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

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 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.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

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 https://listingcenter.nasdaq.com/​rulebook/​phlx/​rulefilings, 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 the fees for NDX ^[3] and NDXP.^[4]

As set forth in Options 7, Section 5.A, the Exchange currently charges all Non-Customer ^[5] orders in NDX and NDXP a $0.75 per contract transaction fee. Customer ^[6] 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.

The Exchange now proposes to assess a surcharge of $1.50 per contract to all electronic simple Non-Customer orders that remove liquidity.^[7] 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.^[8]

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.

2. Statutory Basis

The Exchange believes that its proposal is consistent with Section 6(b) of the Act,^[9] in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,^[10] 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.

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.^[11] 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.^[12] 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”).^[13] 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.

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.

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 intra-market competition, the Exchange will apply the proposed surcharge uniformly to all Non-Customers. As discussed above, the proposed change 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.

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 options 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. As noted above, market participants are offered an opportunity to transact in NDX, NDXP, or XND, or separately execute options overlying QQQ. Offering these products provides market participants with a variety of choices in selecting the product they desire to use to gain exposure to the Nasdaq 100 Index. Furthermore, the proposed surcharge is in line with surcharges assessed on other proprietary products at another options exchange.^[14]

In addition to the Exchange, market participants have alternative options exchanges that they may participate on and direct their order flow, which list proprietary products that compete with NDX and NDXP.^[15] In sum, 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 members or competing options exchanges to maintain their competitive standing in the financial markets.

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.^[16]

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 (https://www.sec.gov/​rules/​sro.shtml); or
• Send an email to[email protected]. Please include file number SR-Phlx-2025-22 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.

June 16, 2025. ( printed page 26388) ( printed page 26389)

All submissions should refer to file number SR-Phlx-2025-22. 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 ( https://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 a.m. and 3 p.m. Copies of the filing also 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-2025-22 and should be submitted on or before July 11, 2025.