilize in order to
gain exposure to the Nasdaq-100 Index. Both NDX index options and QQQ
options derive their value from the same underlying economic exposure:
the Nasdaq-100 index constituents. A participant seeking to hedge or
speculate on the performance of the Nasdaq-100 can achieve comparable
economic outcomes through either product. While the two products differ
in settlement mechanics (NDX settles in cash; QQQ settles in shares of
the ETF) and multiplier conventions, they serve as functional
substitutes for the same core market exposure. In terms of price
comparisons, Non-Public Customers are assessed a $0.45 or $0.46 per
contract Penny Symbol Taker Fees \23\ to execute (remove liquidity) in
an option on QQQ. To measure the notional equivalent of an option on
QQQ as compared to NDX options, the fees should be multiplied by the
ratio of the settlement price of NDX divided by QQQ. For example, on
May 8, 2026, the ratio of settlement prices was 41.10 (29235.00 (NDXP
settlement price)/711.23 (QQQ settlement price)). To create an
equivalence in fees, a Taker Fee of $0.45 per contract for QQQ would
equal $18.50 for NDX. The proposed NDX and NDXP fees are significantly
lower than QQQ options by comparison. A single NDX options contract
carries a notional value approximately 41 times greater than a single
QQQ options contract. A market participant would need to execute
roughly 41 QQQ options to replicate the economic exposure of a single
NDX contract. The Exchange therefore believes that a higher per-
contract surcharge on NDX is reasonable on a cost-per-unit-of-notional-
value basis.
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\23\ See Options 7, Section 3.
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Finally, competing in a regulated capital markets environment
imposes several incremental costs on a less mature product. NDX and
NDXP compete against other broad-based indexes such as the S&P 500
Index (``SPX''), which is a mature index in comparison to NDX and NDXP.
As a result, NDX and NDXP incur significant marketing expenditures
aimed at funding educational content for NDX and NDXP indexes to build
awareness.
The Exchange's proposal to replace the current flat surcharge of
$1.50 per contract for regular Non-Public Customer orders that remove
liquidity with a tiered structure scaled to the premium value of each
contract is not unfairly discriminatory because the surcharge applies
uniformly to all electronic simple Non-Public Customer orders that
remove liquidity in NDX and NDXP. Every Non-Public Customer
(Professionals, Broker-Dealers, Firms, and Market Makers) will be
subject to the same tier table, and the applicable tier for any given
execution will be determined solely by the objective premium value of
the contract executed. While the proposed surcharge does not apply to
Customer orders, the Exchange notes that Customer liquidity benefits
all market participants by providing more trading opportunities, which
attracts market makers. An increase in the activity of market makers--
particularly in response to pricing--facilitates tighter spreads, which
may cause an additional corresponding increase in order flow from other
market participants. Such developments would benefit all market
participants.
Options 7, Section 9B
The Exchange's proposal to remove rule text in Options 7, Section
9B related to a prior migration is reasonable because the migration is
complete and the Exchange has sunset all legacy FIX Ports as of
February 27, 2026. Further, the proposal is equitable and not unfairly
discriminatory because no Phlx member organization has access to a
legacy FIX Port.
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, Section 2
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 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. 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.
Intra-Market Competition
In accordance with Section 6(b)(8) of the Act, the Exchange does
not believe that the proposed rule change would impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange's proposal to decrease the Tier 4 and
5 percentage thresholds for the Customer Rebate Program does not impose
an undue burden on competition because the Exchange would uniformly
apply to all members for purposes of qualifying for Customer rebates.
Further, paying these rebates only to Customers is equitable and not
unfairly discriminatory because Customer liquidity benefits all market
participants by providing more trading opportunities, which attracts
market makers. An increase in the activity of market makers--
particularly in response to pricing--facilitates tighter spreads, which
may cause an additional corresponding increase in order flow from other
market participants.
Finally, market participants are offered an opportunity to transact
in NDX or NDXP, or separately execute options overlying QQQ. Offering
these products provides market participants with a variety of choices
in selecting the
[[Page 35747]]
product they desire to use to gain exposure to the Nasdaq-100 Index.
Options 7, Section 5
Inter-Market Competition
The proposal does not impose an undue burden on inter-market
competition. NDX and NDXP are proprietary options contracts while
options on QQQ are multi-listed. Other options exchanges may price
options on QQQ in a manner so as to compete directly with options on
NDX and NDXP. Further, options exchanges may offer competing broad-
based indexes such as Cboe Exchange, Inc.'s SPX Options to compete with
NDX and NDXP. The manner in which options exchanges elect to price
substitute or competing products may cause order flow to be diverted to
another exchange.
Intra-Market Competition
In accordance with Section 6(b)(8) of the Act, the Exchange does
not believe that the proposed rule change would impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange's proposal to replace the current
flat surcharge of $1.50 per contract for regular Non-Public Customer
orders that remove liquidity with a tiered structure scaled to the
premium value of each contract does not impose an undue burden on
competition because the surcharge applies uniformly to all electronic
simple Non-Public Customer orders that remove liquidity in NDX and
NDXP. Every Non-Public Customer (Professionals, Broker-Dealers, Firms,
and Market Makers) will be subject to the same tier table, and the
applicable tier for any given execution will be determined solely by
the objective premium value of the contract executed. While the
proposed surcharge does not apply to Public Customer orders, the
Exchange notes that Public Customer liquidity benefits all market
participants by providing more trading opportunities, which attracts
market makers. An increase in the activity of market makers--
particularly in response to pricing--facilitates tighter spreads, which
may cause an additional corresponding increase in order flow from other
market participants. Such developments would benefit all market
participants.
Further, today, market participants have the opportunity to
transact in NDX or NDXP options, or separately execute options
overlying QQQ. The NDX and NDXP products provide market participants
with an additional means to gain exposure to the Nasdaq-100 Index. NDX
and NDXP products compete with options on QQQ directly, and SPX
products indirectly and that competition is driven in part through the
pricing of these products. Finally, the proposed pricing differentiates
among transactions--not among market participants--and does so on the
basis of an objective, market-determined variable (premium price) that
directly correlates with the costs imposed on the Exchange. For these
reasons noted above, the Exchange believes that the proposed pricing is
pro-competitive.
Options 7, Section 9B
The Exchange's proposal to remove rule text in Options 7, Section
9B related to a prior migration does not impose an undue burden on
competition because no Phlx member organization has access to a legacy
FIX Port.
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.\24\
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\24\ 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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#3c4e495059115f5351515952484f7c4f595f125b534a"><span class="__cf_email__" data-cfemail="1f6d6a737a327c7072727a716b6c5f6c7a7c31787069">[email protected]</span></a>. Please include
file number SR-Phlx-2026-34 on the subject line.
Paper Comments
<bullet> 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-2026-34. 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 (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection.
All submissions should refer to file number SR-Phlx-2026-34 and
should be submitted on or before July 6, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-11815 Filed 6-11-26; 8:45 am]
BILLING CODE 8011-01-P
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