103910 Federal Register / Vol. 89, No. 244 / Thursday, December 19, 2024 / Notices 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

22 15 U.S.C. 78s(b)(2)(B). 

23 17 CFR 200.30–3(a)(12), (59). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3A QCC with Stock Order is a Qualified 

Contingent Cross Order, as defined in subparagraph 

(j), entered with a stock component to be 

communicated to a designated broker-dealer for 

execution pursuant to Options 3, Section 12(e). 

QCC with Stock Orders may only be entered 

through FIX. See Options 3, Section 7(t). 4A Complex QCC with Stock Order is a Qualified 

Contingent Cross Complex Order, as defined in 

subparagraph (b)(6), entered with a stock 

component to be communicated to a designated 

broker-dealer for execution pursuant to Options 3, 

Section 12(f). See Options 3, Section 14(b)(15). 

5A QCC with Stock Order is a Qualified 

Contingent Cross Order, as defined in Options 3, 

Section 7(j), entered with a stock component to be 

communicated to a designated broker-dealer for 

execution pursuant to Options 3, Section 12(e). 

QCC with Stock Orders may only be entered 

through FIX. See Options 3, Section 7(t). 

6A Complex QCC with Stock Order is a Qualified 

Contingent Cross Complex Order, as defined in 

subparagraph (b)(6), entered with a stock 

component to be communicated to a designated 

broker-dealer for execution pursuant to Options 3, 

Section 12(f). See Options 3, Section 14(b)(15). 

7A Qualified Contingent Cross (‘‘QCC’’) Order is 

comprised of an originating order to buy or sell at 

least 1000 contracts that is identified as being part 

of a qualified contingent trade, as that term is 

defined in Supplementary Material .01 below, 

coupled with a contra-side order or orders totaling 

an equal number of contracts. QCC Orders will 

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 

under Section 19(b)(2)(B) 22 of the Act 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 rule-comments@

sec.gov. Please include file number SR– 

ISE–2024–58 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–ISE–2024–58. 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–ISE–2024–58 and should be 

submitted on or before January 9, 2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–30166 Filed 12–18–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101912; File No. SR–MRX– 

2024–47] 

Self-Regulatory Organizations; Nasdaq 

MRX, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Decommission QCC 

With Stock Orders and Complex QCC 

With Stock Orders 

December 13, 2024. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

3, 2024, Nasdaq MRX, LLC (‘‘MRX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to 

decommission Qualified Contingent 

Cross (‘‘QCC’’) with Stock Orders 3 and 

Complex QCC with Stock Orders.4

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/mrx/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 

decommission QCC with Stock Orders 5

and Complex QCC with Stock Orders.6

Background 

Today, MRX Members are able to 

transact QCC with Stock Orders and 

Complex QCC with Stock Orders subject 

to the provisions of Options 3, Section 

12(e) and (f), respectively. The QCC 

with Stock Order (and Complex QCC 

with Stock Order) is a piece of 

functionality that facilitates the 

execution of the stock component of 

qualified contingent trades in 

connection with the execution of a QCC 

Order on the Exchange. Specifically, a 

QCC with Stock Order is defined as a 

QCC Order 7 entered with a stock 


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Federal Register / Vol. 89, No. 244 / Thursday, December 19, 2024 / Notices 103911 

trade in accordance with Options 3, Section 12(c). 

See Options 3, Section 7(j). 

8The MRX QCC with Stock functionality has 

never been utilized. 

9See Securities Exchange Act Release Nos. 57620 

(April 4, 2008), 73 FR 19271 (April 9, 2008) (‘‘QCT 

Exemptive Order’’). See also Securities Exchange 

Act Release No. 54389 (August 31, 2006), 71 FR 

52829 (September 7, 2006). The QCT Exemption 

applies to trade-throughs caused by the execution 

of an order involving one or more NMS stocks that 

are components of a ‘‘qualified contingent trade.’’ 

As described more fully in the QCT Exemptive 

Order, a qualified contingent trade is a transaction 

consisting of two or more component orders, 

executed as principal or agent, where: (1) At least 

one component order is an NMS stock; (2) all 

components are effected with a product or price 

contingency that either has been agreed to by the 

respective counterparties or arranged for by a 

broker-dealer as principal or agent; (3) the 

execution of one component is contingent upon the 

execution of all other components at or near the 

same time; (4) the specific relationship between the 

component orders (e.g., the spread between the 

prices of the component orders) is determined at 

the time the contingent order is placed; (5) the 

component orders bear a derivative relationship to 

one another, represent different classes of shares of 

the same issuer, or involve the securities of 

participants in mergers or with intentions to merge 

that have been announced or since cancelled; and 

(6) the Exempted NMS Stock Transaction is fully 

hedged (without regard to any prior existing 

position) as a result of the other components of the 

contingent trade. 

10See Options Trader Update #2024–65. 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(5). 

13See supra note 9. 

component to be communicated to a 

designated broker-dealer for execution 

pursuant to Options 3, Section 12(e). A 

Complex QCC with Stock Order is 

defined as a QCC Complex Order 

entered with a stock component to be 

communicated to a designated brokerdealer for execution pursuant to Options 

3, Section 12(f). Today, MRX Members 

desiring to execute an order with stock 

or an ETF component are required to 

enter into a brokerage agreement with a 

broker-dealer designated by the 

Exchange and are permitted to enter 

into such an agreement with one or 

more other broker-dealers to which the 

Exchange is able to route stock orders 

(this is also the case for a Complex QCC 

with Stock Order). Options 3, Section 

12(e) and (f) describe how the stock 

component of QCC with Stock Orders 

and Complex QCC with Stock Orders, 

respectively, are executed on MRX. 

Since QCC Orders represent one 

component of a qualified contingent 

trade, each QCC Order must be paired 

with a stock transaction. When a 

Member enters a QCC Order, the 

Member is responsible for executing the 

associated stock component of the 

qualified contingent trade within a 

reasonable period of time after the QCC 

Order is executed. 

QCC with Stock Order functionality is 

a voluntary piece of functionality that 

provides Members with an automated 

means of executing the stock component 

of a qualified contingent trade. 

Specifically, when a Member enters a 

QCC with Stock Order (or a Complex 

QCC with Stock Order), a QCC Order is 

entered on the Exchange. That QCC 

Order is automatically executed upon 

entry provided that the conditions of 

Options 3, Section 12 (e) or (f), as 

applicable, are met. If the QCC Order (or 

Complex QCC Order) is executed, the 

Exchange will automatically 

communicate the stock component to 

the Member’s designated broker-dealer 

for execution. Currently, Members that 

execute the options component of a 

qualified contingent trade entered as a 

QCC with Stock Order (or Complex QCC 

with Stock Order) remain responsible 

for the execution of the stock 

component if they do not receive an 

execution from their designated brokerdealer. Although QCC Orders (and 

Complex QCC Orders) are eligible for 

automatic execution, it is possible that 

the QCC Order (or Complex QCC Order) 

may not be executable based on market 

prices at the time the order is entered. 

If the QCC Order (or Complex QCC 

Order) is not capable of being executed, 

the entire QCC with Stock Order, 

including both the stock and options 

components, is cancelled. 

Proposal 

At this time, the Exchange proposes to 

no longer offer Members the ability to 

execute QCC with Stock Orders or 

Complex QCC with Stock Orders on 

MRX. The Exchange was offering this 

functionality to Members on a voluntary 

basis to assist in their execution of 

qualified contingent trades. The 

Exchange notes that there has not been 

Member interest in this functionality 

since the Exchange introduced it.8

There is no requirement that Members 

utilize QCC with Stock functionality, 

and Members will continue to be able to 

enter regular QCC Orders and Complex 

QCC Orders where the Exchange does 

not assist with the execution of the 

stock component of the trade and the 

Members do so themselves. After the 

Exchange decommissions the QCC with 

Stock functionality, Members would 

continue to be able to execute QCC 

Orders and Complex QCC Orders on the 

Exchange, provided that the Member 

would be responsible for executing the 

associated stock component of the 

qualified contingent trade in 

compliance with the requirements of the 

QCT exemption. The Exchange surveils 

for compliance with the QCT 

exemption.9 The Exchange provided 

Members notice of its intent to 

decommission this functionality.10

There have been no concerns from 

Members with respect to the 

decommission. 

The Exchange proposes to remove 

rule text related to QCC with Stock 

Orders and Complex QCC with Stock 

Orders in Options 3, Section 7(t); 

Supplementary Material to Options 3, 

Section 7(d)(3); Options 3, Section 12(e) 

and (f); Options 3, Section 14(b)(15); 

and Options 7, Section 3 in notes 1 and 

3. 

Implementation 

The Exchange intends to begin 

implementation of the proposed rule 

change on or before February 15, 2025. 

The Exchange will announce the date of 

the decommission to Members in an 

Options Technical Update. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,11 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act,12 in particular, in that it is 

designed to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general to protect investors and the 

public interest. 

Specifically, the Exchange believes 

that the proposed rule change is 

consistent with the protection of 

investors and the public interest 

because QCC with Stock Orders and 

Complex QCC with Stock functionality 

are currently offered to Members on a 

voluntary basis to assist in their 

execution of qualified contingent trades. 

Furthermore, Members that execute the 

options component of a Qualified 

Contingent Trade entered as a QCC with 

Stock Order or Complex QCC with 

Stock Order remain responsible for the 

execution of the stock component if 

they do not receive an execution from 

their designated broker-dealer. There is 

no requirement that Members utilize 

QCC with Stock or Complex QCC with 

Stock Order functionality, and Members 

will continue to be able to enter regular 

QCC Orders and Complex QCC Orders 

where the Exchange does not assist with 

the execution of the stock component of 

the trade and the Members do so 

themselves. The Exchange surveils for 

compliance with the QCT exemption.13

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 


lotter on DSK11XQN23PROD with NOTICES1
103912 Federal Register / Vol. 89, No. 244 / Thursday, December 19, 2024 / Notices 

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

15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 240.19b–4(f)(6)(iii). 

18See supra note 9 and accompanying text. 

19See supra note 8. 

20See supra note 10 and accompanying text. 

21For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

22 15 U.S.C. 78s(b)(2)(B). 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Decommissioning QCC with Stock 

Orders or Complex QCC with Stock 

Orders does not impose an undue 

burden on intra-market competition. No 

market participant would be able to 

submit a QCC with Stock Order or 

Complex QCC with Stock Order on 

MRX. There is no requirement that 

Members utilize QCC with Stock 

functionality, and Members will 

continue to be able to enter regular QCC 

Orders and Complex QCC Orders. 

Moreover, Members will still be able to 

execute QCC Orders and Complex QCC 

Orders on the Exchange using other 

means to ensure the execution of the 

stock component of those qualified 

contingent trades. The Exchange 

believes that it will continue to remain 

competitive with other options markets 

despite not offering this functionality. 

Decommissioning QCC with Stock 

Orders or Complex QCC with Stock 

Orders does not impose an undue 

burden on inter-market competition as 

other options markets may offer this 

functionality to their Members. 

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 

Because the foregoing proposed rule 

change does not: (i) significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative prior to 30 days from the date 

on which it was filed, or such shorter 

time as the Commission may designate, 

if consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 14 and Rule 

19b–4(f)(6) thereunder.15

A proposed rule change filed under 

Rule 19b–4(f)(6) 16 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),17 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. 

The Exchange states that waiver of the 

operative delay would permit the 

Exchange to decommission QCC with 

Stock Orders and Complex QCC with 

Stock Orders prior to the year’s end so 

that the Exchange can discontinue 

maintaining the infrastructure 

associated with the functionality. The 

Exchange states that after it 

decommissions the QCC with Stock 

functionality, Members will continue to 

be able to execute QCC Orders and 

Complex QCC Orders on the Exchange, 

provided that the Member would be 

responsible for executing the associated 

stock component of the qualified 

contingent trade in compliance with the 

requirements of the QCT exemption. 

The Exchange surveils for compliance 

with the QCT exemption.18 The 

Exchange states that neither QCC with 

Stock Orders nor Complex QCC with 

Stock Orders has been utilized on the 

Exchange.19 The Exchange further states 

that it provided Members notice of its 

intention to decommission the 

functionality, and that Members raised 

no concerns with respect to the 

decommissioning.20 For these reasons, 

and because the proposal does not raise 

any new or novel issues, the 

Commission believes that waiver of the 

operative delay is consistent with the 

protection of investors and the public 

interest. Accordingly, the Commission 

hereby waives the 30-day operative 

delay and designates the proposal 

operative upon filing.21

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 

under Section 19(b)(2)(B) 22 of the Act 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 rule-comments@

sec.gov. Please include file number SR– 

MRX–2024–47 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–MRX–2024–47. 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–MRX–2024–47 and should be 

submitted on or before January 9, 2025. 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 244 / Thursday, December 19, 2024 / Notices 103913 

23 17 CFR 200.30–3(a)(12), (59). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 101520 

(November 6, 2024), 89 FR 89677 (November 13, 

2024) (Notice of Filing and Immediate Effectiveness 

of File No. SR–NASDAQ–2024–064). 

4See General 2, Section 22(a). Sponsored Access 

shall mean an arrangement whereby a member 

permits its customers to enter orders into the 

System that bypass the member’s trading system 

and are routed directly to the Exchange, including 

routing through a service bureau or other third 

party technology provider. 

5For purposes of Equity 4, Rule 3307, the term 

‘‘Common Ownership’’ shall mean participants 

under 75% common ownership or control. 

6The Exchange will require firms requesting to 

use Affiliate Level AIQ to complete an affidavit 

stating: (i) it is currently a Member of the Exchange 

that submits orders directly to the System, and (ii) 

it also submits orders to the System through a 

Sponsored Access arrangement. 

7A ‘‘wash sale’’ is generally defined as a trade 

involving no change in beneficial ownership that is 

intended to produce the false appearance of trading 

and is strictly prohibited under both the federal 

securities laws and FINRA rules. See, e.g., 15 U.S.C 

78i(a)(1); FINRA Rule 6140(b) (‘‘Other Trading 

Practices’’). 

8Self-trades are ‘‘transactions in a security 

resulting from the unintentional interaction of 

orders originating from the same firm that involve 

no change in beneficial ownership of the security.’’ 

FINRA requires members to have policies and 

procedures in place that are reasonably designed to 

review trading activity for, and prevent, a pattern 

or practice of self-trades resulting from orders 

originating from a single algorithm or trading desk, 

or related algorithms or trading desks. See FINRA 

Rule 5210, Supplementary Material .02. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–30167 Filed 12–18–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101913; File No. SR–Phlx– 

2024–70] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the 

Exchange’s Anti-Internalization 

Functionality in Equity 4, Rule 3307 

December 13, 2024. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

4, 2024, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Exchange’s anti-internalization 

functionality in Equity 4, Rule 3307. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/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 amend 

Equity 4, Rule 3307(c) to offer increased 

functionality as it relates to antiinternalization. The Exchange’s 

proposal is identical to the changes 

adopted in SR–NASDAQ–2024–064 

with the exception of technical 

differences in the numbering 

convention.3 Specifically, the Exchange 

proposes to (i) allow participants that 

directly submit orders to the System as 

Members on the Exchange and submit 

orders to the System through Sponsored 

Access 4 as a Sponsored Participant, to 

direct that quotes/orders entered into 

the System directly as a Member not 

execute against quotes/orders submitted 

as a Sponsored Participant; (ii) specify 

when anti-internalization will activate; 

(iii) introduce an anti-internalization 

strategy that uses the strategy of the 

removing order; and (v) make other 

clarifying changes. 

Affiliate Anti-Internalization 

Currently, Equity 4, Rule 3307(c) 

provides that market participants may 

direct that quotes/orders entered into 

the System not execute against either 

quotes/orders entered under the same 

MPID (‘‘MPID Level AIQ’’) or quotes/ 

orders entered across MPIDs under 

Common Ownership (‘‘Organization 

Level AIQ’’).5 In addition, market 

participants using the OUCH order entry 

protocol may assign to orders entered 

through a specific order entry port a 

unique group identification modifier 

that will prevent quotes/orders with 

such modifier from executing against 

each other. Anti-internalization or selfmatch prevention functionality assists 

participants in reducing trading costs 

from unwanted executions potentially 

resulting from the interaction of 

executable buy and sell trading interest 

from the same firm. 

The Exchange proposes to enhance its 

current self-match prevention 

functionality to allow participants that 

demonstrate (i) membership on the 

Exchange through which they directly 

submit orders to the System and (ii) 

participation as a Sponsored Participant 

whereby they submit orders to the 

System through Sponsored Access, to 

direct that quotes/orders entered into 

the System directly as a Member not 

execute against quotes/orders submitted 

as a Sponsored Participant (‘‘Affiliate 

Level AIQ’’).6 The proposed 

enhancement would be in addition to 

the other levels of self-match prevention 

offered today. Under the proposed rule 

change, the anti-internalization 

functionality would continue to be an 

optional feature. If a firm chooses to 

take advantage of self-match prevention, 

the firm would need to opt-in to the 

self-match prevention functionality, as 

is the case today. 

The purpose of this proposed change 

is to extend self-match prevention 

functionality to prevent transactions 

between a firm’s orders submitted 

directly to the System and through 

Sponsored Access. There are situations 

where an individual firm would choose 

to submit orders to the Exchange 

through different mechanisms. For 

instance, a firm may employ different 

trading strategies across different 

trading desks and choose to send orders 

for one strategy to the Exchange through 

a direct connection while the other 

strategy is sent through Sponsored 

Access. The proposed functionality 

would serve as an additional tool that 

participants may enable in order to 

assist with compliance with the various 

securities laws relating to potentially 

manipulative trading activity such as 

wash sales 7 and self-trades.8

Additionally, the proposed functionality 

would provide firms an additional 


lotter on DSK11XQN23PROD with NOTICES1