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 December 16, 2025, 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.

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 pricing at Options 7, Section 9, B, “Port Fees.” ^[4]

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 pricing at Options 7, Section 9, B, “Port Fees” by offering an incentive to Market Makers ^[5] to lower their SQF Port Fees.

Pursuant to a prior rule change, as of January 1, 2026, Phlx will assess an SQF Port Fee of $1,185 per port, per month. ⁶ ( printed page 60789) At this time, the Exchange proposes to offer an opportunity to lower SQF Port Fees as of January 1, 2026. Specifically, the Exchange proposes to offer certain discounts to Market Makers that have transacted a certain percentage of Total National Volume in the prior month. For purposes of this proposal, the percentage of Total National Volume is calculated by taking the total Market Maker Penny Symbol and Market Maker Non-Penny Symbol volume (excluding index options) executed on the Exchange in the prior month and attributing a multiple of five times to that Non-Penny Symbol volume (numerator) and dividing that by Market Maker volume (“M” capacity at The Options Clearing Corporation (“OCC”)) in multiply listed options across all options exchanges (denominator or Total National Volume).

With this proposal, a Market Maker that transacted less than 0.10% of Total National Volume in the prior month would not receive a discount on SQF Port Fees. A Market Maker that transacted greater than or equal to 0.10% and less than 0.25% of Total National Volume in the prior month will be afforded a discount of 10% on their SQF Port Fees. A Market Maker that transacted greater than or equal to 0.25% and less than 0.40% of Total National Volume in the prior month will be afforded a discount of 30% on their SQF Port Fees. Finally, a Market Maker that transacted greater than or equal to 0.40% of Total National Volume in the prior month will be afforded a discount of 50% on their SQF Port Fees. By way of example, a Market Maker that executed 3,000,000 in Penny Volume and 200,000 in Non-Penny Volume in a given month on the Exchange, where the Total National Volume was 1,000,000,000, would qualify for a discount of 50% on their SQF Port Fees ((200,000 × 5= 1,000,000) + 3,000,000 = 4,000,000 which is 0.40% of 1,000,000,000).

The Exchange proposes to calculate Market Maker Non-Penny Symbol volume at five times the weight as compared to Market Maker Penny Symbol volume because Non-Penny Symbols tend to have lower volumes and this incentive should encourage a greater amount of volume in Non-Penny Symbols. Overall, the proposed discounts should encourage Market Makers to transact additional order flow on Phlx with which other market participants may interact, for an opportunity to lower SQF Port Fees. The Exchange proposes to exclude index options as index options are generally not multiply listed.

The Exchange also proposes to add back the text which provided, “A Market Maker may not subscribe to more than 250 SQF Ports per month.” This rule text was inadvertently omitted in the rule text to SR-Phlx-2025-40 which did not indicate that rule text was to be removed. Additionally, the Exchange proposes to remove the text that states, “for ports that receive inbound quotes at any time within that month (“active port”).” SR-Phlx-2025-40 replaced Phlx's SQF Port Fee with an SQF Port Fee that was identical to Nasdaq ISE, LLC (“ISE”).

2. Statutory Basis

The Exchange believes that its proposal is consistent with Section 6(b) of the Act,^[7] in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,^[8] 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 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.” ^[9]

Likewise, in NetCoalition v. Securities and Exchange Commission  ^[10] (“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.^[11] 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.” ^[12]

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' . . . .” ^[13] 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.

The proposed fee discounts for Phlx SQF Ports are reasonable because they will attract a greater amount of order flow to Phlx with which other market participants may interact while also lowering costs for certain Market Makers that are able to transact greater than 0.10% of Total National Volume in the prior month. The Exchange believes it is reasonable to lower costs for certain Market Makers that transact greater than 0.10% of Total National Volume on Phlx because those Market Makers are affording other Phlx members and member organizations an opportunity to interact with that order flow. The proposal provides an incremental incentive for Market Makers that transact at least 0.10% of Total National Volume, which provides a higher ( printed page 60790) benefit for satisfying increasingly more stringent criteria. The Exchange believes that the value of the proposed discounts is commensurate with the difficulty to achieve the corresponding threshold. Additionally, the discounts may incentivize and attract more volume and liquidity to the Exchange, which will benefit all Exchange participants through increased opportunities to trade as well as enhancing price discovery. The Exchange's proposed discounts are substantially similar to Cboe Exchange, Inc.'s (“Cboe”) credit for their BOE Bulk Port Fees.^[14]

Phlx believes it is reasonable to offer fee discounts to those Market Makers that primarily provide and post liquidity to the Exchange, as it should encourage Market Makers to continue to participate on the Exchange and add liquidity. Greater liquidity benefits all market participants by providing more trading opportunities and tighter spreads. The proposal would also mitigate the costs incurred by Market Makers on Phlx.

Calculating Market Maker Non-Penny Symbol volume at five times the weight as compared to Penny Symbol volume is reasonable, equitable and not unfairly discriminatory as Non-Penny Symbols tend to have lower volumes and this incentive should encourage a greater amount of volume in Market Maker Non-Penny Symbols.^[15] The Exchange proposes to calculate the Market Maker Non-Penny Symbol volume in an uniform manner for all members and member organizations. The Exchange proposes to exclude index options as index options are generally not multiply listed. Index Options would be uniformly excluded.

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,^[16] only one SQF Port is necessary for a Phlx Market Maker to fulfill its regulatory quoting obligations.^[17]

The proposed fee discounts for Phlx SQF Ports are equitable and not unfairly discriminatory as they would apply uniformly to each Phlx Market Maker. The Exchange would uniformly calculate the Market Maker's percentage each month. Although only Market Makers may receive the proposed discounts, the Exchange notes that Market Makers are valuable market participants that provide liquidity in the marketplace and incur costs that other market participants do not incur. Unlike other market participants, Market Makers are required to provide continuous two-sided quotes on a daily basis,^[18] and are subject to various obligations associated with providing liquidity.^[19] While the Exchange is not offering a discount to those Market Makers that transact less than 0.10% of Total National Volume, the Exchange notes that these Market Makers transact a much lower amount of contracts on Phlx as compared to other Market Makers who qualify for a discount. In some cases, these Market Makers are not executing the requisite amount of Penny Symbols or Non-Penny Symbols to obtain the discount. Market Makers are required to demonstrate that they have significant market-making and/or Lead Market Maker experience in a broad array of securities, a proven ability to interact with order flow in all types of markets, and a willingness and ability to make competitive markets on the Exchange and otherwise to promote the Exchange in a manner that is likely to enhance the ability of the Exchange to compete successfully for order flow in the options it trades, among other things.^[20] The Exchange believes that all Market Makers are capable of quoting tighter or in a greater amount of options classes to obtain the requisite volume to achieve a discount.

The Exchange's proposal to add back the text which provided, “A Market Maker may not subscribe to more than 250 SQF Ports per month” is reasonable, equitable and not unfairly discriminatory as that rule text was inadvertently not displayed in the rule text to SR-Phlx-2025-40 and was not intended to be removed. There was no mention of its removal in SR-Phlx-2025-40. The Exchange's proposal to remove the words “for ports that receive inbound quotes at any time within that month (“active port”)” is reasonable, equitable and not unfairly discriminatory as SR-Phlx-2025-40 replaced Phlx's SQF Port Fee with an SQF Port Fee that was identical to ISE. Other rule text that mentioned active SQF Ports was removed in SR-Phlx-2025-40.

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 proposed fee discounts for Phlx SQF Ports do not impose a burden on competition because they would apply uniformly to each Phlx Market Maker and the Exchange would uniformly calculate the Market Maker's percentage each month. Although only Market Makers may receive the proposed discounts, the Exchange notes that Market Makers are valuable market participants that provide liquidity in the marketplace and incur costs that other market participants do not incur. Unlike other market participants, Market Makers are required to provide continuous two-sided quotes on a daily basis,^[21] and are subject to various obligations associated with providing liquidity.^[22] Further, while the Exchange is not offering a discount to those Market Makers that transact less than 0.10% of Total National Volume, the Exchange notes that these Market Makers transact a much lower amount of contracts on Phlx as compared to other Market Makers that qualify for the discount and/or these Market Makers are not executing the requisite amount of Penny Symbols or Non-Penny Symbols to obtain the discount. The ( printed page 60791) Exchange's proposal does not impose an undue burden on competition because Market Makers are required to demonstrate that they have significant market-making and/or Lead Market Maker experience in a broad array of securities, a proven ability to interact with order flow in all types of markets, and a willingness and ability to make competitive markets on the Exchange and otherwise to promote the Exchange in a manner that is likely to enhance the ability of the Exchange to compete successfully for order flow in the options it trades, among other things.^[23] The Exchange believes that all Market Makers are capable of quoting tighter or in a greater amount of options classes to obtain the requisite volume to achieve a discount.

The Exchange's proposal to add back the text which provided, “A Market Maker may not subscribe to more than 250 SQF Ports per month” does not impose an undue burden on competition as that rule text was inadvertently not displayed in the rule text to SR-Phlx-2025-40 and was not intended to be removed. There was no mention of its removal in SR-Phlx-2025-40. Also, the Exchange's proposal to remove the words “for ports that receive inbound quotes at any time within that month (“active port”)” does not impose an undue burden on competition as SR-Phlx-2025-40 replaced Phlx's SQF Port Fee with an SQF Port Fee that was identical to ISE. Other rule text that mentioned active SQF Ports was removed in SR-Phlx-2025-40.

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. In addition to the Exchange, market participants have alternative options exchanges that they may participate on and direct their order flow. 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.^[24]

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 torule-comments@sec.gov. Please include file number SR-Phlx-2025-75 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-2025-75. 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-2025-75 and should be submitted on or before January 20, 2026.