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[Federal Register Volume 89, Number 243 (Wednesday, December 18, 2024)]
[Notices]
[Pages 102994-103002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29921]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101892; File No. SR-NASDAQ-2024-078]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Lower the Options Regulatory Fee (ORF) and Adopt a New Approach to ORF 
in 2025

December 12, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 27, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend The Nasdaq Options Market LLC 
(``NOM'') Pricing Schedule at Options 7, Section 5, Options Regulatory 
Fee.\3\
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    \3\ On October 31, 2024, SR-NASDAQ-2024-058 was filed to amend 
ORF. On November 27, 2024, SR-NASDAQ-2024-058 was withdrawn and this 
rule change was filed. The current proposal amends the ORF Rate for 
Local Customer ``C'' Origin Code transactions executed on NOM, Local 
Firm ``F'' Origin Code transactions executed on NOM, and Away ORF 
Rate Firm ``F'' Origin Code multi-list transactions executed on non-
NOM exchanges.
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    While the changes proposed herein are effective upon filing, the 
Exchange has designated certain amendments to be operative on November 
1, 2024, and other amendments to be operative on January 1, 2025, as 
noted in the Exhibit 5 and herein.
    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
    NOM proposes to amend its current ORF in several respects. In 
summary, first, NOM proposes to reduce its ORF from $0.0016 to $0.0014 
per contract side from November 1, 2024, through December 31, 2024. 
Second, as of January 1, 2025, NOM proposes to amend its methodology of 
collection to: (1) exclude options transactions in proprietary 
products; and (2) assess ORF in all clearing ranges except market 
makers who clear as ``M'' at The Options Clearing Corporation 
(``OCC''). Additionally, NOM will assess a different rate for trades 
executed on NOM (``Local ORF Rate'') and trades executed on non-NOM 
exchanges (``Away ORF Rate''). Each change will be described below in 
greater detail.
Background on Current ORF
    Today, NOM assesses its ORF for each Customer \4\ option 
transaction that is either: (1) executed by a Participant \5\ on NOM; 
or (2) cleared by a NOM Participant at OCC in the Customer range,\6\ 
even if the transaction was executed by a non-member of NOM, regardless 
of the exchange on which the transaction occurs.\7\ If the OCC clearing 
member is a NOM Participant, ORF is assessed and collected on all 
ultimately cleared Customer contracts (after adjustment for CMTA \8\); 
and (2) if the OCC clearing member is not a NOM Participant, ORF is 
collected only on the cleared Customer contracts executed at

[[Page 102995]]

NOM, taking into account any CMTA instructions which may result in 
collecting the ORF from a non-member.\9\
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    \4\ Today, ORF is collected from Customers, Professionals and 
broker-dealers that are not affiliated with a clearing member that 
clear in the ``C'' range at OCC. See supra notes 18 and 19 for 
descriptions of Customers and Professionals.
    \5\ The term ``Options Participant'' or ``Participant'' mean a 
firm, or organization that is registered with the Exchange pursuant 
to Options 2A of these Rules for purposes of participating in 
options trading on NOM as a ``Nasdaq Options Order Entry Firm'' or 
``Nasdaq Options Market Maker''. See Options 1, Section 1(a)(39).
    \6\ Participants must record the appropriate account origin code 
on all orders at the time of entry of the order. The Exchange 
represents that it has surveillances in place to verify that 
Participants mark orders with the correct account origin code.
    \7\ The Exchange uses reports from OCC when assessing and 
collecting the ORF.
    \8\ CMTA or Clearing Member Trade Assignment is a form of 
``give-up'' whereby the position will be assigned to a specific 
clearing firm at OCC.
    \9\ By way of example, if Broker A, a NOM Participant, routes a 
Customer order to CBOE and the transaction executes on CBOE and 
clears in Broker A's OCC Clearing account, ORF will be collected by 
NOM from Broker A's clearing account at OCC via direct debit. While 
this transaction was executed on a market other than NOM, it was 
cleared by a NOM Participant in the member's OCC clearing account in 
the Customer range, therefore there is a regulatory nexus between 
NOM and the transaction. If Broker A was not a NOM Participant, then 
no ORF should be assessed and collected because there is no nexus; 
the transaction did not execute on NOM nor was it cleared by a NOM 
Participant.
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    Today, in the case where a Participant both executes a transaction 
and clears the transaction, the ORF will be assessed to and collected 
from that Participant. Today, in the case where a Participant executes 
a transaction and a different Participant clears the transaction, the 
ORF will be assessed to and collected from the Participant who clears 
the transaction and not the Participant who executes the transaction. 
Today, in the case where a non-member executes a transaction at an away 
market and a Participant clears the transaction, the ORF will be 
assessed to and collected from the Participant who clears the 
transaction. Today, in the case where a Participant executes a 
transaction on NOM and a non-member clears the transaction, the ORF 
will be assessed to the Participant that executed the transaction on 
NOM and collected from the non-member who cleared the transaction. 
Today, in the case where a Participant executes a transaction at an 
away market and a non-member ultimately clears the transaction, the ORF 
will not be assessed to the Participant who executed the transaction or 
collected from the non-member who cleared the transaction because the 
Exchange does not have access to the data to make absolutely certain 
that ORF should apply. Further, the data does not allow the Exchange to 
identify the Participant executing the trade at an away market.
ORF Revenue and Monitoring of ORF
    Today, the Exchange monitors the amount of revenue collected from 
the ORF (``ORF Regulatory Revenue'') to ensure that it, in combination 
with other regulatory fees and fines, does not exceed Options 
Regulatory Costs.\10\ In determining whether an expense is considered 
an Options Regulatory Cost, the Exchange reviews all costs and makes 
determinations if there is a nexus between the expense and a regulatory 
function. The Exchange notes that fines collected by the Exchange in 
connection with a disciplinary matter offset Options Regulatory Cost.
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    \10\ The regulatory costs for options comprise a subset of the 
Exchange's regulatory budget that is specifically related to options 
regulatory expenses and encompasses the cost to regulate all 
Participants' options activity (``Options Regulatory Cost'').
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    ORF Regulatory Revenue, when combined with all of the Exchange's 
other regulatory fees and fines, is designed to recover a material 
portion of the Options Regulatory Costs to the Exchange of the 
supervision and regulation of member Customer options business 
including performing routine surveillances, investigations, 
examinations, financial monitoring, and policy, rulemaking, 
interpretive, and enforcement activities. Options Regulatory Costs 
include direct regulatory expenses and certain indirect expenses in 
support of the regulatory function. The direct expenses include in-
house and third-party service provider costs to support the day-to-day 
regulatory work such as surveillances, investigations and examinations. 
The indirect expenses are only those expenses that are in support of 
the regulatory functions, such areas include Office of the General 
Counsel, technology, finance, and internal audit. Indirect expenses 
will not exceed 35% of the total Options Regulatory Costs. Thus, direct 
expenses would be 65% of total Options Regulatory Costs for 2024.\11\
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    \11\ Direct and indirect expenses are based on the Exchange's 
2024 Regulatory Budget.
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    The ORF is designed to recover a material portion of the Options 
Regulatory Costs to the Exchange of the supervision and regulation of 
its Participants, including performing routine surveillances, 
investigations, examinations, financial monitoring, and policy, 
rulemaking, interpretive, and enforcement activities.
Proposal for November 1, 2024, Through December 31, 2024
    Based on NOM's most recent review of its ORF Regulatory Revenues as 
compared to its ORF Regulatory Costs in light of recent fines, NOM 
proposes to reduce the amount of ORF that will be collected by the 
Exchange from $0.0016 to $0.0014 per contract side from November 1, 
2024, through December 31, 2024. The Exchange issued an Options Trader 
Alert on September 16, 2024, that specified the proposed rate change 
for November 1, 2024.\12\
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    \12\ See https://www.nasdaqtrader.com/MicroNews.aspx?id=OTA2024-53. The Exchange plans on issuing a second Options Trader Alert 
announcing changes for January 1, 2025.
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    NOM notes that there can be no assurance that the Options 
Regulatory Costs for the remainder of 2024 will not differ materially 
from these expectations and prior practice, nor can the Exchange 
predict with certainty whether options volume will remain at the 
current level going forward. The Exchange notes however, that when 
combined with regulatory fees and fines, the Options Regulatory Revenue 
that may be generated utilizing an ORF rate of $0.0016 per contract 
side may result in Options Regulatory Revenue which exceeds the 
Exchange's estimated Options Regulatory Costs for 2024 as a result of 
fines. The Exchange therefore proposes to reduce its ORF to $0.0014 per 
contract side to ensure that Options Regulatory Revenue does not exceed 
the Exchange's estimated Options Regulatory Costs in 2024. 
Particularly, the Exchange believes that reducing the ORF when combined 
with all of the Exchange's other regulatory fees and fines, would allow 
the Exchange to continue covering a material portion of its Options 
Regulatory Costs, while lessening the potential for generating excess 
revenue that may otherwise occur using the rate of $0.0016 per contract 
side.\13\
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    \13\ The Exchange notes that its regulatory responsibilities 
with respect to Participant compliance with options sales practice 
rules have largely been allocated to FINRA under a 17d-2 agreement. 
The ORF is not designed to cover the cost of that options sales 
practice regulation.
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    The Exchange will continue to monitor the amount of Options 
Regulatory Revenue collected from the ORF to ensure that Options 
Regulatory Revenue, in combination with its other regulatory fees and 
fines, does not exceed Options Regulatory Costs. If the Exchange 
determines Options Regulatory Revenue exceed Options Regulatory Costs, 
the Exchange will adjust the ORF by submitting a fee change filing to 
the Commission and notifying \14\ its Participants via an Options 
Trader Alert.\15\
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    \14\ The Exchange will provide Participants with such notice at 
least 30 calendar days prior to the effective date of the change.
    \15\ The Exchange notes that in connection with this proposal, 
it provided the Commission confidential details regarding the 
Exchange's projected regulatory revenue, including projected revenue 
from ORF, along with a projected regulatory expense.
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Proposal for January 1, 2025
    NOM has been reviewing it methodologies for the assessment and 
collection of ORF. As a result of this review, NOM proposes to revamp 
the current process of assessing and collecting ORF in various 
ways.\16\ Below NOM will explain the modelling it performed and the 
outcomes of the

[[Page 102996]]

modelling which have led the Exchange to propose the below changes.
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    \16\ The Exchange proposes to delete language in the Pricing 
Schedule at Options 7, Section 5 that will be obsolete as of 
November 1, 2024.
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    Effective January 1, 2025, NOM proposes to assess ORF to each NOM 
Participant for multi-listed options transactions, excluding options 
transactions in proprietary products,\17\ cleared by OCC in all 
clearing ranges except market makers who clear as ``M'' at OCC 
(``Market Makers'') \18\ where: (1) the execution occurs on NOM or (2) 
the execution occurs on another exchange and is cleared by a NOM 
Participant. With this change, NOM proposes to amend its current ORF to 
assess ORF on Customer,\19\ Professional,\20\ Firm \21\ and Broker-
Dealer \22\ transactions. All market participants, except Market 
Makers, would be subject to ORF.
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    \17\ Proprietary products are products with intellectual 
property rights that are not multi-listed. NOM has no proprietary 
products.
    \18\ Capacity ``M'' covers Market Makers registered on NOM and 
market makers registered at non-NOM exchanges.
    \19\ The 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)). See Options 7, Section 1(a).
    \20\ The 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. See Options 7, Section 1(a).
    \21\ The term ``Firm'' or (``F'') applies to any transaction 
that is identified by a Participant for clearing in the Firm range 
at OCC. See Options 7, Section 1(A).
    \22\ The 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. See Options 7, Section 
1(a). A Broker-Dealer clears in the ``F'' range at OCC.
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    The ORF would be collected by OCC on behalf of NOM from (1) NOM 
clearing members for all Customer, Professional, Firm and Broker-Dealer 
transactions they clear or (2) non-members for all Customer, 
Professional, Firm and Broker-Dealer transactions they clear that were 
executed on NOM. This model collects ORF where there is a nexus with 
NOM and does not collect ORF from a non-member where the transaction 
takes place away from the Exchange.
    Further, effective January 1, 2025, the Exchange proposes to 
establish a different ORF for trades executed on NOM (``Local ORF 
Rate'') and trades executed on non-NOM exchanges (``Away ORF Rate'') by 
market participants.\23\ For Customer, Professional, and broker-dealer 
(not affiliated with a clearing member) transactions that clear in the 
``C'' range at OCC (collectively ``Customers'') the Exchange proposes 
to assess a Local ORF Rate of $0.0203 per contract and an Away ORF Rate 
of $0.00 per contract. For Firm and Broker-Dealer transactions that 
clear in the ``F'' range at OCC (collectively ``Firm and Broker-Dealer 
Transactions'') the Exchange proposes to assess a Local ORF Rate of 
$0.00024 per contract and an Away ORF Rate of $0.00024 per contract. 
The combined amount of Local ORF and Away ORF collected may not exceed 
88% of Options Regulatory Cost. NOM will ensure that ORF Regulatory 
Revenue does not exceed Options Regulatory Cost. As is the case today, 
the Exchange will notify Participants via an Options Trader Alert of 
these changes at least 30 calendar days prior to January 1, 2025.
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    \23\ The Exchange is continuing to permit NOM Participants who 
do not transact an equities business on Nasdaq in a calendar year to 
receive a refund of the fees specified in Equity 7, Section 30(b) 
upon written notification to the Exchange along with documentation 
evidencing that no equities business was conducted on Nasdaq for 
that calendar year. The Exchange is replicating related rule text in 
Options 7, Section 5 to retain the continuity of this refund 
process.
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    The Exchange utilized historical and current data from its 
affiliated options exchanges to create a new regression model that 
would tie expenses attributable to regulation to a respective 
source.\24\ To that end, the Exchange plotted Customer volumes from 
each exchange \25\ against Options Regulatory Cost from each exchange 
for the Time Period. Specifically, the Exchange utilized standard 
charting functionality to create a linear regression. The charting 
functionality yields a ``slope'' of the line, representing the marginal 
cost of regulation, as well as an ``intercept,'' representing the fixed 
cost of regulation.\26\ The Exchange considered using non-linear 
models, but concluded that the best R[supcaret]2 (``R-Squared'') \27\ 
results came from a standard y = Mx +B format for regulatory expense. 
The R-Squared for the below charting method ranged from 85% to 95% 
historically. As noted, the plots below represent the Time Period. The 
X-axis reflects Customer volumes by exchange, by quarter and the Y-axis 
reflects regulatory expense by exchange.
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    \24\ This new model seeks to provide a new approach to 
attributing Options Regulatory Cost to Options Regulatory Expense. 
In creating this model, the exchange did not rely on data from a 
single SRO as it had in the past.
    \25\ The Exchange utilized data from all Nasdaq affiliated 
options exchanges to create this model from 2023 Q3 through 2024 Q2 
(``Time Period'').
    \26\ The Exchange utilized data from 2023 Q1 to 2024 Q3 to 
calculate the slope and intercept.
    \27\ R-Squared is a statistical measure that indicates how much 
of the variation of a dependent variable is explained by an 
independent variable in a regression model. The formula for 
calculating R-squared is: R2 = 1-Unexplained Variation/Total 
Variation.
[GRAPHIC] [TIFF OMITTED] TN18DE24.071

[[Page 102997]]

    The results of this modelling indicated a high correlation and 
intercept for the baseline cost of regulating the options market as a 
whole. Specifically, the regression model indicated that (1) the 
marginal cost of regulation is easily measurable, and significantly 
attributable to Customer activity; and (2) the fixed cost of setting up 
a regulatory regime should arguably be dispersed across the industry so 
that all options exchanges have substantially similar revenue streams 
to satisfy the ``intercept'' element of cost. When seeking to offset 
the ``set-up'' cost of regulation, the Exchange attempted several 
levels of attribution. The most successful attribution was related to 
industry wide Firm and Broker-Dealer Transaction volume. Of note, 
through analysis of the results of this regression model, there was no 
positive correlation that could be established between Customer away 
volume and regulatory expense. This led the Exchange to utilize a model 
with a two-factor regression on a quarterly basis for the last four 
quarters of volumes relative to the pool of expense data for the six 
Nasdaq affiliated options exchanges. Once again, standard spreadsheet 
functionality (including the Data Analysis Packet) was used to 
determine the mathematics for this model. The results of this two-
factor model, which resulted in the attribution of Customer Local ORF 
and Firm and Broker-Dealer Transaction Local and Away ORF, typically 
increased the R-Squared (goodness of fit) to >97% across multiple 
historical periods.\28\
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    \28\ The Exchange notes that various exchanges negotiate their 
respective contracts independently with FINRA creating some 
variability. Additionally, an exchange with a floor component would 
create some variability.
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    Utilizing the new regression model, and assumptions in the 
proposal, the model demonstrates that Customer volumes are directly 
attributable to marginal cost, and also shows that Firm and Broker-
Dealer Transaction volumes industry-wide are a valid method (given the 
goodness of fit) to offset the fixed cost of regulation. Applying the 
regression coefficient values historically, the Exchange established a 
``normalization'' by per options exchange. This ``normalization'' 
encompassed idiosyncratic exchange expense-volume relationships which 
served to tighten the attributions further while not deviating by more 
than 30% from the mean for any single options exchange in the model. 
The primary driver of this need for ``normalization'' are negotiated 
regulatory contracts that were negotiated at different points in time, 
yielding some differences in per contract regulatory costs by exchange. 
Normalization is therefore the average of a given exchange's historical 
(prior 4 quarters) ratio of regulatory expense to revenue when using 
the regressed values (for Customer Local ORF and Firm and Broker-Dealer 
Transaction Local and Away ORF) that yields an effective rate by 
exchange. The ``normalization'' was then multiplied to a ``targeted 
collection rate'' of approximately 88% to arrive at ORF rates for 
Customer, Firm and Broker-Dealer Transactions. Of note, when comparing 
the ORF rates generated from this method, historically, there appears 
to be a very tight relationship between the estimated modeled 
collection and actual expense and the regulatory expenses for that same 
period. In summary, the model does not appear to increase marginal 
returns.
    One other important aspect of this modeling is the input of Options 
Regulatory Costs. The Exchange notes that in defining Options 
Regulatory Costs it accounts for the nexus between the expense and 
options regulation. By way of example, the Exchange excludes certain 
indirect expenses such as payroll expenses, accounts receivable, 
accounts payable, marketing, executive level expenses and corporate 
systems.
    The Exchange would continue to monitor the amount of Options 
Regulatory Revenue collected from the ORF to ensure that it, in 
combination with other regulatory fees and fines, does not exceed 
Options Regulatory Costs. In determining whether an expense is 
considered an Options Regulatory Cost, the Exchange would continue to 
review all costs and makes determinations if there is a nexus between 
the expense and a regulatory function. The Exchange notes that fines 
collected by the Exchange in connection with a disciplinary matter will 
continue to offset Options Regulatory Cost. Participants will continue 
to be provided with 30 calendar day notice of any change to ORF.
    As is the case today, ORF Regulatory Revenue, when combined with 
all of the Exchange's other regulatory fees and fines, is designed to 
recover a material portion of the Options Regulatory Costs to the 
Exchange for the supervision and regulation of Participants' 
transactions, including performing routine surveillances, 
investigations, examinations, financial monitoring, and policy, 
rulemaking, interpretive, and enforcement activities. As discussed 
above, Options Regulatory Costs include direct regulatory expenses \29\ 
and certain indirect expenses in support of the regulatory 
function.\30\
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    \29\ The direct expenses include in-house and third-party 
service provider costs to support the day-to-day regulatory work 
such as surveillances, investigations and examinations.
    \30\ The indirect expenses include support from such areas as 
Office of the General Counsel, technology, finance and internal 
audit.
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    Finally, the Exchange notes that this proposal will be sunset on 
July 1, 2025, at which point the Exchange would revert back to the ORF 
methodology and rate ($0.0016 per contract side) that was in effect 
prior to this rule change.\31\
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    \31\ The Exchange proposes to reconsider the sunset date in 2025 
and determine whether to proceed with the proposed ORF structure at 
that time.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\32\ Specifically, the 
Exchange believes the proposed rule change is consistent with Section 
6(b)(4) of the Act,\33\ which provides that Exchange rules may provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members, and other persons using its facilities. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \34\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \32\ 15 U.S.C. 78f(b).
    \33\ 15 U.S.C. 78f(b)(4).
    \34\ 15 U.S.C. 78f(b)(5).
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Proposal for November 1, 2024, Through December 31, 2024
    The Exchange believes the proposed reduction of ORF is reasonable 
because it would help ensure that ORF Regulatory Revenue does not 
exceed a material portion of the Exchange's ORF Regulatory Costs. As 
noted above, the ORF is designed to recover a material portion, but not 
all, of the Exchange's ORF Regulatory Costs. Further, the Exchange 
believes the proposed fee change is reasonable because Customer 
transactions will be subject to a lower ORF than the rate that would 
otherwise be in effect on November 1, 2024.
    The Exchange had designed the ORF to generate ORF Regulatory 
Revenue that would be less than the amount of the Exchange's ORF 
Regulatory Costs to ensure that it, in combination with its other 
regulatory fees and fines, does not exceed ORF Regulatory Costs, which 
is

[[Page 102998]]

consistent with the view of the Commission that regulatory fees be used 
for regulatory purposes and not to support the Exchange's business 
operations. As discussed above, however, after review of its ORF 
Regulatory Costs and ORF Regulatory Revenue which includes revenues 
from ORF and other regulatory fees and fines, the Exchange determined 
that absent a reduction in ORF, it may collect ORF Regulatory Revenue 
which would exceed its ORF Regulatory Costs. Indeed, the Exchange notes 
that when taking into account the potential that recent options volume 
persists, it estimates the ORF may generate ORF Regulatory Revenue that 
would cover more than the approximated Exchange's projected ORF 
Regulatory Costs due to fines. As such, the Exchange believes it's 
reasonable and appropriate to reduce the ORF amount from $0.0016 to 
$0.0014 per contract side.
    The Exchange also believes the proposed fee change is equitable and 
not unfairly discriminatory in that it is charged to all Participants 
on all their transactions that clear in the Customer range at OCC.\35\ 
The Exchange believes the ORF ensures fairness by assessing higher fees 
to those Participants that require more Exchange regulatory services 
based on the amount of Customer options business they conduct. 
Regulating Customer trading activity is much more labor intensive and 
requires greater expenditure of human and technical resources than 
regulating non-Customer trading activity, which tends to be more 
automated and less labor-intensive. For example, there are costs 
associated with main office and branch office examinations (e.g., staff 
expenses), as well as investigations into Customer complaints and the 
terminations of registered persons. As a result, the costs associated 
with administering the Customer component of the Exchange's overall 
regulatory program are materially higher than the costs associated with 
administering the non-Customer component of its regulatory program. 
Moreover, the Exchange notes that it has broad regulatory 
responsibilities with respect to activities of its Participants, a 
small portion of which takes place on away exchanges. Indeed, the 
Exchange cannot effectively review for such conduct without looking at 
and evaluating activity regardless of where it transpires. In addition 
to its own surveillance programs, the Exchange also works with other 
SROs and exchanges on intermarket surveillance related issues. Through 
its participation in the Intermarket Surveillance Group (``ISG'') \36\ 
the Exchange shares information and coordinates inquiries and 
investigations with other exchanges designed to address potential 
intermarket manipulation and trading abuses. Accordingly, there is a 
strong nexus between the ORF and the Exchange's regulatory activities 
with respect to Customer trading activity of its Participants.
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    \35\ If the OCC clearing member is a NOM Participant, ORF will 
be assessed and collected on all cleared Customer contracts (after 
adjustment for CMTA); and (2) if the OCC clearing member is not a 
NOM Participant, ORF will be collected only on the cleared Customer 
contracts executed at NOM, taking into account any CMTA instructions 
which may result in collecting the ORF from a non-member.
    \36\ ISG is an industry organization formed in 1983 to 
coordinate intermarket surveillance among the SROs by cooperatively 
sharing regulatory information pursuant to a written agreement 
between the parties. The goal of the ISG's information sharing is to 
coordinate regulatory efforts to address potential intermarket 
trading abuses and manipulations.
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Proposal for January 1, 2025
    The Exchange believes the proposed ORF to be assessed on January 1, 
2025, is reasonable, equitable and not unfairly discriminatory for 
various reasons. First, as of January 1, 2025, the Exchange would 
expand the collection of ORF to all clearing ranges, except Market 
Makers, provided the transaction was executed by an NOM Participant or 
cleared by an NOM Participant. With this amendment, NOM would begin to 
assess Firm and Broker-Dealer Transactions an ORF, provided the 
transactions were executed by a NOM Participant or cleared by a NOM 
Participant, except transactions in proprietary products. Second, as of 
January 1, 2025, the Exchange would assess different rates to Customer 
transactions for the Local ORF Rate and Away ORF Rate as compared to 
Firms and Broker-Dealer Transactions. Third, as of January 1, 2025, the 
combined amount of Local ORF and Away ORF collected would not exceed 
88% of Options Regulatory Cost as all Participants, except Market 
Makers, would be assessed ORF.
    The Exchange believes that assessing all Participants, except 
Market Makers, an ORF is reasonable, equitable and not unfairly 
discriminatory. While the Exchange acknowledges that there is a cost to 
regulate Market Makers, unlike other market participants, Market Makers 
have various regulatory requirements with respect to quoting as 
provided for in Options 2, Section 4. Specifically, Market Makers have 
certain quoting requirements with respect to their assigned options 
series as provided in Options 2, Section 5. Market Makers are required 
to quote intra-day.\37\ Further, unlike other market participants, 
Market Makers have obligations to compete with other Market Makers to 
improve the market in all series of options classes to which the Market 
Maker is appointed and to update market quotations in response to 
changed market conditions in all series of options classes to which the 
Market Maker is appointed.\38\ Market Makers are critical market 
participants in that they are the only market participants that are 
required to provide liquidity to NOM and are necessary for opening the 
market. Excluding Market Maker transactions from ORF allows these 
market participants to manage their costs and consequently their 
business model more effectively thus enabling them to better allocate 
resources to other technologies that are necessary to manage risk and 
capacity to ensure that these market participants continue to compete 
effectively on NOM in providing tight displayed quotes which in turn 
benefits markets generally and market participants specifically. 
Finally, the Exchange notes that Market Makers may transact orders in 
addition to submitting quotes on the Exchange. This proposal would 
except orders submitted by Market Makers, in addition to quotes, for 
purposes of ORF. Market Makers utilize orders in their assigned options 
series to sweep the order book. The Exchange believes the quantity of 
orders utilized by Market Makers in their assigned series is de 
minimis. In their unassigned options series, Market Makers utilize 
orders to hedge their risk or respond to auction. The Exchange notes 
that the number of orders submitted by Market Makers in their 
unassigned options series are far below the cap \39\ and therefore de 
minimis.
---------------------------------------------------------------------------

    \37\ See Options 2, Section 5(d).
    \38\ See NOM Options 2, Section 4(a)(3) and (5).
    \39\ See NOM Options 2, Section 6(b). The total number of 
contracts executed by a Market Maker in options in which it is not 
registered as a Market Maker shall not exceed 25 percent of the 
total number of all contracts executed by the Market Maker in any 
calendar quarter.
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    The Exchange believes excluding options transactions in proprietary 
products is reasonable, equitable and not unfairly discriminatory 
because NOM does not list any proprietary products. The Exchange 
believes that only exchanges that list proprietary products should be 
able to collect a Local ORF for those products. NOM notes that there 
are a small number of proprietary products transacted as compared to 
multi-list options. NOM's focus is on surveillance related to multi-

[[Page 102999]]

listed options. Should NOM list a proprietary product in the future, 
NOM would amend its ORF to collect a Local ORF on that proprietary 
product.
    The Exchange believes that assessing different rates to Customer 
transactions for the Local ORF Rate and Away ORF Rate as compared to 
Firm and Broker-Dealer Transactions and collecting no more than 88% of 
Options Regulatory Cost is reasonable, equitable and not unfairly 
discriminatory. Customer transactions account for a material portion of 
NOM's Options Regulatory Cost.\40\ Customer transactions in combination 
with Firm and Broker-Dealer Transactions account for a large portion of 
the Exchange's surveillance expense. Therefore, the Exchange believes 
that 88% of Options Regulatory Cost is appropriate and correlates to 
the degree of regulatory responsibility and Options Regulatory Cost 
borne by the Exchange. With respect to Customer transactions, options 
volume continues to surpass volume from other options participants. 
Additionally, there are rules in the Exchange's Rulebook that deal 
exclusively with Customer transactions, such as rules involving doing 
business with a Customer, which would not apply to Firm and Broker-
Dealer Transactions.\41\ For these reasons, regulating Customer trading 
activity is ``much more labor-intensive'' and therefore, more costly. 
The Exchange believes that a large portion of the Options Regulatory 
Cost relates to Customer allocation because obtaining Customer 
information may be more time intensive. For example, non-Customer 
market participants are subject to various regulatory and reporting 
requirements which provides the Exchange certain data with respect to 
these market participants. In contrast, Customer information is known 
by Participants of the Exchange and is not readily available to 
NOM.\42\ The Exchange may have to take additional steps to understand 
the facts surrounding particular trades involving a Customer which may 
require requesting such information from a broker-dealer. Further, 
Customers require more Exchange regulatory services based on the amount 
of options business they conduct. For example, there are Options 
Regulatory Costs associated with main office and branch office 
examinations (e.g., staff expenses), as well as investigations into 
Customer complaints and the terminations of registered persons. As a 
result, the Options Regulatory Costs associated with administering the 
Customer component of the Exchange's overall regulatory program are 
materially higher than the Options Regulatory Costs associated with 
administering the non-Customer component when coupled with the amount 
of volume attributed to such Customer transactions. Utilizing the new 
regression model, and assumptions in the proposal, it appears that 
NOM's Customer regulation occurs to a large extent on Exchange. 
Utilizing the new regression model, and assumptions in the proposal, 
the Exchange does not believe that significant Options Regulatory Costs 
should be attributed to Customers for activity that may occur across 
options markets. To that end, with this proposal, the Exchange would 
assess Customers a Local ORF, but not an Away ORF rate.
---------------------------------------------------------------------------

    \40\ The Exchange notes that the regulatory costs relating to 
monitoring Participants with respect to Customer trading activity 
are generally higher than the regulatory costs associated with 
Participants that do not engage in Customer trading activity, which 
tends to be more automated and less labor-intensive. By contrast, 
regulating Participants that engage in Customer trading activity is 
generally more labor intensive and requires a greater expenditure of 
human and technical resources as the Exchange needs to review not 
only the trading activity on behalf of Customers, but also the 
Participant's relationship with its Customers via more labor-
intensive exam-based programs. As a result, the costs associated 
with administering the Customer component of the Exchange's overall 
regulatory program are materially higher than the costs associated 
with administering the non-Customer component of the regulatory 
program.
    \41\ See NOM Options 10 Rules.
    \42\ The Know Your Customer or ``KYC'' provision is the 
obligation of the broker-dealer.
---------------------------------------------------------------------------

    In contrast, the Options Regulatory Cost of regulating Firm and 
Broker-Dealer Transactions is materially less than the Options 
Regulatory Costs of regulating Customer transactions, as explained 
above. The below chart derived from OCC data reflects the percentage of 
transactions by market participant.
[GRAPHIC] [TIFF OMITTED] TN18DE24.072

[[Page 103000]]

    With this model, the addition of Firm and Broker-Dealer 
Transactions to the collection of ORF does not entail significant 
volume when compared to Customer transactions. As these market 
participants are more sophisticated, the Exchange notes that there are 
not the same protections in place for Firm and Broker-Dealer 
Transactions as compared to Customer transactions. Therefore, with the 
proposed model, the regulation of Firm and Broker-Dealer Transactions 
is less resource intensive than the regulation of Customer 
transactions. However, the Exchange notes that it appears from the new 
regression model and assumptions in the proposal, that unlike Customer 
transactions, the regulation of Firm and Broker-Dealer Transactions 
occurs both on the Exchange and across options markets. To that end, 
the Exchange proposes to assess Firm and Broker-Dealer Transactions 
both a Local ORF and an Away ORF in contrast to Customer transactions 
that would only be assessed a Local ORF. The Exchange believes that not 
assessing Market Maker transactions an ORF permits these market 
participants to utilize their resources to quote tighter in the market. 
Tighter quotes benefits Customers as well as other market participants 
who interact with that liquidity.
    The Exchange's proposal to establish both a Local ORF Rate and an 
Away ORF Rate and allocate the portion of Options Regulatory Cost 
differently between the two separate rates, by market participant, 
ensures that the Local ORF Rate and Away ORF Rate reflect the amount of 
Options Regulatory Costs associated with different types of 
surveillances and are reasonable, equitable and not unfairly 
discriminatory. The Exchange is responsible for regulating activity on 
its market as well as activity that may occur across options markets. 
The Exchange believes that it is reasonable, equitable and not unfairly 
discriminatory to assess only Firm and Broker-Dealer Transactions an 
Away ORF. With this model, while the regulation of Firm and Broker-
Dealer Transactions is less resource intensive than the regulation of 
Customer transactions, it occurs both on the Exchange and across 
options markets.\43\ The Exchange believes that assessing the Firm and 
Broker-Dealer Transactions the same rate for Local ORF and Away ORF is 
appropriate given the lower volume that is attributed to these 
Participants combined with the activity that is required to be 
regulated both on the Exchange and across options markets. The Exchange 
notes that there are Exchange rules that involve cross market 
surveillances that relate to activities conducted by Firm and Broker-
Dealer Participants.\44\ While not large in number, when compared to 
the overall number of Exchange rules that are surveilled by NOM for on-
Exchange activity, the Away ORF that would be assessed to Firm and 
Broker-Dealer regulation would account for those costs. Additionally, 
the Exchange believes that limiting the amount of ORF assessed for 
activity that occurs on non-NOM exchanges avoids overlapping ORFs that 
would otherwise be assessed by NOM and other options exchanges that 
also assess an ORF. Also, the Exchange's proposal continues to ensure 
that Options Regulatory Revenue, in combination with other regulatory 
fees and fines, does not exceed Options Regulatory Costs. Fines 
collected by the Exchange in connection with a disciplinary matter will 
continue to offset Options Regulatory Cost.
---------------------------------------------------------------------------

    \43\ NOM pays the Financial Industry Regulatory Authority 
(``FINRA'') to perform certain cross-market surveillances on its 
behalf. In order to perform cross-market surveillances, Consolidated 
Audit Trail (``CAT'') data is utilized to match options transactions 
to underlying equity transactions. This review is data intensive 
given the volumes of information that are being reviewed and 
analyzed.
    \44\ NOM conducts surveillances and enforces NOM Rules, however 
only a subset of those rules is subject to cross-market 
surveillance, such as margin and position limits. Of note, some NOM 
trading rules are automatically enforced by NOM's System.
---------------------------------------------------------------------------

    Capping the combined amount of Local ORF and Away ORF collected at 
88% of Options Regulatory Cost commencing January 1, 2025, is 
reasonable, equitable and not unfairly discriminatory as given these 
factors. The Exchange will review the ORF Regulatory Revenue at the end 
of January 2025 and would amend the ORF if it finds that its ORF 
Regulatory Revenue exceeds its projections.\45\
---------------------------------------------------------------------------

    \45\ NOM would submit a rule change to the Commission to amend 
ORF rates.
---------------------------------------------------------------------------

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 intra-market competition not necessary or 
appropriate in furtherance of the purposes of the Act.
    The proposed changes to ORF do not impose an undue burden on inter-
market competition because ORF is a regulatory fee that supports 
regulation in furtherance of the purposes of the Act. The Exchange 
notes, however, the proposed change is not designed to address any 
competitive issues. The Exchange is obligated to ensure that the amount 
of ORF Regulatory Revenue, in combination with its other regulatory 
fees and fines, does not exceed ORF Regulatory Cost.
Proposal for November 1, 2024, Through December 31, 2024
    The Exchange's proposal to reduce its ORF from $0.0016 to $0.0014 
per contract side from November 1, 2024, through December 31, 2024, 
does not create an unnecessary or inappropriate burden on intra-market 
competition because the ORF applies to all Customer activity, thereby 
raising regulatory revenue to offset regulatory expenses. It also 
supplements the regulatory revenue derived from non-customer activity.
Proposal for January 1, 2025
    Excluding Market Makers does not impose an undue burden on intra-
market competition because, unlike other market participants, Market 
Makers have various regulatory requirements with respect to quoting as 
provided for in Options 2, Section 4. Specifically, Market Makers have 
certain quoting requirements with respect to their assigned options 
series as provided in Options 2, Section 5. Market Makers are required 
to quote intra-day.\46\ Further, unlike other market participants, 
Market Makers have obligations to compete with other Market Makers to 
improve the market in all series of options classes to which the Market 
Maker is appointed and to update market quotations in response to 
changed market conditions in all series of options classes to which the 
Market Maker is appointed.\47\ Market Makers are critical market 
participants in that they are the only market participants that are 
required to provide liquidity to NOM and are necessary for opening the 
market. Excluding Market Maker transactions from ORF does not impose an 
intra-market burden on competition, rather it allows these market 
participants to manage their costs and consequently their business 
model more effectively thus enabling them to better allocate resources 
to other technologies that are necessary to manage risk and capacity to 
ensure that these market participants continue to compete effectively 
on NOM in providing tight displayed quotes which in turn benefits 
markets generally and market participants specifically. Finally, the 
Exchange notes that Market Makers may transact orders on the Exchange, 
in addition to submitting quotes. The Exchange's proposal to except 
orders

[[Page 103001]]

submitted by Market Makers, in addition to quotes, for purposes of ORF 
does not impose an undue burden on intra-market competition because 
Market Makers utilize orders in their assigned options series to sweep 
the order book. Further, the Exchange believes the quantity of orders 
utilized by Market Makers in their assigned series is de minimis. In 
their unassigned options series, Market Makers utilize orders to hedge 
their risk or respond to auction. The Exchange notes that the number of 
orders submitted by Market Makers in their unassigned options series 
are far below the cap \48\ and therefore de minimis.
---------------------------------------------------------------------------

    \46\ See Options 2, Section 5(d).
    \47\ See NOM Options 2, Section 4(a)(3) and (5).
    \48\ See NOM Options 2, Section 6(b). The total number of 
contracts executed by a Market Maker in options in which it is not 
registered as a Market Maker shall not exceed 25 percent of the 
total number of all contracts executed by the Market Maker in any 
calendar quarter.
---------------------------------------------------------------------------

    Uniformly excluding options transactions in proprietary products 
from ORF for all NOM Participants does not impose an undue burden on 
intra-market competition. The Exchange believes that only exchanges 
that list proprietary products should be able to collect a Local ORF 
for those products. There are a small number of proprietary products 
transacted as compared to multi-list options. Also, proprietary 
products are transacted on a limited number of options exchanges and 
would require a de minimis amount of cross market surveillance, for 
these reasons the Exchange believes that only a Local ORF should be 
applied to the extent that NOM were to list a proprietary product. 
NOM's focus is on surveillance related to multi-listed options. Should 
NOM list a proprietary product in the future, NOM would amend its ORF 
to collect a Local ORF on that proprietary product.
    The Exchange's proposal to expand the clearing ranges to 
specifically include Firm and Broker-Dealer Transactions, in addition 
to Customer and Professional transactions, as of January 1, 2025, does 
not impose an undue burden on intra-market competition as Customer 
transactions account for a material portion of NOM's Options Regulatory 
Cost.\49\ Customer transactions in combination with Firm and Broker-
Dealer Transactions account for a large portion of the Exchange's 
surveillance expense. With respect to Customer transactions, options 
volume continues to surpass volume from other options participants. 
Additionally, there are rules in the Exchange's Rulebook that deal 
exclusively with Customer transactions, such as rules involving doing 
business with a Customer, which would not apply to Firm and Broker-
Dealer Transactions.\50\ For these reasons, regulating Customer trading 
activity is ``much more labor-intensive'' and therefore, more costly. 
Further, the Exchange believes that a large portion of the Options 
Regulatory Cost relates to Customer allocation because obtaining 
Customer information may be more time intensive. For example, non-
Customer market participants are subject to various regulatory and 
reporting requirements which provides the Exchange certain data with 
respect to these market participants. In contrast, Customer information 
is known by Participants of the Exchange and is not readily available 
to NOM.\51\ The Exchange may have to take additional steps to 
understand the facts surrounding particular trades involving a Customer 
which may require requesting such information from a broker-dealer. 
Further, Customers require more Exchange regulatory services based on 
the amount of options business they conduct. For example, there are 
Options Regulatory Costs associated with main office and branch office 
examinations (e.g., staff expenses), as well as investigations into 
Customer complaints and the terminations of registered persons. As a 
result, the Options Regulatory Costs associated with administering the 
Customer component of the Exchange's overall regulatory program are 
materially higher than the Options Regulatory Costs associated with 
administering the non-Customer component when coupled with the amount 
of volume attributed to such Customer transactions. Not attributing 
significant Options Regulatory Costs to Customers for activity that may 
occur across options markets does not impose an undue burden on intra-
market competition because the data in the regression model 
demonstrates that NOM's Customer regulation occurs to a large extent on 
Exchange.
---------------------------------------------------------------------------

    \49\ The Exchange notes that the regulatory costs relating to 
monitoring Participants with respect to Customer trading activity 
are generally higher than the regulatory costs associated with 
Participants that do not engage in Customer trading activity, which 
tends to be more automated and less labor-intensive. By contrast, 
regulating Participants that engage in Customer trading activity is 
generally more labor intensive and requires a greater expenditure of 
human and technical resources as the Exchange needs to review not 
only the trading activity on behalf of Customers, but also the 
Participant's relationship with its Customers via more labor-
intensive exam-based programs. As a result, the costs associated 
with administering the Customer component of the Exchange's overall 
regulatory program are materially higher than the costs associated 
with administering the non-Customer component of the regulatory 
program.
    \50\ See NOM Options 10 Rules.
    \51\ The Know Your Customer or ``KYC'' provision is the 
obligation of the broker-dealer.
---------------------------------------------------------------------------

    The Exchange believes that assessing Firm and Broker-Dealer 
Transactions a different ORF and assessing both a Local ORF and an Away 
ORF to these transactions does not impose an undue burden on intra-
market competition because the regulation of Firm and Broker-Dealer 
Transactions is less resource intensive than the regulation of Customer 
transactions. With this model, the addition of Firm and Broker-Dealer 
Transactions to the collection of ORF does not entail significant 
volume when compared to Customer transactions. Unlike Customer 
transactions, the regulation of Firm and Broker-Dealer Transactions 
occurs both on the Exchange and across options markets. To that end, 
the Exchange proposes to assess Firm and Broker-Dealer Transactions 
both a Local ORF and an Away ORF.
    The Exchange's proposal to allocate the portion of costs 
differently between the Local ORF and Away ORF does not create an undue 
burden on intra-market competition. The Exchange believes that each 
rate reflects the amount of Options Regulatory Costs associated with 
different types of surveillances and does not create an undue burden on 
competition as NOM Participants, excluding except Market Makers, would 
be uniformly assessed either a Local ORF Rate or an Away ORF Rate 
depending on where the transaction occurred and whether the transaction 
was executed or cleared by an NOM Participant. Also, the Exchange would 
uniformly assess the Local ORF Rate and an Away ORF Rate by market 
participant. The Exchange is responsible for regulating activity on its 
market as well as activity that may occur across options markets.
    The Exchange believes that assessing only Firm and Broker-Dealer 
Transactions an Away ORF does not create an undue burden on intra-
market competition because while the regulation of Firm and Broker-
Dealer Transactions is less resource intensive than the regulation of 
Customer transactions, the regulation of Firm and Broker-Dealer 
Transactions occurs both on the Exchange and across options 
markets.\52\ The Exchange believes that assessing Firm and Broker-
Dealer Transactions the same rate for Local ORF and Away ORF is 
appropriate

[[Page 103002]]

given the lower volume that is attributed to these Participants 
combined with the activity that is required to be regulated both on the 
Exchange and across options markets. There are Exchange rules that 
involve cross market surveillances that relate to activities conducted 
by Firm and Broker-Dealer Participants.\53\ While not large in number, 
when compared to the overall number of Exchange rules that are 
surveilled by NOM for on-Exchange activity, the Away ORF that would be 
assessed to Firm and Broker-Dealer Transactions would account for those 
Options Regulatory Costs. Additionally, the Exchange believes that 
limiting the amount of ORF assessed for activity that occurs on non-NOM 
exchanges does not impose a burden on intra-market competition, rather 
it avoids overlapping ORFs that would otherwise be assessed by NOM and 
other options exchanges that also assess an ORF. With this model, 
Customer transactions would be assessed a higher Local ORF, while not 
being assessed an Away ORF as compared to Firm and Broker-Dealer 
Transactions. The Exchange believes that this difference in allocation 
is appropriate and correlates to the degree of regulatory 
responsibility and Options Regulatory Costs borne by different 
Participants of the Exchange in light of the volume different 
Participants transact on the Exchange.
---------------------------------------------------------------------------

    \52\ NOM pays the Financial Industry Regulatory Authority 
(``FINRA'') to perform certain cross-market surveillances on its 
behalf. In order to perform cross-market surveillances, Consolidated 
Audit Trail (``CAT'') data is utilized to match options transactions 
to underlying equity transactions. This review is data intensive 
given the volumes of information that are being reviewed and 
analyzed.
    \53\ NOM conducts surveillances and enforces NOM Rules, however 
only a subset of those rules is subject to cross-market 
surveillance, such as margin and position limits. Of note, some NOM 
trading rules are automatically enforced by NOM's System.
---------------------------------------------------------------------------

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 \54\ and Rule 19b-4(f)(2) \55\ thereunder.
---------------------------------------------------------------------------

    \54\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \55\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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 necessary or 
appropriate in the public interest, for the protection of investors, or 
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 change 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 [email protected]. Please include 
file number SR-NASDAQ-2024-078 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-2024-078. 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-2024-078 and should 
be submitted on or before January 8, 2025.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\56\
---------------------------------------------------------------------------

    \56\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-29921 Filed 12-17-24; 8:45 am]
BILLING CODE 8011-01-P
```