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Nasdaq PHLX caps gifts to outside employees at $300 per year

Nasdaq PHLX caps gifts to outside employees at $300 per year

Rule Changes

Options exchange mirrors FINRA Rule 3220; SEC notice opens a 60-day review window

Today: Federal Register publishes the SEC notice

Overview

Updated 1 hour ago

Nasdaq PHLX, the options exchange, filed a rule on September 8 that caps what member firms can give to employees of other companies: nothing over $300 per person per year, gratuities included. The Securities and Exchange Commission (SEC) published its notice of the filing on September 22.

The rule writes Financial Industry Regulatory Authority (FINRA) Rule 3220 into PHLX's rulebook nearly verbatim, closing the gap for firms that trade on PHLX but are not FINRA members. The rule took effect on filing. The SEC has 60 days to suspend it if it sees a problem.

Why it matters

Options firms face a $300 annual cap on gifts to outside employees — the same limit FINRA already applies.

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Key Indicators

$300
Annual per-person gift cap
Anything above this, including gratuities, is barred under the proposed rule.
60 days
SEC suspension window
The Commission can suspend the rule within 60 days of the September 8 filing.
0
Comments received by the exchange
PHLX said it neither solicited nor received comments on the proposal.

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Organizations Involved

NA
Nasdaq PHLX LLC
Options exchange (self-regulatory organization)
Filed the proposed rule change

The options exchange proposing Options 10, Section 27, a gift-limit rule matching FINRA Rule 3220.
U.S. Securities and Exchange Commission
U.S. Securities and Exchange Commission
Federal Regulatory Agency
Publishing the notice; holds suspension authority for 60 days

The agency that published the notice and can suspend the rule within 60 days.
Financial Industry Regulatory Authority
Financial Industry Regulatory Authority
Self-Regulatory Organization
Source of the mirrored Rule 3220; already binds most PHLX members

Wrote Rule 3220, the $300 gift cap PHLX is copying.

Timeline

3 events Latest: Today

  1. Federal Register publishes the SEC notice

    Today Publication

    The notice appears in the Federal Register (91 FR 60186), opening the public inspection phase and marking the start of the public comment period. The 60-day suspension window is counted from the September 8 filing.

  2. SEC completes the public notice

    Procedural

    The SEC signs Release No. 34-106406 for File No. SR-Phlx-2026-56, setting the notice for Federal Register publication.

  3. PHLX files gift-limit rule with the SEC

    Filing

    Nasdaq PHLX files the proposed rule change creating Options 10, Section 27, capping gifts to employees of other firms at $300 per person per year. The rule takes effect on filing under Section 19(b)(3)(A).

Scenarios

1

SEC lets the gift rule stand

Likely Resolves by Nov 8, 2026

Discussed by: Standard 19(b)(3)(A) process; the exchange reported no comments on the filing.

The 60-day window closes with no SEC action, and Options 10, Section 27 becomes a permanent PHLX rule. The technical amendment to Section 7 stands with it. PHLX firms then face the same $300 limit whether the standard comes through FINRA or through the exchange's own rulebook.

2

SEC suspends the rule for formal review

Unlikely Resolves by Nov 8, 2026

Discussed by: The Commission's reserved authority to summarily suspend any SRO rule it deems contrary to investor protection or the public interest.

The SEC issues a suspension order and opens formal proceedings to approve or disapprove the rule. That outcome is unlikely for a rule duplicating a FINRA standard already in force for most PHLX members, but the mechanism exists and is exercised occasionally when a filing raises unexpected questions.

3

Rival options exchanges adopt the same limit

Possible Resolves by Sep 22, 2027

Discussed by: The harmonization rationale in PHLX's filing — reducing regulatory fragmentation — applies equally to Cboe, NYSE American, and other options venues.

One or more other options exchanges file substantively similar rules over the following year, effectively making FINRA Rule 3220 the uniform gift standard across U.S. options markets.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

1975–present

Immediate-effectiveness fast track (1975–present)

Since the 1975 Securities Acts Amendments added Section 19(b)(3)(A), the SEC has let rule changes that do not significantly affect investor protection or competition take effect on filing, subject to a 60-day suspension window.

Then

Most routine SRO filings go live immediately; contested ones get suspended and reviewed.

Now

The fast track keeps rulebooks current while the suspension power checks genuinely controversial changes.

Why this matters now

This is the mechanism that let PHLX's gift rule become effective on September 8, the day it was filed.

2021–2022

FINRA raises gift cap to $300 (2021–2022)

FINRA proposed raising the limit on gifts to employees of other firms from $100 to $300 per person per year, its first adjustment in decades. The SEC approved the change, and the higher limit took effect in 2022 after years of inflation eroded the old $100 ceiling.

Then

Firms and their compliance staffs got a higher ceiling and a clearer dollar benchmark for what counted as an improper inducement.

Now

$300 became the reference point for gift limits across the securities industry, the figure PHLX now copies.

Why this matters now

PHLX's new rule adopts the same $300 figure, so the cap that has bound FINRA members since 2022 will now bind exchange-only members too.

2010s–2020s

SRO conduct-rule harmonization (2010s–present)

Across the past decade-plus, U.S. exchanges — Cboe, the NYSE family, and Nasdaq venues — have folded FINRA-style conduct rules into their own rulebooks, citing the cost of applying different standards to the same member firms across markets.

Then

Member firms face fewer conflicts between exchange rules and FINRA rules.

Now

FINRA's conduct rules have effectively become the template for exchange rulebooks.

Why this matters now

PHLX's gift rule is the latest instance: it copies FINRA Rule 3220 wholesale rather than drafting a distinct standard.

Sources

(3)
+1
Federal Register U.S. Government Publishing Office Federal Register