Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fees for Nasdaq 100 Index Options in Options 7, Section 5.A

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-103268; File No. SR-Phlx-2025-22]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fees for Nasdaq 100 Index Options in Options 7, Section 5.A</SUBJECT> <DATE>June 16, 2025.</DATE> Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), <SU>1</SU> <FTREF/> and Rule 19b-4 thereunder, <SU>2</SU> <FTREF/> notice is hereby given that on June 2, 2025, 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. <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  17 CFR 240.19b-4. </FTNT> <HD SOURCE="HD1">I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change</HD> The Exchange proposes to amend the fees for Nasdaq 100 Index options in the Exchange's Pricing Schedule at Options 7, Section 5.A to adopt a new surcharge for removing liquidity. The text of the proposed rule change is available on the Exchange's website at <E T="03">https://listingcenter.nasdaq.com/rulebook/phlx/rulefilings,</E> at the principal office of the Exchange, and at the Commission's Public Reference Room. <HD SOURCE="HD1">II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> 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. <HD SOURCE="HD2">A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> <HD SOURCE="HD3">1. Purpose</HD> The purpose of the proposed rule change is to amend the fees for NDX  <SU>3</SU> <FTREF/> and NDXP. <SU>4</SU> <FTREF/> <FTNT> <SU>3</SU>  NDX represents A.M.-settled options on the full value of the Nasdaq 100 Index traded under the symbol NDX. </FTNT> <FTNT> <SU>4</SU>  NDXP represents P.M.-settled options on the full value of the Nasdaq 100 Index traded under the symbol NDXP. </FTNT> As set forth in Options 7, Section 5.A, the Exchange currently charges all Non-Customer  <SU>5</SU> <FTREF/> orders in NDX and NDXP a $0.75 per contract transaction fee. Customer  <SU>6</SU> <FTREF/> orders are currently assessed a $0.25 per contract transaction fee in NDX and NDXP. These transaction fees apply to electronic simple and complex executions as well as floor transactions. <FTNT> <SU>5</SU>  The term “Non-Customer” applies to transactions for the accounts of Lead Market Makers, Market Makers, Firms, Professionals, Broker-Dealers and JBOs. </FTNT> <FTNT> <SU>6</SU>  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)). </FTNT> The Exchange now proposes to assess a surcharge of $1.50 per contract to all electronic simple Non-Customer orders that remove liquidity. <SU>7</SU> <FTREF/> Customer NDX and NDXP fees will remain unchanged under this proposal. The proposed surcharge is aimed at encouraging Non-Customers to add more liquidity and reduce “take” behavior that removes liquidity from the order book. The Exchange notes that the proposed surcharge amount is within the range of surcharges assessed for transactions in other proprietary products at another options exchange. <SU>8</SU> <FTREF/> <FTNT> <SU>7</SU>   <E T="03">See</E> proposed note 3 in Options 7, Section 5.A. </FTNT> <FTNT> <SU>8</SU>  For example, Cboe Options (“Cboe”) currently assesses market participants LEAPS surcharge fees for SPX ranging from $1.00 to $2.50 per contract. <E T="03">See</E> Cboe Fees Schedule. </FTNT> Lastly, the Exchange proposes a non-substantive change in the Section 5.A pricing schedule. Specifically, the Exchange proposes to relocate the note 1 references currently appended to NDX, NDXP, and EXGN under the “Symbol” column to the relevant transaction fees under the columns for “Professional,” “Lead Market Maker and Market Maker,” “Broker-Dealer,” and “Firm.” Note 1 currently sets forth the $0.25 per contract surcharge for NDX, NDXP and EXGN assessed to Non-Customers. The Exchange seeks to promote clarity in its Section 5.A pricing schedule by relocating the note 1 references so that they are appended to the respective transaction fees for Non-Customers. <HD SOURCE="HD3">2. Statutory Basis</HD> The Exchange believes that its proposal is consistent with Section 6(b) of the Act, <SU>9</SU> <FTREF/> in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act, <SU>10</SU> <FTREF/> 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. <FTNT> <SU>9</SU>  15 U.S.C. 78f(b). </FTNT> <FTNT> <SU>10</SU>  15 U.S.C. 78f(b)(4) and (5). </FTNT> The Exchange believes that its proposal to add a $1.50 per contract surcharge to all electronic simple Non-Customer orders that remove liquidity is reasonable because the proposed pricing reflects the proprietary nature of this product. Similar to other proprietary products like options overlying the Nasdaq 100 Micro Index (“XND”), the Exchange seeks to recoup the operational costs of listing proprietary products. <SU>11</SU> <FTREF/> Also, pricing by symbol is a common practice on many U.S. options exchanges as a means to incentivize order flow to be sent to an exchange for execution in particular products. As noted above, another options exchange assesses surcharges for its proprietary index options products that are within the range (or higher) of what the Exchange is proposing herein. <SU>12</SU> <FTREF/> Further, the Exchange notes that 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, NDXP, or XND, or separately through multi-listed options overlying Invesco QQQ Trust (“QQQ”). <SU>13</SU> <FTREF/> Offering such products 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. When exchanges are able to recoup costs associated with offering proprietary products, it incentivizes growth and competition for the innovation of additional products. <FTNT> <SU>11</SU>  By way of example, in analyzing an obvious error, the Exchange would have additional data points available in establishing a theoretical price for a multiply listed option as compared to a proprietary product, which requires additional analysis and administrative time to comply with Exchange rules to resolve an obvious error. </FTNT> <FTNT> <SU>12</SU>   <E T="03">See supra</E> note 8. </FTNT> <FTNT> <SU>13</SU>  QQQ is an exchange-traded fund based on the same Nasdaq 100 Index as NDX, NDXP, and XND. </FTNT> The Exchange believes that its proposal is equitable and not unfairly discriminatory because it will be applied uniformly to all electronic simple Non-Customer NDX and NDXP orders that remove liquidity. Assessing this surcharge only to Non-Customers is equitable and not unfairly discriminatory because Customers have historically been assessed more favorable pricing on the Exchange, including on NDX and NDXP orders where they will continue to be assessed the lowest transaction fee of $0.25 per contract under this proposal. Customer order flow benefits all market participants by providing more trading opportunities, which attracts market makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants, to the benefit of all market participants who may interact with this order flow. Further, the proposed surcharge is aimed at encouraging Non-Customers to add more liquidity and reduce “take” behavior that removes liquidity from the order book. To the extent the Exchange is successful in incentivizing this behavior, the additional liquidity on the Exchange will benefit all market participants through more trading opportunities, tighter spreads, and added price discovery. Lastly, the Exchange believes that the non-substantive changes to relocate the note 1 references in the Section 5.A pricing schedule as described above are reasonable, equitable, and not unfairly discriminatory because they will promote clarity in the Exchange's pricing schedule and make it easier to follow, to the benefit of all market participants. <HD SOURCE="HD2">B. Self-Regulatory Organization's Statement on Burden on Competition</HD> 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 intra-market competition, the Exchange will apply the proposed surcharge uniformly to all Non-Customers. 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