81166 Federal Register / Vol. 88, No. 223 / Tuesday, November 21, 2023 / Notices 

1 44 U.S.C. 3501 et seq. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 

they determine whether the plan is in 

the best interests of each class and the 

fund. In addition, the plan may be 

useful to Commission staff in reviewing 

the fund’s compliance with the rule. 

The following estimates of average 

burden hours are made solely for 

purposes of the Paperwork Reduction 

Act of 1995 1 and are not derived from 

a comprehensive or even representative 

survey or study of the cost of 

Commission rules and forms. 

Compliance with the information 

collection requirements of rule 18f–3 is 

necessary to obtain the benefit of the 

rule’s exemption. Responses to the 

collection of information requirements 

will not be kept confidential. 

TABLE 1—RULE 18f–3 PRA ESTIMATES

Internal annual burden Wage rate 1 Internal time costs 

ESTIMATES FOR RULE 18F–3 

Prepare and approve a written 18f–3 plan 2 .... 6 hours 3.

Average number of responses annually per 

registrant.

0.5 responses 3.

Total number of hours per registrant per year 4 3 hours 3 ................................. $484 (in-house attorney) ........

$4,770 (fund board of directors) 6.

$936,056 (in-house attorney). 

$4,612,590 (board of directors).7

Total number of registrants .............................. 967 4.

Total annual hour burden .......................... 2,901 hours 5 .......................... ................................................. $5,548,646.8

Notes: 

1. The Commission’s estimates of the relevant wage rates are based on salary information for the securities industry compiled by the Securities Industry and Financial Markets Association’s Office Salaries in the Securities Industry 2013. The estimated figures are modified by firm size, 

employee benefits, overhead, and adjusted to account for the effects of inflation. See Securities Industry and Financial Markets Association, Report on Management & Professional Earnings in the Securities Industry 2013. 

2. The Commission estimates that each registrant prepares and approves a rule 18f–3 plan every two years when issuing a new fund fund or 

class or amending a plan (or that 484 of all 967 registrants prepare and approve a plan each year). 

3. This estimate assumes that each response will take 6 hours, requiring 3 hours per registrant per year (0.5 responses per registrant × 6 

hours per response = 3 hours per registrant). 

4. The Commission estimates that there are approximately 6,733 multiple class funds offered by 967 registrants. 

5. 967 registrants × 3 hours = 2,901 hours. 

6. The estimate for the cost of board time as a whole is derived from estimates made by the staff regarding typical board size and compensation that is based on information received from fund representatives and publicly available sources. The $4,770 per hour estimate for a fund 

board of directors was last adjusted for inflation through 2019, and assumes an average of 9 board members per board. 

7. This estimate assumes that two-thirds (1,934) of the internal hours are spent by in-house attorneys to prepare the plan (1,934 hours × $484 

estimated hourly rate = $936,056 per year) and that one-third (967) are spent by the fund’s board of directors to approve the plan (967 hours × 

$4,770 per hour = $4,612,590). 

8. $936,056 + $4,612,590 = $5,548,646. 

Written comments are invited on: (a) 

whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 

(b) the accuracy of the Commission’s 

estimate of the burden of the collection 

of information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology. Consideration will be given 

to comments and suggestions submitted 

by January 22, 2024. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

under the PRA unless it displays a 

currently valid OMB control number. 

Please direct your written comments 

to: David Bottom, Acting Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o John 

Pezzullo, 100 F Street NE, Washington, 

DC 20549 or send an email to: PRA_

Mailbox@sec.gov. 

Dated: November 16, 2023. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–25724 Filed 11–20–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98934; File No. SR– 

NASDAQ–2023–044] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend The 

Nasdaq Options Market LLC Pricing 

Schedule at Options 7, Section 2 

November 15, 2023. 

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 November 

1, 2023, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ 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 The 

Nasdaq Options Market LLC (‘‘NOM’’) 

Pricing Schedule at Options 7, Section 

2. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 


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Federal Register / Vol. 88, No. 223 / Tuesday, November 21, 2023 / Notices 81167 

3The term ‘‘NOM Market Maker’’ or (‘‘M’’) is a 

Participant that has registered as a Market Maker on 

NOM pursuant to Options 2, Section 1, and must 

also remain in good standing pursuant to Options 

2, Section 9. In order to receive NOM Market Maker 

pricing in all securities, the Participant must be 

registered as a NOM Market Maker in at least one 

security. 

4The term ‘‘Non-NOM Market Maker’’ or (‘‘O’’) is 

a registered market maker on another options 

exchange that is not a NOM Market Maker. A NonNOM Market Maker must append the proper NonNOM Market Maker designation to orders routed to 

NOM. 

5The term ‘‘Firm’’ or (‘‘F’’) applies to any 

transaction that is identified by a Participant for 

clearing in the Firm range at OCC. 

6The term ‘‘Broker-Dealer’’ or (‘‘B’’) applies to 

any transaction which is not subject to any of the 

other transaction fees applicable within a particular 

category. 

7The term ‘‘Customer’’ or (‘‘C’’) applies to any 

transaction that is identified by a Participant for 

clearing in the Customer range at The Options 

Clearing Corporation (‘‘OCC’’) which is not for the 

account of broker or dealer or for the account of a 

‘‘Professional’’ (as that term is defined in Options 

1, Section 1(a)(47)). 8See Options 7, Section 2(1), note 1. 9To qualify for MARS, the Participant’s routing 

system (‘‘System’’) would be required to: (1) enable 

the electronic routing of orders to all of the U.S. 

options exchanges, including NOM; (2) provide 

current consolidated market data from the U.S. 

options exchanges; and (3) be capable of interfacing 

with NOM’s API to access current NOM match 

engine functionality. Further, the Participant’s 

System would also need to cause NOM to be the 

one of the top three default destination exchanges 

for (a) individually executed marketable orders if 

NOM is at the national best bid or offer (‘‘NBBO’’), 

regardless of size or time or (b) orders that establish 

a new NBBO on NOM’s Order Book, but allow any 

user to manually override NOM as a default 

destination on an order-by-order basis. Any NOM 

Participant would be permitted to avail itself of this 

arrangement, provided that its order routing 

functionality incorporates the features described 

above and satisfies NOM that it appears to be robust 

and reliable. The Participant remains solely 

responsible for implementing and operating its 

System. 

10For the purpose of qualifying for the MARS 

Payment, Eligible Contracts may include Firm, NonNOM Market Maker, Broker-Dealer, or Joint Back 

Office or ‘‘JBO’’ equity option orders that add 

liquidity and are electronically delivered and 

executed. Eligible Contracts do not include Mini 

Option orders. 

11The specified MARS Payment will be paid on 

all executed Eligible Contracts that add liquidity, 

which are routed to NOM through a participating 

NOM Participant’s System and meet the requisite 

Eligible Contracts ADV. No payment will be made 

with respect to orders that are routed to NOM, but 

not executed. 

12The term ‘‘Professional’’ or (‘‘P’’) means any 

person or entity that (i) is not a broker or dealer in 

securities, and (ii) places more than 390 orders in 

listed options per day on average during a calendar 

month for its own beneficial account(s) pursuant to 

Options 1, Section 1(a)(47). All Professional orders 

shall be appropriately marked by Participants. 

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 NOM’s Pricing 

Schedule at Options 7, Section 2(1) 

(setting forth fees and rebates for 

execution of contract on NOM) and 

Section 2(3) (setting forth fees for 

routing contracts to markets other than 

NOM). Each change will be described 

below. 

Options 7, Section 2(1) 

Fees To Remove Liquidity in NonPenny Symbols 

As set forth in Options 7, Section 2(1), 

the Exchange currently charges NOM 

Market Makers,3 Non-NOM Market 

Makers,4 Firms,5 and Broker-Dealers 6 a 

$1.10 per contract fee for removing 

liquidity in Non-Penny Symbols. The 

Exchange now proposes to increase this 

fee to $1.25 per contract. 

Note 8 Incentive 

Today, the Exchange provides 

Customers 7 with tiered rebates for 

adding liquidity in Penny Symbols that 

are $0.20 (Tier 1), $0.25 (Tier 2), $0.43 

(Tier 3), $0.44 (Tier 4), $0.45 (Tier 5), 

and $0.48 (Tier 6). These rebates are 

paid based on the highest volume tier 

that the Customer achieves in a given 

month.8

Today, the Exchange also links the 

tiered Penny Symbol Customer add 

liquidity rebate program described 

above to its Market Access and Routing 

Subsidy (‘‘MARS’’) program in Section 

2(4) as a means to attract additional 

liquidity to the Exchange from market 

participants. Under MARS, the 

Exchange pays qualifying NOM 

Participants to subsidize their costs of 

providing routing services to route 

orders to NOM. To qualify for MARS, 

NOM Participants must have System 

Eligibility.9 In addition, NOM 

Participants that have System 

Eligibility, and have routed and 

executed the requisite number of 

Eligible Contracts 10 daily in a month 

(‘‘Average Daily Volume’’ or ‘‘ADV’’) 

that add liquidity on NOM are entitled 

to the tiered MARS Payments set forth 

in Section 2(4), depending on the 

highest ADV tier achieved.11

In particular, the Exchange currently 

links the tiered Penny Symbol Customer 

rebate to add liquidity program in 

Penny Symbols and MARS, each as 

described above, through note 8 of 

Options 7, Section 2(1) where NOM 

Participants that qualify for any MARS 

Payment Tier in Section 2(4) receive: (1) 

an additional $0.05 per contract Penny 

Symbol Customer Rebate to Add 

Liquidity for each transaction which 

adds liquidity in Penny Symbols in that 

month, in addition to qualifying 

Customer Rebate to Add Liquidity Tiers 

1–5, or (2) an additional $0.04 per 

contract Penny Symbol Customer Rebate 

to Add Liquidity for each transaction 

which adds liquidity in Penny Symbols 

in that month, in addition to qualifying 

Penny Symbol Customer Rebate to Add 

Liquidity Tier 6 (‘‘Note 8 Incentive’’). As 

such, NOM Participants may earn 

Customer Rebates to Add Liquidity in 

Penny Symbols up to $0.25 in Tier 1, 

$0.30 in Tier 2, $0.48 in Tier 3, $0.49 

in Tier 4, $0.50 in Tier 5, and $0.52 in 

Tier 6, provided they meet the 

qualifications in note 8. 

The Note 8 Incentive was intended to 

attract additional order flow to NOM by 

way of encouraging participation in 

both the tiered Customer add liquidity 

rebate program and in MARS. The 

Exchange, however, has observed that 

this rebate program has not 

accomplished its objective and therefore 

proposes to eliminate this program in 

note 8 of Options 7, Section 2(1). 

Note 9 Incentive 

Today, pursuant to note 9 of Options 

7, Section 2(1), NOM Participants that 

transact in all securities through one or 

more of its Nasdaq Market Center MPIDs 

that represent 3.00% or more of 

Consolidated Volume in the same 

month on The Nasdaq Stock Market 

receive a $0.50 per contract Rebate to 

Add Liquidity in Penny Symbols as 

Customer, a $0.48 per contract rebate as 

Professional,12 a $1.00 per contract 

Rebate to Add Liquidity in Non-Penny 

Symbols as Customer, and a $0.90 per 

contract Rebate to Add liquidity in NonPenny Symbols as Professional (‘‘Note 9 

Incentive’’). Participants that qualify for 

the Note 9 Incentive are not be eligible 

for any other rebates in Tiers 1–6 or 

other rebate incentives on NOM for 

Customer and Professional order flow in 

Options 7, Section 2(1). 

The Exchange now proposes to 

increase $1.00 Customer Rebate to Add 

Liquidity in Non-Penny Symbols to 

$1.10. The Exchange is increasing the 

rebate amount without changing the 


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81168 Federal Register / Vol. 88, No. 223 / Tuesday, November 21, 2023 / Notices 

13Any NOM Participant may trade equities on 

The Nasdaq Stock Market because they are already 

approved members. Although a NOM Participant 

may potentially incur additional labor and/or costs 

to establish connectivity to The Nasdaq Stock 

Market, there are no additional membership fees for 

NOM Participants that want to transact on The 

Nasdaq Stock Market. 

14See Options 3, Section 7(c). 15See Securities Exchange Act Release No. 87276 

(October 10, 2019), 84 FR 55644 (October 17, 2019) 

(SR–NASDAQ–2019–084). At the time of adopting 

the Note 11 Incentive, only route ‘‘b’’ was available 

to qualify for Tier 5. 

qualifications in the Note 9 Incentive so 

that NOM Participants can bring the 

same amount of volume as they do 

today on The Nasdaq Stock Market to 

receive larger rebate in Customer Add 

Liquidity volume in Non-Penny 

Symbols.13 Overall, the Exchange 

believes that the increased rebate will 

bring greater volume to both The 

Nasdaq Stock Market and NOM, to the 

benefit of all market participants. 

Note 10 Incentive 

Today, pursuant to note 10 of Options 

7, Section 2(1), NOM Participants that 

(a) add Customer, Professional, Firm, 

Non-NOM Market Maker and/or BrokerDealer liquidity in Penny Symbols and/ 

or Non-Penny Symbols above 1.20% of 

total industry customer equity and ETF 

option ADV contracts per day in a 

month, (b) execute greater than 0.04% of 

Consolidated Volume (‘‘CV’’) via 

Market-on-Close/Limit-on-Close 

(‘‘MOC/LOC’’) volume within The 

Nasdaq Stock Market Closing Cross 

within a month, and (c) add greater than 

1.5 million shares per day of nondisplayed volume within The Nasdaq 

Stock Market within a month receive a 

$0.55 per contract Rebate to Add 

Liquidity in Penny Symbols as 

Customer, a $0.48 per contract Rebate to 

Add Liquidity in Penny Symbols as 

Professional, and a $1.05 per contract 

Rebate to Add Liquidity in Non-Penny 

Symbols as Customer, and a $0.90 per 

contract Rebate to Add Liquidity in 

Non-Penny Symbols as Professional 

(‘‘Note 10 Incentive’’). Participants that 

qualify for the Note 10 Incentive are not 

be eligible for any other rebates in Tiers 

1–6 or other rebate incentives on NOM 

for Customer and Professional order 

flow in Options 7, Section 2(1). 

The Exchange now proposes to amend 

the NOM volume threshold in part (a) 

of the Note 10 Incentive by increasing 

1.20% to 1.50% of total industry 

customer equity and ETF option ADV 

contracts per day in a month. The 

Exchange also proposes to increase the 

$1.05 Customer Rebate to Add Liquidity 

in Non-Penny Symbols to $1.15. No 

other changes are being proposed to the 

rebates and qualifications in the Note 10 

Incentive. As amended, the Note 10 

Incentive will provide: ‘‘NOM 

Participants that (a) add Customer, 

Professional, Firm, Non-NOM Market 

Maker and/or Broker-Dealer liquidity in 

Penny Symbols and/or Non-Penny 

Symbols above 1.50% of total industry 

customer equity and ETF option ADV 

contracts per day in a month, (b) 

execute greater than 0.04% of 

Consolidated Volume (‘‘CV’’) via 

Market-on-Close/Limit-on-Close 

(‘‘MOC/LOC’’) volume within The 

Nasdaq Stock Market Closing Cross 

within a month, and (c) add greater than 

1.5 million shares per day of nondisplayed volume within The Nasdaq 

Stock Market within a month will 

receive a $0.55 per contract Rebate to 

Add Liquidity in Penny Symbols as 

Customer, a $0.48 per contract Rebate to 

Add Liquidity in Penny Symbols as 

Professional, and a $1.15 per contract 

Rebate to Add Liquidity in Non-Penny 

Symbols as Customer, and a $0.90 per 

contract Rebate to Add Liquidity in 

Non-Penny Symbols as Professional. 

Participants that qualify for this rebate 

would not be eligible for any other 

rebates in Tiers 1–6 or other rebate 

incentives on NOM for Customer and 

Professional order flow in Options 7, 

Section 2(1).’’ 

Options 7, Section 2(3) 

As set forth in Options 7, Section 2(3), 

the Exchange currently assesses a NonCustomer routing fee of $0.99 per 

contract to any options exchange. The 

Exchange also assesses a Customer 

routing fee of $0.23 per contract, in 

addition to the actual transaction fee 

assessed by the away market, for routing 

contracts to any options exchange other 

than the Exchange’s affiliates, Nasdaq 

BX, Inc. (‘‘BX’’) and Nasdaq Phlx LLC 

(‘‘Phlx’’). If the away market (other than 

BX and Phlx) pays a rebate, this 

Customer routing fee is $0.13 per 

contract instead. When routing to BX 

and Phlx, the Exchange currently 

assesses a Customer routing fee of $0.13 

per contract in addition to the actual 

transaction fee assessed. 

At this time, the Exchange proposes to 

assess a Non-Customer an increased 

routing fee to route to any options 

exchange of $1.20 per contract. The 

Exchange also proposes to assess a 

Customer a routing fee of $0.23 per 

contract, in addition to the actual 

transaction fee assessed by the away 

market, for routing contracts to any 

options exchange. With this change, the 

Exchange would no longer assess the 

lower routing of $0.13 per contract, in 

addition to the actual transaction fee 

assessed, when routing to BX and Phlx. 

The Exchange would continue to assess 

a $0.13 per contract routing fee if the 

away market pays a rebate, including 

BX and Phlx. The purpose of the 

proposed routing fees is to recoup costs 

incurred by the Exchange when routing 

orders to other options exchanges on 

behalf of NOM Participants. In 

determining its proposed routing fees, 

the Exchange took into account 

transaction fees assessed by other 

options exchanges, the Exchange’s 

projected clearing costs, and the 

projected administrative, regulatory, 

and technical costs associated with 

routing orders to other options 

exchanges. The Exchange will continue 

to use its affiliated broker-dealer, 

Nasdaq Execution Services, to route 

orders to other options exchanges. 

Routing services offered by the 

Exchange are completely optional and 

market participants can readily select 

between various providers of routing 

services, including other exchanges and 

broker-dealers. Also, the Exchange notes 

that NOM Participants may elect to 

mark their orders as ‘‘Do-Not-Route’’ to 

avoid any routing fees.14 The Exchange 

believes that the proposed routing fees 

would enable the Exchange to recover 

the costs it incurs to route orders to 

away markets after taking into account 

the other costs associated with routing 

orders to other options exchanges. Also, 

the Exchange’s proposal would 

uniformly assess the same Customer 

routing fees, regardless of the away 

venue, of $0.23 per contract, in addition 

to the actual transaction fee assessed, or 

$0.13 per contract of the away market 

pays a rebate. 

Technical Amendment 

The Exchange proposes a technical 

amendment in note 11 of Options 7, 

Section 2(1). Note 11 currently provides 

that NOM Participants that qualify for 

the Tier 5 NOM Market Maker Rebate to 

Add Liquidity in Penny Symbols and 

add NOM Market Maker liquidity in 

Penny Symbols and/or Non-Penny 

Symbols of above 0.50% of total 

industry customer equity and ETF 

option ADV contracts per day in a 

month, will receive a $0.46 contract 

rebate to add liquidity in Penny 

Symbols as Market Maker in lieu of the 

Tier 5 rebate (‘‘Note 11 Incentive’’). The 

Tier 5 NOM Market Maker Rebate to 

Add Liquidity in Penny Symbol 

currently has two alternative routes in 

‘‘a’’ and ‘‘b’’ to qualify for the Tier 5 

rebate, but when the Exchange adopted 

the Note 11 Incentive, the intent was to 

provide the Note 11 Incentive for NOM 

participants that qualified pursuant to 

route ‘‘b’’ in Tier 5.15 The Exchange 

subsequently adopted an alternative 


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Federal Register / Vol. 88, No. 223 / Tuesday, November 21, 2023 / Notices 81169 

16See Securities Exchange Act Release No. 98721 

(October 11, 2023), 88 FR 71616 (October 17, 2023) 

(SR–NASDAQ–2023–040). 

17 15 U.S.C. 78f(b). 

18 15 U.S.C. 78f(b)(4) and (5). 

19NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSEArca–2006–21)). 

20Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 

(‘‘Regulation NMS Adopting Release’’). 

21See supra note 13. 

22The NOM Participant will also continue to be 

required to meet the following volume 

qualifications (in addition to the proposed NOM 

volume threshold) to receive the $1.15 Non-Penny 

Symbol Customer Rebate to Add Liquidity in the 

Note 10 Incentive: execute greater than 0.04% of 

Consolidated Volume (‘‘CV’’) via Market-on-Close/ 

Limit-on-Close (‘‘MOC/LOC’’) volume within The 

Nasdaq Stock Market Closing Cross within a month, 

AND add greater than 1.5 million shares per day of 

non-displayed volume within The Nasdaq Stock 

Market within a month. 

23See supra note 22. 

route ‘‘a’’ to qualify for the Tier 5 NOM 

Market Maker Rebate to Add Liquidity 

in Penny Symbols, but did not update 

the Note 11 Incentive to specify which 

route applied.16 The Exchange therefore 

proposes to clarify that the Note 11 

Incentive is available for NOM 

Participants that qualify for the Tier 5(b) 

NOM Market Maker Rebate to Add 

Liquidity in Penny Symbols. The 

proposed change will align the rule text 

with the original intent of the incentive. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,17 in general, and furthers the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,18 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’s proposed changes to 

its Pricing Schedule are reasonable in 

several respects. As a threshold matter, 

the Exchange is subject to significant 

competitive forces in the market for 

options securities transaction services 

that constrain its pricing determinations 

in that market. The fact that this market 

is competitive has long been recognized 

by the courts. In NetCoalition v. 

Securities and Exchange Commission, 

the D.C. Circuit stated as follows: ‘‘[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’. . . .’’ 19

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.’’ 20

Numerous indicia demonstrate the 

competitive nature of this market. For 

example, clear substitutes to the 

Exchange exist in the market for options 

security transaction services. The 

Exchange is only one of seventeen 

options venues to which market 

participants may direct their order flow. 

Within this environment, market 

participants can freely and often do shift 

their order flow among the Exchange 

and competing venues in response to 

changes in their respective pricing 

schedules. As such, the proposal 

represents a reasonable attempt by the 

Exchange to increase its liquidity and 

market share relative to its competitors. 

Options 7, Section 2(1) 

The Exchange believes that the 

proposed changes to the fees and rebates 

in Options 7, Section 2(1) are reasonable 

in several ways. The Exchange believes 

that it is reasonable to increase the Fees 

to Remove Liquidity in Non-Penny 

Symbols for NOM Market Makers, NonNOM Market Makers, Firms, and 

Broker-Dealers from $1.10 to $1.25 

because the proposed Non-Penny 

Symbol fee increases will be balanced 

by the Non-Penny Symbol rebate 

increases for Customers, which are 

intended to improve overall market 

quality on the Exchange by 

incentivizing market participants to 

bring additional order flow and, in turn, 

provide more trading opportunities to 

the benefit of all market participants. As 

discussed above, the Exchange is 

proposing to increase the Non-Penny 

Symbol Customer Rebate to Add 

Liquidity in the Note 9 Incentive from 

$1.00 to $1.10 per contract without 

amending the current volume 

qualifications in note 9 so that NOM 

Participants can bring the same amount 

of volume as they do today on The 

Nasdaq Stock Market to receive larger 

rebate in Customer Add Liquidity 

volume in Non-Penny Symbols.21 The 

Exchange believes that the increased 

rebate as set forth in the Note 9 

Incentive will incentivize market 

participants to send additional order 

flow to both The Nasdaq Stock Market 

and NOM, which will in turn benefit all 

market participants on the equities and 

options markets from the opportunity to 

interact with such order flow. 

As discussed above, the Exchange is 

also proposing to increase the NonPenny Symbol Customer Rebate to Add 

Liquidity in the Note 10 Incentive from 

$1.05 to $1.15 per contract if the NOM 

Participant meets the qualifications in 

note 10, including the increased NOM 

volume threshold that requires NOM 

Participants to add Customer, 

Professional, Firm, Non-NOM Market 

Maker and/or Broker-Dealer liquidity in 

Penny Symbols and/or Non-Penny 

Symbols above 1.50% (increased from 

above 1.20%) of total industry customer 

equity and ETF option ADV contracts 

per day in a month.22 While the NOM 

volume threshold in the Note 10 

Incentive will be increased under this 

proposal, the Exchange believes that the 

proposed increase is commensurate 

with the corresponding increase in the 

Non-Penny Symbol Customer Rebate to 

Add Liquidity in the Note 10 Incentive 

as described above. To the extent NOM 

Participants add greater liquidity on 

NOM to meet the proposed volume 

threshold to receive the larger rebate, 

the Exchange believes that its proposal 

will benefit all market participants who 

will be able to interact with the 

additional liquidity. The proposed 

changes to the Note 10 Incentive are 

designed as a means to improve overall 

market quality by providing NOM 

Participants with a larger incentive to 

increase their provision of liquidity on 

the Exchange’s equity and options 

markets.23 The Exchange believes that 

its proposal will continue to encourage 

NOM Participants to send order flow to 

both the options and equity markets to 

receive the Note 10 Incentive. 

The Exchange also believes that the 

proposed changes to the fees and rebates 

in Options 7, Section 2(1) as described 

above are equitable and not unfairly 

discriminatory because they will apply 

uniformly to all similarly situated 

participants. As it relates to the NonPenny Symbol fee increases, the 

Exchange will apply the increase to 

NOM Market Makers, Non-NOM Market 

Makers, Firms, and Broker-Dealers 

while Customers and Professionals will 


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81170 Federal Register / Vol. 88, No. 223 / Tuesday, November 21, 2023 / Notices 

24With the proposed changes, the Exchange 

would no longer assess the lower routing fee of 

$0.13 per contract, in addition to the actual 

transaction fee assessed, when routing to BX and 

Phlx. 

25See Options 3, Section 7(c). 

continue to be uniformly assessed at a 

lower rate. The Exchange also notes that 

the Note 9 Incentive and the Note 10 

Incentive, each as modified under this 

proposal, are available to only 

Customers and Professionals. The 

Exchange has historically provided 

more favorable pricing to both 

Customers and Professionals throughout 

its Pricing Schedule. Furthermore, both 

Customer and Professional liquidity 

offer benefits to the market that 

ultimately benefit all market 

participants. Customer liquidity 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. With respect to 

Professionals, the Exchange believes 

that continuing to encourage NOM 

Participants to bring Professional order 

flow to NOM creates competition among 

options exchanges because the more 

favorable pricing may cause market 

participants to select NOM as a venue 

to send Professional order flow. 

The Exchange believes that its 

proposal to eliminate the Note 8 

Incentive is reasonable because this 

rebate program has not been successful 

in accomplishing its objective of 

incentivizing NOM Participants to send 

order flow and add liquidity on the 

Exchange by fortifying participation in 

the MARs program and the tiered Penny 

Symbol Customer Rebate to Add 

Liquidity program. The proposed 

elimination of the Note 8 Incentive will 

streamline the Exchange’s Pricing 

Schedule. The Exchange has limited 

resources to devote to incentive 

programs, and it is appropriate for the 

Exchange to reallocate these incentives 

periodically in a manner that best 

achieves the Exchange’s overall 

objectives to increase order flow and 

liquidity on NOM. The Exchange also 

believes that eliminating the Note 8 

Incentive is equitable and not unfairly 

discriminatory because the incentive 

will be eliminated in its entirety and 

would no longer be available to any 

NOM Participants. 

Options 7, Section 2(3) 

The Exchange’s proposal to assess a 

Non-Customer an increased routing fee 

of $1.20 to route to another options 

exchange, and a Customer a routing fee 

of $0.23 per contract, in addition to the 

actual transaction fee assessed by the 

away market, for routing contracts to 

any options exchange 24 is reasonable 

because the proposed routing fees 

would enable the Exchange to recover 

the costs it incurs to route orders to 

away markets after taking into account 

the other costs associated with routing 

orders to other options exchanges. In 

determining its proposed routing fees, 

the Exchange took into account 

transaction fees assessed by other 

options exchanges, the Exchange’s 

projected clearing costs, and the 

projected administrative, regulatory, 

and technical costs associated with 

routing orders to other options 

exchanges. Routing services offered by 

the Exchange are completely optional 

and market participants can readily 

select between various providers of 

routing services, including other 

exchanges and broker-dealers. Also, the 

Exchange notes that market participants 

may elect to mark their orders as ‘‘DoNot-Route’’ to avoid any routing fees.25

The Exchange’s proposal to assess a 

Non-Customer an increased routing fee 

of $1.20 to route to another options 

exchange is equitable and not unfairly 

discriminatory as all Non-Customers 

would be assessed a uniform routing 

fee. Additionally, the Exchange’s 

proposal to assess a Customer a routing 

fee of $0.23 per contract, in addition to 

the actual transaction fee assessed by 

the away market, for routing contracts to 

any options exchange is equitable and 

not unfairly discriminatory as all 

Customers will be uniformly assessed 

the same routing fee, regardless of the 

destination market. Customers will 

continue to receive favorable pricing as 

compared to other market participants 

because Customer liquidity enhances 

market quality on the Exchange by 

providing more trading opportunities, 

which benefits all market participants. 

Finally, the Exchange notes that market 

participants may elect to market orders 

as Do-Not-Route to avoid any routing 

fees. 

Technical Amendment 

The Exchange believes that its 

proposal to clarify that the Note 11 

Incentive is available for NOM 

Participants that qualify for the Tier 5(b) 

NOM Market Maker Rebate to Add 

Liquidity in Penny Symbols is 

reasonable because the proposal will 

align the rule text with the original 

intent of the Note 11 Incentive and 

avoid any potential confusion about the 

application of the Exchange’s Pricing 

Schedule. The Exchange also believes 

that its proposal is equitable and not 

unfairly discriminatory because it will 

apply uniformly to all similarly situated 

market participants. Continuing to 

apply the Note 11 Incentive to only 

NOM Market Makers is equitable and 

not unfairly discriminatory in light of 

their obligations on NOM (e.g., 

continuous quoting obligations). 

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 

does not believe that its proposal will 

place any category of market participant 

at a competitive disadvantage. While 

some aspects of the proposal apply 

directly to certain market participants as 

described above (e.g., increased NonPenny Symbol Customer Rebates to Add 

Liquidity), Exchange believes that the 

changes, taken together, will ultimately 

fortify and encourage activity on the 

Exchange. As discussed above, all 

market participants will benefit from 

any increase in market activity that the 

proposal effectuates. 

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 

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. 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 order 

execution venues 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. 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 223 / Tuesday, November 21, 2023 / Notices 81171 

26 15 U.S.C. 78s(b)(3)(A)(ii). 

27 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 98567 

(Sept. 27, 2023), 88 FR 68171. The Commission has 

received no comments on the proposal. 

4 15 U.S.C. 78s(b)(2). 

5 15 U.S.C. 78s(b)(2). 

6 17 CFR 200.30–3(a)(31). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

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.26

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 rule-comments@

sec.gov. Please include file number SR– 

NASDAQ–2023–044 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–NASDAQ–2023–044. 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–NASDAQ–2023–044 and should be 

submitted on or before December 12, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–25656 Filed 11–20–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98944; File No. SR– 

NYSEARCA–2023–63] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Designation of a 

Longer Period for Commission Action 

on a Proposed Rule Change To List 

and Trade Shares of the Grayscale 

Ethereum Futures Trust (ETH) ETF 

Under NYSE Arca Rule 8.200–E, 

Commentary .02 (Trust Issued 

Receipts) 

November 15, 2023. 

On September 19, 2023, NYSE Arca, 

Inc. (‘‘NYSE Arca’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

list and trade shares of the Grayscale 

Ethereum Futures Trust (ETH) ETF 

under NYSE Arca Rule 8.200–E, 

Commentary .02 (Trust Issued Receipts). 

The proposed rule change was 

published for comment in the Federal 

Register on October 3, 2023.3

Section 19(b)(2) of the Act 4 provides 

that within 45 days of the publication of 

notice of the filing of a proposed rule 

change, or within such longer period up 

to 90 days as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or as to which the 

self-regulatory organization consents, 

the Commission shall either approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether the 

proposed rule change should be 

disapproved. The 45th day after 

publication of the notice for this 

proposed rule change is November 17, 

2023. The Commission is extending this 

45-day time period. 

The Commission finds it appropriate 

to designate a longer period within 

which to take action on the proposed 

rule change so that it has sufficient time 

to consider the proposed rule change 

and the issues raised therein. 

Accordingly, the Commission, pursuant 

to Section 19(b)(2) of the Act,5

designates January 1, 2024, as the date 

by which the Commission shall either 

approve or disapprove, or institute 

proceedings to determine whether to 

disapprove, the proposed rule change 

(File No. SR–NYSEARCA–2023–63). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–25659 Filed 11–20–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98947; File No. SR– 

NYSEARCA–2023–58] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Designation of a 

Longer Period for Commission Action 

on a Proposed Rule Change To List 

and Trade Shares of the Hashdex 

Bitcoin Futures ETF Under NYSE Arca 

Rule 8.500–E (Trust Units) 

November 15, 2023. 

On September 22, 2023, NYSE Arca, 

Inc. (‘‘NYSE Arca’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

list and trade shares of the Hashdex 

Bitcoin Futures ETF under NYSE Arca 

Rule 8.500–E (Trust Units). The 

proposed rule change was published for 


lotter on DSK11XQN23PROD with NOTICES1