[Federal Register Volume 90, Number 173 (Wednesday, September 10, 2025)]
[Notices]
[Pages 43662-43666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-17340]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103889; File No. SR-Phlx-2025-40]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Phlx
Options 7, Section 9
September 5, 2025.
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 August 26, 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.
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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 its Specialized Quote Feed \3\ or
``SQF'' Port and SQF Purge Port pricing at Options 7, Section 9, B,
``Port Fees.''
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\3\ ``Specialized Quote Feed'' or ``SQF'' is an interface that
allows Lead Market Makers, Streaming Quote Traders (``SQTs'') and
Remote Streaming Quote Traders (``RSQTs'') to connect, send, and
receive messages related to quotes, Immediate-or-Cancel Orders, and
auction responses into and from the Exchange. Features include the
following: (1) options symbol directory messages (e.g., underlying
and complex instruments); (2) system event messages (e.g., start of
trading hours messages and start of opening); (3) trading action
messages (e.g., halts and resumes); (4) execution messages; (5)
quote messages; (6) Immediate-or-Cancel Order messages; (7) risk
protection triggers and purge notifications; (8) opening imbalance
messages; (9) auction notifications; and (10) auction responses. The
SQF Purge Interface only receives and notifies of purge requests
from the Lead Market Maker, SQT or RSQT. Lead Market Makers, SQTs
and RSQTs may only enter interest into SQF in their assigned options
series. Immediate-or-Cancel Orders entered into SQF are not subject
to the Order Price Protection, the Market Order Spread Protection,
or Size Limitation in Options 3, Section 15(a)(1), (a)(2) and
(b)(2), respectively. See Options 3, Section 7(a)(i)(B).
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While the changes proposed herein are effective upon filing, the
Exchange has designated the amendments become operative on January 1,
2026.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/phlx/rulefilings,
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Phlx proposes to amend its SQF Port and SQF Purge Port pricing at
Options 7, Section 9, B, ``Port Fees.''
Phlx currently assesses an SQF Port fee of $1,375 per port, per
month, for active ports,\4\ up to a maximum of
[[Page 43663]]
$46,200 per month. Additionally, Phlx currently assesses an SQF Purge
Port fee of $550 per port, per month for each of the first 5 SQF Purge
Ports, and $110 per port, per month for each port thereafter to $1,185
per port, per month.
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\4\ An active port means that the port was utilized to submit a
quote to the System during a given month. Today, Market Makers are
not assessed an active SQF Port fee for additional ports acquired
for ten business days for the purpose of transitioning technology.
The member organization is required to provide the Exchange with
written notification of the transition and all additional ports,
provided at no cost, will be removed at the end of the ten business
days. See Options 7, Section 9, B.
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Phlx proposes to amend its SQF Port fee to $1,185 per port, per
month. Additionally, Phlx proposes to amend its SQF Purge Port fee to
$1,185 per port, per month. The proposed Phlx SQF Port fee and SQF
Purge Port fee are identical to ISE's SQF Purge Port fee and ISE's SQF
Purge Port fee.\5\ With this proposal, Phlx would no longer cap the SQF
Port fee and SQF Purge Port fee.
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\5\ See Options 7, Section 7C.
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Only Market Makers \6\ utilize SQF Ports and SQF Purge Ports for
quoting purposes. A Phlx Market Maker requires only one SQF Port to
submit quotes in its assigned options series into Phlx. A Phlx Market
Maker may submit all quotes through one SQF Port. While a Phlx Market
Maker may elect to obtain multiple SQF Ports to organize its
business,\7\ only one SQF Port is necessary for a Phlx Market Maker to
fulfill its regulatory quoting obligations.\8\
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\6\ The term ``Market Maker'' is defined in Options 1, Section
1(b)(28) as a member of the Exchange who is registered as an options
Market Maker pursuant to Options 2, Section 12(a). A Market Maker
includes SQTs and RSQTs as well as Floor Market Makers. See Options
7, Section 1(c). The term ``Floor Market Maker'' is a Market Maker
who is neither an SQT or an RSQT. A Floor Market Maker may provide a
quote in open outcry. See Options 8, Section 2(a)(4).
\7\ For example, a Phlx Market Maker may desire to utilize
multiple SQF Ports for accounting purposes, to measure performance,
for regulatory reasons or other determinations that are specific to
that member organization.
\8\ Phlx Market Makers have various regulatory requirements as
provided for in Options 2, Section 4. Additionally, Phlx Market
Makers have certain quoting requirements with respect to their
assigned options series as provided in Options 2, Section 5. SQF
Ports are the only quoting protocol available on Phlx and only
Market Makers may utilize SQF Ports.
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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 Section
6(b)(5) of the Act,\10\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest. Additionally, the Exchange believes that its proposal
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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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ See 15 U.S.C. 78f(b)(4) and (5).
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Pricing
Proposed Port Fees Are Reasonable, Equitable and Not Unfairly
Discriminatory
The Exchange believes that its proposal furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ 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. This belief is based on
comparability, the proposed fees are comparable to, and in some cases
less than, those of similarly situated exchanges.
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\12\ See 15 U.S.C. 78f(b)(4) and (5).
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The proposed fees for Phlx SQF Ports and Phlx SQF Purge Ports are
identical to ISE SQF Ports and ISE SQF Purge Ports Fees.\13\ Further,
ISE has identical SQF Port and SQF Purge Port protocols.\14\
Additionally, the proposed fees for Phlx SQF Ports and Phlx SQF Purge
Ports are comparable to those of its closest competitors, BOX Exchange,
LLC (``BOX''); \15\ Miami International Securities Exchange, LLC
(``MIAX''); \16\ NYSE Arca, Inc. (``Arca''); \17\ NYSE American LLC
(``Amex''); \18\ and Cboe EDGX Exchange, Inc. (``EDGX''),\19\ based on
market share.
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\13\ ISE assesses an SQF Port fee and an SQF Purge Port fee of
$1,185 per port, per month. See Options 7, Section 7C.
\14\ See Options 3, Section 7(a)(i)(B).
\15\ SOLA[supreg] Access Information Language or ``SAIL'' Market
Making Ports are connections to BOX systems that enable Market
Makers to continuously quote on BOX. For quote submission, BOX
assesses a fee of $1,000 per month for all ports. BOX will assess
monthly SAIL Port Fees on all Participants in each month the
Participant is credentialed to use a SAIL Port in the production
environment and based upon the number of credentialed SAIL Ports.
See BOX's Pricing Schedule.
\16\ MIAX Express Interface or ``MEI'' is a connection to MIAX
systems that enables Market Makers to submit simple and complex
electronic quotes to MIAX. MIAX assesses monthly MEI Port Fees based
on the number of options classes and the percentage of national
average daily volume. The applicable fee rate is the lesser of
either the per class basis or percentage of total national average
daily volume measurement as follows: (1) $5,000.00 for up to 5
classes and up to 10% of classes by volume; (2) 10,000.00 for up to
10 classes and up to 20% of classes by volume; (3) 14,000.00 for up
to 40 classes and up to 35% of classes by volume; (4) 17,500.00 for
up to 100 classes and up to 50% of classes by volume; and (5)
20,500.00 for over 100 classes and over 50% of classes by volume up
to all classes listed on MIAX. For these Monthly MIAX MEI Fees
levels, if the Market Maker's total monthly executed volume during
the relevant month is less than 0.060% of the total monthly executed
volume reported by OCC in the market maker account type for MIAX-
listed option classes for that month, then the fee will be $14,500
instead of the fee otherwise applicable to such level. Purge Ports
provide Market Makers with the ability to send quote purge messages
to the MIAX System. Purge Ports are not capable of sending or
receiving any other type of messages or information. Further, a MIAX
Market Maker may request and be allocated two (2) Purge Ports per
matching engine to which it connects via a Full Service MEI Port and
will be charged the below monthly fee per Matching Engine. Purge
Ports are $300 per matching engine. MIAX has multiple matching
engines. See MIAX's Fee Schedule.
\17\ For quote submission, Arca assesses quote entry port fees
of $510 per port, per month for 1 through 40 ports and $170 per port
per month for 41 ports or greater. For purpose of calculating the
number of order/quote entry ports, ARCA aggregates the ports of
Affiliates. See NYSE Arca Options Fees and Charges.
\18\ For quote submission Amex assesses order/quote entry port
fees of $510 per port, per month for 1 through 40 ports and $170 per
port per month for 41 ports or greater. For purpose of calculating
the number of order/quote entry ports, Amex aggregates the ports of
Affiliates. See NYSE American Options Fee Schedule.
\19\ For quote submission, EDGX assesses logical ports $750 per
port, per month and purge ports of $850 per port, per month. See
Cboe EDGX Options Fee Schedule.
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Below is a chart comparing Phlx's proposed SQF Port and SQF Purge
Port fees to those of ISE, an affiliated Nasdaq options exchange that
has identical SQF Ports and SQF Purge Ports.
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Market share
Exchange (%) SQF port SQF purge port
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Phlx.................................... 9.7 $1,185 per port, per month $1,185 per port, per month
for each port.. for each port.
ISE..................................... 6.9 $1,185 per port, per month $1,185 per port, per month
for each port.. for each port.
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[[Page 43664]]
The below chart compares Phlx proposed fees to the fees of various
unaffiliated options exchanges with comparable logical ports. Only Phlx
assesses a maximum fee for quoting protocols among the below options
exchanges.
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Market share
Exchange (%) Quoting port Quoting purge port
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Phlx............................... 9.7 $1,185 per port, per month for each $1,185 per port, per
port. month for each port.
BOX................................ 7.2 BOX assesses a fee of $1,000 per no purge port fee.
month for all ports.
MIAX............................... 6.8 The lesser of either the per class $300 per matching
basis or percentage of total engine.
national average daily volume
measurement as follows: (1)
$5,000.00 for up to 5 classes and
up to 10% of classes by volume; (2)
10,000.00 for up to 10 classes and
up to 20% of classes by volume; (3)
14,000.00 for up to 40 classes and
up to 35% of classes by volume; (4)
17,500.00 for up to 100 classes and
up to 50% of classes by volume; and
(5) 20,500.00 for over 100 classes
and over 50% of classes by volume
up to all classes listed on MIAX.
For these Monthly MIAX MEI Fees
levels, if the Market Maker's total
monthly executed volume during the
relevant month is less than 0.060%
of the total monthly executed
volume reported by OCC in the
market maker account type for MIAX-
listed option classes for that
month, then the fee will be $14,500
instead of the fee otherwise
applicable to such level.
Arca............................... 12.5 $510 per port, per month for 1 no quote purge port
through 40 ports and $170 per port fee.
per month for 41 ports or greater.
Amex............................... 6.9 $510 per port, per month for 1 no quote purge port
through 40 ports and $170 per port fee.
per month for 41 ports or greater.
EDGX............................... 6.9 $750 per port, per month............ $850 per port, per
month.
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The Exchange's analysis utilized the below graph representing the
market share \20\ for each of the eighteen options markets based on
total options contracts traded from August 1, 2024 through August 1,
2025.
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\20\ Market share is the percentage of volume on a particular
exchange relative to the total volume across all exchanges, and
indicates the amount of order flow directed to that exchange. High
levels of market share enhance the value of trading and ports. Total
contracts include both multi-list options and proprietary options
products. Proprietary options products are products with
intellectual property rights that are not multi-listed. Phlx lists
proprietary products.
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[[Page 43665]]
[GRAPHIC] [TIFF OMITTED] TN10SE25.000
ISE
ISE has a market share of 6.9% which is comparable to Phlx's market
share of 9.7%. The Phlx SQF Port and SQF Purge Port fees are identical
to the ISE SQF Port and SQF Purge Port fees in Options 7, Section 7C,
namely $1,185 per port, per month for each of these ports.
BOX
BOX has a market share of 7.2% which is comparable to Phlx's market
share of 9.7%. BOX offers a SAIL SOLA[supreg] Access Information
Language (SAIL) native protocol for SOLA[supreg], that offers
functionalities required for order and quote submission.\21\ Unlike
SAIL, SQF is only for quote submission. For SAIL Ports, BOX assesses a
fee of $1,000 per month for all ports. BOX's SAIL Port fee is lower
than the proposed Phlx SQF Port fee. Unlike Phlx, BOX does not appear
to assess a quote purge fee.
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\21\ See https://boxoptions.com/assets/BOX-SAIL-Specifications-Guide-v2.24.pdf.
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MIAX
MIAX has a market share of 6.8% which is comparable to Phlx's
market share of 9.7%. MIAX Express Interface or ``MEI'' is a connection
to MIAX systems that enables Market Makers to submit simple and complex
electronic quotes to MIAX.\22\ MIAX assesses monthly MEI Port Fees
based on the number of options classes and the percentage of national
average daily volume. The applicable fee rate is the lesser of either
the per class basis or percentage of total national average daily
volume measurement as follows: (1) $5,000.00 for up to 5 classes and up
to 10% of classes by volume; (2) 10,000.00 for up to 10 classes and up
to 20% of classes by volume; (3) 14,000.00 for up to 40 classes and up
to 35% of classes by volume; (4) 17,500.00 for up to 100 classes and up
to 50% of classes by volume; and (5) 20,500.00 for over 100 classes and
over 50% of classes by volume up to all classes listed on MIAX.\23\ For
these Monthly MIAX MEI Fees levels, if the Market Maker's total monthly
executed volume during the relevant month is less than 0.060% of the
total monthly executed volume reported by OCC in the market maker
account type for MIAX-listed option classes for that month, then the
fee will be $14,500 instead of the fee otherwise applicable to such
level. MIAX Purge Ports provide Market Makers with the ability to send
quote purge messages to the MIAX System.\24\ Further, a MIAX Market
Maker may request and be allocated two (2) Purge Ports per matching
engine to which it connects via a Full Service MEI Port and will be
charged the below monthly fee per Matching Engine. Purge Ports are $300
per matching engine. Phlx's proposed SQF Port fees are less than MIAX's
SQF Port fees. However, Phlx's proposed SQF Purge Port fee are higher
than MIAX's purge port fee.
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\22\ See https://www.miaxglobal.com/markets/us-options/miax-options/interface-specifications.
\23\ For these Monthly MIAX MEI Fees levels, if the Market
Maker's total monthly executed volume during the relevant month is
less than 0.060% of the total monthly executed volume reported by
OCC in the market maker account type for MIAX-listed option classes
for that month, then the fee will be $14,500 instead of the fee
otherwise applicable to such level.
\24\ Purge Ports are not capable of sending or receiving any
other type of messages or information.
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Arca
Arca has a market share of 12.5% which is comparable to Phlx's
market share of 9.7%.\25\ For quote submission, Arca assesses quote
entry port fees of $510 per port, per month for 1 through 40 ports and
$170 per port per month for 41 ports or greater. For purpose of
[[Page 43666]]
calculating the number of order/quote entry ports, ARCA aggregates the
ports of Affiliates. The proposed Phlx SQF Port fee is higher than
Arca's port fees, which are tiered. Additionally, Arca assesses no fee
for purge ports.
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\25\ See https://www.nyse.com/publicdocs/nyse/NYSE_Pillar_Options_Gateway_Binary_Protocol_Specification.pdf.
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Amex
Amex has market share of 6.9% which is comparable to Phlx's market
share of 9.7%. Amex offers a proprietary, binary protocol.\26\ For
purpose of calculating the number of order/quote entry ports, Amex
aggregates the ports of Affiliates. The proposed Phlx SQF Port fee is
higher than Amex's port fees, which are tiered. Additionally, Amex
assesses no fee for purge ports.
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\26\ See https://www.nyse.com/publicdocs/nyse/NYSE_Pillar_Options_Gateway_Binary_Protocol_Specification.pdf.
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EDGX
EDGX has market share of 6.9% which is comparable to Phlx's market
share of 9.7%. EDGX assesses $750 per port, per month for its Binary
Order Entry (``BOE'') Logical Port, a Cboe proprietary order entry
protocol.\27\ BOE provides users the ability to enter order/quotes.
Unlike BOE, SQF is only for quote submission. EDGX does not cap its
fees. The proposed Phlx SQF Port fee is higher than EDGX's port fee.
Additionally, EDGX assesses a purge port fee of $850 per port, per
month. EDGX's purge port fee is lower than Phlx's SQF Purge Port fee.
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\27\ https://cdn.cboe.com/resources/membership/US_Options_BOE_Specification.pdf.
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In summary, the proposed SQF Port fee is (i) identical to ISE; (ii)
lower than MIAX's fee; and (iii) higher than BOX, Arca, Amex and EDGX.
In summary, the proposed SQF Purge Port fee is (i) identical to ISE;
and (ii) higher than BOX, MIAX, Arca, Amex, and EDGX.
The Proposal is equitable as the proposed fees would apply to all
Phlx Market Maker in a uniform manner. The proposed Phlx SQF Port fees
and SQF Purge Port fees would be assessed uniformly to each Phlx Market
Maker. The Proposal is not unfairly discriminatory. Phlx SQF Port fees
and SQF Purge Port fees are available to all Market Makers on a non-
discriminatory basis. Unlike other market participants, Market Makers
are required to provide continuous two-sided quotes on a daily
basis,\28\ and are subject to various obligations associated with
providing liquidity.\29\
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\28\ See Phlx Options 2, Section 5.
\29\ See Phlx Options 2, Section 4.
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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.
Nothing in the proposal burdens inter-market competition (the
competition among self-regulatory organizations) because approval of
the Proposal does not impose any burden on the ability of other options
exchanges to compete. Phlx SQF Port fees and SQF Purge Port fees are
comparable to, and in some cases less than, those of other exchanges,
as discussed above.
Nothing in the Proposal burdens intra-market competition (the
competition among consumers of exchange data) because Phlx SQF Port
fees and SQF Purge Port fees is available to all Market Makers. Unlike
other market participants, Market Makers are required to provide
continuous two-sided quotes on a daily basis,\30\ and are subject to
various obligations associated with providing liquidity.\31\
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\30\ See Phlx Options 2, Section 5.
\31\ See Phlx Options 2, Section 4.
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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.\32\ 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.
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\32\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2025-40 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-2025-40. 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 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-2025-40 and should be submitted on
or before October 1, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-17340 Filed 9-9-25; 8:45 am]
BILLING CODE 8011-01-P