Federal Register / Vol. 87, No. 56 / Wednesday, March 23, 2022 / Notices 16521 

26The Commission notes that this is referring to 

both initial and continued listing standards. 

27 In addition, once a security has been approved 

for initial listing, maintenance criteria allow an 

exchange to monitor the status and trading 

characteristics of that issue to ensure that it 

continues to meet the exchange’s standards for 

market depth and liquidity so that fair and orderly 

markets can be maintained. See, e.g., Securities 

Exchange Act Release Nos. 82627 (Feb. 2, 2018), 3 

FR 5650, 5653, n.53 (Feb. 8, 2018) (SR–NYSE– 

2017–30); 81856 (Oct. 11, 2017), 82 FR 48296, 

48298 (Oct. 17, 2017) (SR–NYSE–2017–31); 81079 

(July 5, 2017), 82 FR 32022, 32023 (July 11, 2017) 

(SR–NYSE–2017–11). The Commission has stated 

that adequate listing standards, by promoting fair 

and orderly markets, are consistent with Section 

6(b)(5) of the Act, in that they are, among other 

things, designed to prevent fraudulent and 

manipulative acts and practices, promote just and 

equitable principles of trade, and protect investors 

and the public interest. See, e.g., Securities 

Exchange Act Release Nos. 82627 (Feb. 2, 2018), 3 

FR 5650, 5653, n.53 (Feb. 8, 2018) (SR–NYSE– 

2017–30); 87648 (Dec. 3, 2019), 84 FR 67308, 67314, 

n.42 (Dec. 9, 2019) (SR–NASDAQ–2019–059); 

88716 (Apr. 21, 2020), 85 FR 23393, 23395, n.22 

(Apr. 27, 2020) (SR–NASDAQ–2020–001). 

28See, e.g., Securities Exchange Act Release Nos. 

65708 (Nov. 8, 2011), 76 FR 70799 (Nov. 15, 2011) 

(SR–NASDAQ–2011–073) (order approving a 

proposal to adopt additional listing requirements 

for companies applying to list after consummation 

of a ‘‘reverse merger’’ with a shell company), and 

57785 (May 6, 2008), 73 FR 27597 (May 13, 2008) 

(SR–NYSE–2018–17) (order approving a proposal to 

adopt new initial and continued listing standards 

to list securities of special purpose acquisition 

companies). 

29 15 U.S.C. 78s(b)(2). 

30 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. 34– 

94038 (January 24, 2022), 87 FR 4683 (January 28, 

2022) (order approving SR–Nasdaq–2021–40, as 

amended). 4The ‘‘Nasdaq Closing Cross’’ refers to Nasdaq’s 

process for determining the price at which it will 

execute orders at the close and for executing those 

orders, as set forth in Rule 4754. 5The ‘‘LULD Closing Cross’’ refers to Nasdaq’s 

modified process for determining the price at which 

Continued 

requesting and conducting such 

hearings between paragraphs (A) and (B) 

could lead to confusion. Therefore, the 

Commission believes that providing the 

same procedures for requesting and 

conducting a hearing under Rules 

5815(d)(4)(A) and (B) and consolidating 

these procedures into proposed 

paragraph (C) provides transparency 

and clarity to such hearings, and thus 

may help ensure that the Exchange’s 

rules do not permit unfair 

discrimination between issuers, and 

provides a fair procedure for review of 

a Staff Delisting Determination, 

consistent with the Act. 

As the Commission has previously 

noted, the development and 

enforcement of meaningful listing 

standards 26 for an exchange is of 

substantial importance to financial 

markets and the investing public. 

Among other things, listing standards 

provide the means for an exchange to 

screen issuers that seek to become 

listed, and to provide listed status only 

to those that are bona fide companies 

that have or will have sufficient public 

float, investor base, and trading interest 

likely to generate depth and liquidity 

sufficient to promote fair and orderly 

markets.27 Meaningful listing standards 

also are important given investor 

expectations regarding the nature of 

securities that have achieved an 

exchange listing, and the role of an 

exchange in overseeing its market and 

assuring compliance with its listing 

standards.28 Therefore it is important for 

exchanges to prevent companies that are 

deficient in their listing standards or 

that do not meet initial listing standards 

from remaining or becoming listed on 

an exchange. Clarifying the rules and 

procedures for appeal where a listed 

Company has recurrent deficiencies so 

is under a Hearings Panel Monitor and 

cannot avail itself of additional time to 

demonstrate compliance, should further 

investor protection under Section 

6(b)(5) of the Act by helping to 

eliminate potential confusion about the 

application of Rule 5815(d)(4), while at 

the same time ensuring such Companies 

have a fair procedure for review 

consistent with Section 6(b)(7) of the 

Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,29 that the 

proposed rule change (SR–NASDAQ– 

2021–099) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–06091 Filed 3–22–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94451; File No. SR– 

NASDAQ–2022–025] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Exchange’s Transaction Fees and 

Credits at Equity 7, Sections 114 and 

118 March 17, 2022 

March 17, 2022. 

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 March 9, 

2022, 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 

Exchange’s transaction credits at Equity 

7, Section 118, as described further 

below. 

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. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s 

schedule of fees and credits, at Equity 

7, Sections 114 and 118 to establish 

pricing for orders executed in the new 

Extended Trading Close or ‘‘ETC,’’ 

which the Commission approved earlier 

this year.3 The proposed fee will be 

effective coincident with the 

commencement of the ETC, which the 

Exchange intends to occur on March 7, 

2022. 

As set forth in Rule 4755, the 

Extended Trading Close will allow 

Participants an additional opportunity 

to access liquidity in Nasdaq-listed 

securities at the Nasdaq Official Closing 

Price for a five minute period of time 

after the Nasdaq Closing Cross 4 or the 

LULD Closing Cross,5 (collectively, the 


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it will execute orders at the close, following a 

Trading Pause, as set forth in Rule 4120(a), which 

exists at or after 3:50 p.m. and before 4:00 p.m., as 

well as the process for executing those orders, as 

set forth in Rule 4754(b)(6). 

6For purposes of the ETC, the term ‘‘After Hours 

Trading’’ refers to trading in a Nasdaq-listed 

security that commences immediately following the 

conclusion of the Nasdaq Closing Cross or the 

LULD Closing Cross, during Post-Market Hours, as 

that term is defined in Equity 1, Section 1(a)(9). 

7By default, all LOC Orders in Nasdaq-listed 

securities will be set to participate in the Extended 

Trading Close in the event that the LOC Orders are 

not fully executed during the Closing Cross. 

However, a Participant may opt to exclude its LOC 

Orders from participating in the Extended Trading 

Close. When ETC eligibility is disabled, the System 

will simply cancel LOC Orders in Nasdaq-listed 

securities that remain unexecuted after the Closing 

Cross occurs. Also, if Participants select a time-inforce for their LOC Orders in Nasdaq-listed 

securities that continues after the Closing Cross 

occurs, then if such LOC Orders remain unexecuted 

after the Closing Cross, the Exchange will cause the 

remaining unexecuted shares to bypass the 

Extended Trading Close and participate in After 

Hours Trading. 

8Pursuant to Equity 7, Section 118(a), the term 

‘‘Consolidated Volume’’ means the total 

consolidated volume reported to all consolidated 

transaction reporting plans by all exchanges and 

trade reporting facilities during a month in equity 

securities, excluding executed orders with a size of 

less than one round lot. For purposes of calculating 

Consolidated Volume and the extent of a member’s 

trading activity the date of the annual reconstitution 

of the Russell Investments Indexes is excluded from 

both total Consolidated Volume and the member’s 

trading activity. For the purposes of calculating the 

extent of a member’s trading activity during the 

month on Nasdaq and determining the charges and 

credits applicable to such member’s activity, all M– 

ELO Orders that a member executes on Nasdaq 

during the month will count as liquidity-adding 

activity on Nasdaq. 

‘‘Closing Cross’’) concludes. During this 

five minute period, the System will 

continuously match and execute ‘‘ETC 

Eligible Orders’’—which include ‘‘ETC 

Orders’’ and ‘‘ETC Eligible LOC Orders’’ 

(discussed below)—at the Nasdaq 

Official Closing Price, as determined by 

the Closing Cross, unless the System 

suspends executions in two scenarios. 

First, the System will suspend 

executions of matched orders in a 

Nasdaq-listed security in the ETC if and 

when it detects an order in the security 

resting on the Nasdaq Continuous Book 

in After Hours Trading 6 with an After 

Hours Trading bid (offer) price that is 

higher (lower) than the Nasdaq Official 

Closing Price. Second, the System will 

suspend executions of matched orders 

in a Nasdaq-listed security in the ETC 

if and when the last sale price during 

After Hours Trading, or the best After 

Hours Trading bid (offer) price, of the 

security, other than on the Nasdaq 

Continuous Book, is higher (lower) than 

the Nasdaq Official Closing Price by the 

greater of 0.5% or $0.01. The Exchange 

will cancel any portion of an ETC 

Eligible Order that remains unexecuted 

at the conclusion of the ETC, or for 

which the System has suspended 

execution, where that suspension 

remains active as of the conclusion of 

the ETC. The ETC will not occur for a 

security on any day when insufficient 

interest exists in the System to conduct 

the Closing Cross for that security or 

when the Exchange invokes contingency 

procedures due to a disruption that 

prevents execution of the Closing Cross. 

As noted above, two types of orders 

may participate in the ETC: (1) ETC 

Eligible Limit-on-Close (‘‘LOC’’) Orders; 

and (2) Extended Trading Close (‘‘ETC’’) 

Orders. As set forth in Rule 4702(b)(12), 

ETC Eligible LOC Orders are LOC 

Orders that are eligible to, and by 

default are designated to participate in 

the ETC7 to the extent that such LOC 

Orders are entered through RASH or FIX 

and remain unexecuted, in whole or 

part, in the Closing Cross. An ETC 

Order, meanwhile, is an order in a 

Nasdaq-listed security that that is 

eligible for entry and execution 

exclusively during the ETC, at the 

Nasdaq Official Closing Price, as 

determined by the Closing Cross. 

The Exchange now proposes to amend 

Equity 7, Section 118 to adopt fees for 

ETC Eligible LOC Orders and ETC 

Orders that execute in the ETC. In short, 

the Exchange proposes to charge the 

same fees to execute ETC Eligible 

Orders as it does to execute ordinary 

LOC Orders (and Market on Close 

(‘‘MOC’’) Orders) in the Closing Cross. 

Equity 7, Section 118(d) governs 

pricing for orders executed in the 

Nasdaq Closing Cross. It provides for a 

system of tiered fees for MOC and LOC 

Orders executed in the Closing Cross. 

These tiers are as follows: 

Tiers Volume Price per executed share 

Tier A ................ Shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent above 1.75% of Consolidated Volume 8 or MOC/LOC volume 

above 0.50% of Consolidated Volume.

$0.0008 per executed share. 

Tier B ................ Shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent above 0.80% to 1.75% of Consolidated Volume or MOC/LOC 

volume above 0.30% to 0.50% of Consolidated Volume.

$0.0011 per executed share. 

Tier C ................ Shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent above 0.50% to 0.80% of Consolidated Volume or MOC/LOC 

volume above 0.10% to 0.30% of Consolidated Volume.

$0.0012 per executed share. 

Tier D ................ Shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent above 0.30% to 0.50% of Consolidated Volume.$0.00135 per executed share. 

Tier E ................ Shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent above 0.015% to 0.30% of Consolidated Volume.$0.00145 per executed share. 

Tier F ................. Shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent 0.00% to 0.015% of Consolidated Volume.$0.0016 per executed share. 

Tier G ................ member adds Nasdaq Options Market Customer and/or Professional liquidity in Penny Pilot 

Options and/or Non-Penny Pilot Options of 0.80% or more of national customer volume in 

multiply-listed equity and ETF options classes in a month.

$0.0010 per executed share. 

The Exchange proposes to amend this 

tier schedule so that its fees also apply 

to executions of ETC Eligible LOC 

Orders and ETC Orders in the ETC. For 

example, if at the end of a month, a 

member provides liquidity on Nasdaq 

that represents 1.20% of Consolidated 

Volume and/or provides MOC or LOC 

volume in the Nasdaq Closing Cross 

amounting to 0.40% of Consolidated 

Volume, then the member would qualify 

for Tier B pricing of $0.0011 per share 

executed for both its LOC and MOC 

Orders executed in the Nasdaq Closing 

Cross and its ETC Eligible LOC Orders 

and ETC Orders executed in the ETC. 

Under the proposal, shares in ETC 

Eligible LOC Orders and ETC Orders 

will not count towards determining a 

participant’s qualification for any of the 

fee or credit tiers in Section 118(a) or 

118(d). Likewise, the Exchange proposes 

to amend Equity 7, Section 114(a) to 


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9These market quality incentive programs are the 

Qualified Market Maker Program, the NBBO 

Program, the Designated Liquidity Provider 

Program, and the Nasdaq Growth Program. 

10 15 U.S.C. 78f(b). 

11 15 U.S.C. 78f(b)(4) and (5). 

12NetCoalition 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)). 

13Securities Exchange Act Release No. 51808 

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

(‘‘Regulation NMS Adopting Release’’). 

specify that, to the extent that any of the 

market quality incentive programs 

described in Section 114 9 prescribe 

pricing tiers for which eligibility 

depends upon a participant achieving 

certain threshold volumes in LOC or 

MOC shares, then ETC Eligible LOC 

Orders and ETC Orders will not count 

towards such eligibility determinations. 

The Exchange’s proposal is reasonable 

to adopt the same execution fees for 

ETC Eligible LOC Orders and ETC 

Orders that execute in the ETC as it 

charges for ordinary LOC and MOC 

Orders that execute in the Nasdaq 

Closing Cross because the ETC will act 

as an extension of the Closing Cross. 

That is, ordinary LOC Orders which do 

not execute fully in the Nasdaq Closing 

Cross will become eligible automatically 

for participation in the ETC as an ETC 

Eligible LOC Order (unless a member 

opts out of such participation), and if 

such ETC Eligible LOC Orders execute 

in the ETC, then they will do so at the 

Nasdaq Official Closing Price, as 

determined by the Nasdaq Closing 

Cross. Given the close relationship 

between LOC Orders that execute in the 

Nasdaq Closing Cross, and those that 

execute in the ETC, the Exchange 

believes that it is logical for the same fee 

structure to apply to each of them. The 

Exchange also believes that this same 

price structure is appropriate for ETC 

Orders that execute in the ETC because 

this structure is simple for participants 

and properly calibrates incentives to 

participate in the ETC so that they are 

neither too high nor too low. The 

Exchange does not wish for ETC Order 

execution fees to be too high, lest it will 

discourage participation in the ETC in 

favor of competing on- and off-exchange 

mechanisms that also allow for 

participants to execute orders at the 

Nasdaq Closing Cross price. The 

Exchange also does not wish for the fees 

to be too low, lest it may discourage 

participation in the Nasdaq Closing 

Cross. 

Similarly, the Exchange believes it is 

reasonable to exclude ETC Eligible LOC 

and ETC Orders from determining a 

participant’s qualification for any of the 

MOC or LOC based fee tiers in Equity 

7, Sections 114, 118(a), and 118(d). 

Again, the Exchange does not wish to 

provide undue incentives to participate 

in the ETC that might occur at the 

expense of participation in the Nasdaq 

Closing Cross. 

The Exchange notes that those 

participants that are dissatisfied with 

the proposed fees are free to shift their 

order flow to competing on- and offexchange venues that also enable 

participants to execute their orders at 

the Nasdaq Closing Cross price or to 

simply opt against participating in the 

ETC. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,10 in general, and 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. The 

proposal is also consistent with Section 

11A of the Act relating to the 

establishment of the national market 

system for securities. 

The Proposal Is Reasonable 

The Exchange’s proposal is reasonable 

in several respects. As a threshold 

matter, the Exchange is subject to 

significant competitive forces in the 

market for equity 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 brokerdealers 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’. . . .’’ 12

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.’’ 13

Numerous indicia demonstrate the 

competitive nature of this market. For 

example, clear substitutes to the 

Exchange exist in the market for equity 

security transaction services. The 

Exchange is only one of several equity 

venues to which market participants 

may direct their order flow. Competing 

equity exchanges offer similar tiered 

pricing structures to that of the 

Exchange, including schedules of 

rebates and fees that apply based upon 

members achieving certain volume 

thresholds. 

The Exchange believes it reasonable 

to adopt the same execution fees for 

ETC Eligible LOC Orders and ETC 

Orders that execute in the ETC as it 

charges for ordinary LOC and MOC 

Orders that execute in the Nasdaq 

Closing Cross because the ETC will act 

as an extension of the Closing Cross. 

That is, ordinary LOC Orders which do 

not execute fully in the Nasdaq Closing 

Cross will become eligible automatically 

for participation in the ETC as an ETC 

Eligible LOC Order (unless a member 

opts out of such participation), and if 

such ETC Eligible LOC Orders execute 

in the ETC, then they will do so at the 

Nasdaq Official Closing Price, as 

determined by the Nasdaq Closing 

Cross. Given the close relationship 

between LOC Orders that execute in the 

Nasdaq Closing Cross, and those that 

execute in the ETC, the Exchange 

believes that it is logical for the same fee 

structure to apply to each of them. The 

Exchange also believes that this same 

price structure is appropriate for ETC 

Orders that execute in the ETC because 

this structure is simple for participants 

and properly calibrates incentives to 

participate in the ETC so that they are 

neither too high nor too low. The 

Exchange does not wish for ETC Order 

execution fees to be too high, lest it will 

discourage participation in the ETC in 

favor of competing on- and off-exchange 

mechanisms that also allow for 

participants to execute orders at the 

Nasdaq Closing Cross price. The 

Exchange also does not wish for the fees 

to be too low, lest it may discourage 

participation in the Nasdaq Closing 

Cross. 

Similarly, the Exchange believes it is 

reasonable to exclude ETC Eligible LOC 

and ETC Orders from determining a 

participant’s qualification for any of the 


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MOC or LOC based fee tiers in Equity 

7, Sections 114, 118(a), and 118(d). 

Again, the Exchange does not wish to 

provide undue incentives to participate 

in the ETC that might occur at the 

expense of participation in the Nasdaq 

Closing Cross. 

The Exchange notes that those 

participants that are dissatisfied with 

the proposed fees are free to shift their 

order flow to competing on- and offexchange venues that also enable 

participants to execute their orders at 

the Nasdaq Closing Cross price or to 

simply opt against participating in the 

ETC. 

The Proposal Is an Equitable Allocation 

of Fees 

The Exchange believes its proposal 

will allocate its charges and credits 

fairly among its market participants. 

The Exchange believes that its 

proposed fees for ETC executions is an 

equitable allocation. The proposed fees 

are consistent with those it presently 

charges for MOC and LOC Orders that 

execute in the Nasdaq Closing Cross. 

Given the close relationship between 

LOC Orders that execute in the Nasdaq 

Closing Cross, and those that execute in 

the ETC, the Exchange believes that it is 

logical for the same fee structure to 

apply to each of them. The Exchange 

also believes that this same price 

structure is appropriate for ETC Orders 

that execute in the ETC because this 

structure is simple for participants and 

properly calibrates incentives to 

participate in the ETC so that they are 

neither too high nor too low. The 

Exchange does not wish for ETC Order 

execution fees to be too high, lest it will 

discourage participation in the ETC. The 

Exchange also does not wish for the fees 

to be too low, lest it may discourage 

participation in the Nasdaq Closing 

Cross. 

For similar reasons, it is equitable to 

exclude ETC Eligible LOC and ETC 

Orders from determining a participant’s 

qualification for any of the MOC or LOC 

based fee tiers in Equity 7, Sections 114, 

118(a), and 118(d). Again, the Exchange 

does not wish to provide undue 

incentives to participate in the ETC that 

might occur at the expense of 

participation in the Nasdaq Closing 

Cross. 

The Exchange notes that those 

participants that are dissatisfied with 

the proposed fees are free to shift their 

order flow to competing on- and offexchange venues that also enable 

participants to execute their orders at 

the Nasdaq Closing Cross price or to 

simply opt against participating in the 

ETC. 

The Proposal Is Not Unfairly 

Discriminatory 

The Exchange believes that its 

proposal is not unfairly discriminatory. 

As an initial matter, the Exchange 

believes that nothing about its volumebased tiered pricing model is inherently 

unfair; instead, it is a rational pricing 

model that is well-established and 

ubiquitous in today’s economy among 

firms in various industries—from cobranded credit cards to grocery stores to 

cellular telephone data plans—that use 

it to reward the loyalty of their best 

customers that provide high levels of 

business activity and incent other 

customers to increase the extent of their 

business activity. It is also a pricing 

model that the Exchange and its 

competitors have long employed with 

the assent of the Commission. It is fair 

because it enhances price discovery and 

improves the overall quality of the 

equity markets. 

The Exchange also believes that its 

proposal is not unfairly discriminatory 

because the proposed tiered ETC 

execution fees already apply to 

members that execute MOC and LOC 

Orders in the Nasdaq Closing Cross, and 

thus are familiar and understood. 

Moreover, the fee tiers are accessible to 

any Nasdaq member that engages in 

qualifying activity on Nasdaq or that 

chooses to grow the extent of that 

activity to qualify for a more favorable 

tier. 

Again, any participants that are 

dissatisfied with the proposed fees are 

free to shift their order flow to 

competing on- and off-exchange venues 

that also enable participants to execute 

their orders at the Nasdaq Closing Cross 

price or to simply opt against 

participating in the ETC. 

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. 

Intramarket Competition 

The Exchange does not believe that its 

proposal will place any category of 

Exchange participant at a competitive 

disadvantage. 

As noted above, the Exchange’s 

proposed pricing for ETC executions is 

intended to be consistent with its 

pricing for LOC and MOC Closing Cross 

executions due to similarities in the two 

mechanisms and the desire to properly 

calibrate incentives to spur member 

participation in each of them. The 

Exchange notes that its members are free 

to trade on other venues, or to not 

participate in the ETC, to the extent they 

believe that the proposed fees are not 

attractive. 

Intermarket Competition 

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 

credits and fees to remain competitive 

with other exchanges and with 

alternative trading systems that have 

been exempted from compliance with 

the statutory standards applicable to 

exchanges. Because competitors are free 

to modify their own credits and fees in 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

believes that the degree to which credit 

or fee changes in this market may 

impose any burden on competition is 

extremely limited. The proposal is 

reflective of this competition. Any 

participant that is dissatisfied with the 

proposal is free to shift their order flow 

to competing on- and off-exchange 

venues that also enable participants to 

execute their orders at the Nasdaq 

Closing Cross price or to simply opt 

against participating in the ETC. 

Even as one of the largest U.S. 

equities exchanges by volume, the 

Exchange has less than 20% market 

share, which in most markets could 

hardly be categorized as having enough 

market power to burden competition. 

Moreover, as noted above, price 

competition between exchanges is 

fierce, with liquidity and market share 

moving freely between exchanges in 

reaction to fee and credit changes. This 

is in addition to free flow of order flow 

to and among off-exchange venues 

which comprises upwards of 50% of 

industry volume. 

In sum, if the change proposed herein 

is 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 change will impair the ability 

of members or competing order 

execution venues to maintain their 

competitive standing in the financial 

markets. 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 56 / Wednesday, March 23, 2022 / Notices 16525 

14 15 U.S.C. 78s(b)(3)(A)(ii). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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.14

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2022–025 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–2022–025. 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 (http://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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2022–025 and 

should be submitted on or before April 

13, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–06092 Filed 3–22–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94444; File No. SR–GEMX– 

2022–05] 

Self-Regulatory Organizations; Nasdaq 

GEMX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Harmonize Various 

Processes Under Options 3, Section 20 

Across the Affiliated Nasdaq Options 

Exchanges 

March 17, 2022. 

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 March 8, 

2022, Nasdaq GEMX, LLC (‘‘GEMX’’ 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 Harmonize 

various processes under Options 3, 

Section 20 across the affiliated Nasdaq 

options exchanges. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/gemx/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to harmonize 

its existing processes with those of its 

affiliate Nasdaq Phlx LLC (‘‘Phlx’’) 

concerning the review of decisions on 

appeal under Options 3, Section 20. The 

Exchange also proposes a number of 

non-substantive changes. Each change is 

discussed in detail below. 

Appeal 

Today, Options 3, Section 20(k) 

governs the appeal process for 

determinations by Exchange staff made 

under this Rule, including obvious error 

determinations. Specifically, if a 

Member affected by a determination 

under this Rule so requests within the 

permitted time period, an Exchange 

Review Council panel will review 

decisions made by the Official under 

Options 3, Section 20, including 

whether an obvious error occurred and 

whether the correct determination was 

made. A request for review on appeal 

must be made in writing via email or 

other electronic means specified from 

time to time by the Exchange in an 

Options Trader Alert distributed to 

Members within thirty (30) minutes 

after the party making the appeal is 

given notification of the initial 

determination being appealed. The 


jspears on DSK121TN23PROD with NOTICES1