Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52273 

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

2 17 CFR 240.19b–4. 

3The 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)). 

4The 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. 

5The term ‘‘NOM Market Maker’’ or (‘‘M’’) is a 

Participant that has registered as a Market Maker on 

NOM pursuant to Options 2, Section 1, and must 

also remain in good standing pursuant to Options 

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

pricing in all securities, the Participant must be 

registered as a NOM Market Maker in at least one 

security. 

Fund(s) or Affiliated Fund(s) and its 

Adviser. 

15. Independence. If the Holders own 

in the aggregate more than 25 percent of 

the Shares of a Regulated Fund, then the 

Holders will vote such Shares in the 

same percentages as the Regulated 

Fund’s other shareholders (not 

including the Holders) when voting on 

(1) the election of directors; (2) the 

removal of one or more directors; or (3) 

any other matter under either the Act or 

applicable State law affecting the 

Board’s composition, size or manner of 

election. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–20207 Filed 9–17–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92974; File No. SR– 

NASDAQ–2021–069] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend The 

Nasdaq Options Market’s Pricing 

Schedule at Options 7, Section 2(1) 

September 14, 2021. 

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 

September 1, 2021, The Nasdaq Stock 

Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I, II, and III, below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend The 

Nasdaq Options Market’s (‘‘NOM’’) 

Pricing Schedule at Options 7, Section 

2(1). 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend NOM’s Pricing 

Schedule at Options 7, Section 2(1) to 

amend the (i) Customer 3 and 

Professional 4 Rebates to Add Liquidity 

in Penny Symbols, and (ii) Tier 3 

Market Maker 5 Rebate to Add Liquidity 

in Penny Symbols. 

Customer and Professional Rebate To 

Add Liquidity in Penny Symbols 

Today, the Exchange pays tiered 

Customer and Professional Rebates to 

Add Liquidity in Penny Symbols that 

are $0.20 (Tier 1), $0.25 (Tier 2), $0.42 

(Tier 3), $0.43 (Tier 4), $0.45 (Tier 5), 

and $0.48 (Tier 6). These rebates are 

paid per the highest tier achieved 

below. 

Monthly volume 

Tier 1 .................................... Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 

Symbols and/or Non-Penny Symbols of up to 0.10% of total industry customer equity and ETF option average 

daily volume (‘‘ADV’’) contracts per day in a month. 

Tier 2 .................................... Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 

Symbols and/or Non-Penny Symbols above 0.10% to 0.20% of total industry customer equity and ETF option 

ADV contracts per day in a month. 

Tier 3 .................................... Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 

Symbols and/or Non-Penny Symbols above 0.20% to 0.30% of total industry customer equity and ETF option 

ADV contracts per day in a month. 

Tier 4 .................................... Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 

Symbols and/or Non-Penny Symbols above 0.30% to 0.40% of total industry customer equity and ETF option 

ADV contracts per day in a month. 

Tier 5 .................................... Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 

Symbols and/or Non-Penny Symbols above 0.40% to 0.80% of total industry customer equity and ETF option 

ADV contracts per day in a month. 

52274 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

6Specifically, to qualify for MARS, the 

Participant’s routing system (‘‘System’’) would be 

required to: (1) Enable the electronic routing of 

orders to all of the U.S. options exchanges, 

including NOM; (2) provide current consolidated 

market data from the U.S. options exchanges; and 

(3) be capable of interfacing with NOM’s API to 

access current NOM match engine functionality. 

Further, the Participant’s System would also need 

to cause NOM to be the one of the top three default 

destination exchanges for (a) individually executed 

marketable orders if NOM is at the national best bid 

or offer (‘‘NBBO’’), regardless of size or time or (b) 

orders that establish a new NBBO on NOM’s Order 

Book, but allow any user to manually override 

NOM as a default destination on an order-by-order 

basis. Any NOM Participant would be permitted to 

avail itself of this arrangement, provided that its 

order routing functionality incorporates the features 

described above and satisfies NOM that it appears 

to be robust and reliable. The Participant remains 

solely responsible for implementing and operating 

its System. 

7For the purpose of qualifying for the MARS 

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

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

liquidity and are electronically delivered and 

executed. Eligible Contracts do not include Mini 

Option orders. 

8The specified MARS Payment will be paid on 

all executed Eligible Contracts that add liquidity, 

which are routed to NOM through a participating 

NOM Participant’s System and meet the requisite 

Eligible Contracts ADV. No payment will be made 

with respect to orders that are routed to NOM, but 

not executed. Furthermore, a Participant will not be 

entitled to receive any other revenue from the 

Exchange for the use of its System specifically with 

respect to orders routed to NOM. 

9Accordingly, a Participant that qualifies for the 

additional incentives in note ‘‘8’’ by executing the 

requisite MARS volume and qualifying for a 

Customer Rebate to Add Liquidity Tiers 1–6 in 

Penny Symbols can earn up to $0.25 in Tier 1, $0.29 

in Tier 2, $0.46 in Tier 3, $0.47 in Tier 4, $0.49 in 

Tier 5, and $0.52 in Tier 6. 

10As described above, the existing Tier 3 rebate 

qualification requires the Participant to add 

Customer, Professional, Firm, Non-NOM Market 

Maker and/or Broker-Dealer liquidity in Penny 

Symbols and/or Non-Penny Symbols above 0.20% 

to 0.30% of total industry customer equity and ETF 

option ADV contracts per day in a month. 11As proposed above, the Tier 3 and Tier 4 

Customer Rebates to Add Liquidity in Penny 

Monthly volume 

Tier 6 .................................... Participant adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 

Symbols and/or Non-Penny Symbols above 0.80% or more of total industry customer equity and ETF option 

ADV contracts per day in a month, or Participant adds: (1) Customer and/or Professional liquidity in Penny 

Symbols and/or Non-Penny Symbols of 0.20% or more of total industry customer equity and ETF option ADV 

contracts per day in a month, and (2) has added liquidity in all securities through one or more of its Nasdaq 

Market Center MPIDs that represent 1.00% or more of Consolidated Volume in a month or qualifies for MARS 

(defined below). 

In addition, the Exchange currently 

ties the tiered Penny Symbol add 

liquidity rebate program described 

above to its Market Access and Routing 

Subsidy (‘‘MARS’’) program in Section 

2(4) as a means to attract additional 

liquidity to the Exchange from market 

participants. Under MARS, the 

Exchange pays qualifying Participants to 

subsidize their costs of providing 

routing services to route orders to NOM. 

To qualify for MARS, Participants must 

have System Eligibility.6 In addition, 

Participants that have System 

Eligibility, and have routed and 

executed the requisite number of 

Eligible Contracts 7 daily in a month 

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

that add liquidity on NOM are entitled 

to tiered MARS Payments, which are 

currently paid per the highest tier 

achieved below.8

Tiers 

Average 

daily 

volume 

(‘‘ADV’’) 

1 ............................................ 2,000 

2 ............................................ 5,000 

3 ............................................ 10,000 

4 ............................................ 20,000 

5 ............................................ 45,000 

6 ............................................ 75,000 

7 ............................................ 100,000 

8 ............................................ 125,000 

9 ............................................ 150,000 

One of the present ways that the 

Exchange ties the tiered Penny Symbol 

add liquidity rebate program and 

MARS, each as described above, is 

through note ‘‘8’’ of Options 7, Section 

2(1) where Participants that qualify for 

any MARS Payment Tier in Options 7, 

Section 2(4) receive: (1) An additional 

$0.05 per contract Penny Symbol 

Customer Rebate to Add Liquidity for 

each transaction which adds liquidity in 

Penny Symbols in that month, in 

addition to qualifying Customer Rebate 

to Add Liquidity Tiers 1, or (2) an 

additional $0.04 per contract Penny 

Symbol Customer Rebate to Add 

Liquidity for each transaction which 

adds liquidity in Penny Symbols in that 

month, in addition to qualifying Penny 

Symbol Customer Rebate to Add 

Liquidity Tiers 2–6.9 The purpose of the 

note ‘‘8’’ incentive is to attract 

additional order flow to NOM by way of 

encouraging participation in both the 

tiered Penny Symbol add liquidity 

Customer rebate program and in MARS. 

The Exchange now proposes a 

number of changes to the current tiered 

Penny Symbol add liquidity rebate 

program described above. The Exchange 

first proposes to increase the Tier 3 and 

Tier 4 Customer and Professional 

rebates from $0.42 to $0.43 per contract 

and from $0.43 to $0.44 per contract, 

respectively. The Exchange believes that 

the higher Tier 3 and Tier 4 rebates, 

together with the proposed changes 

described below, will further encourage 

Participants to reach for the higher 

Customer and Professional rebate tiers 

by bringing additional order flow that 

adds liquidity on the Exchange, which 

will be ultimately beneficial to all 

market participants. 

The Exchange also proposes to add an 

alternative route to achieve the 

proposed $0.43 per contract Tier 3 

Customer and Professional Rebate to 

Add Liquidity in Penny Symbols that 

will be tied to MARS. Specifically, the 

Exchange proposes that Participants 

will also be eligible to receive the 

proposed $0.43 per contract Tier 3 

Customer and Professional Rebate to 

Add Liquidity in Penny Symbols if the 

Participant adds Customer and/or 

Professional liquidity in Penny Symbols 

and/or Non-Penny Symbols of 0.15% to 

less than 0.20% of total industry 

customer equity and ETF option ADV 

contracts per day in a month and 

qualifies for MARS. The Exchange also 

proposes to make related changes by 

renumbering the existing method to 

qualify for the Tier 3 Customer and 

Professional rebate as paragraph (a) and 

the proposed alternative method as 

paragraph (b).10 By adding an 

alternative route to achieve the Tier 3 

Customer and Professional rebate that is 

tied to MARS, the Exchange is seeking 

to incentivize Participants to increase 

their liquidity adding activity on NOM 

to improve the quality of the market. 

Lastly, the Exchange proposes to 

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

to increase the additional $0.04 per 

contract rebate currently offered to 

Participants that qualify for any MARS 

Payment Tier in addition qualifying for 

Penny Symbol Customer Rebates to Add 

Liquidity Tiers 2–5 to $0.05 per 

contract. As proposed, Participants may 

earn Customer Rebates to Add Liquidity 

in Penny Symbols up to $0.30 in Tier 

2, $0.48 in Tier 3, $0.49 in Tier 4, and 

$0.50 in Tier 5, provided they meet the 

note 8 qualifications.11 Participants that 

Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52275 

Symbols will also be increased to $0.43 and $0.44, 

respectively. 

12This rebate is $0.40 per contract in the 

following symbols: AAPL, SPY, QQQ, IWM, and 

VXX. See Options 7, Section 2(1), note 4. 

13 Id. 

14The Exchange will also correct a punctuation 

error in Tier 3. 15All NOM Participants are required to be 

members of The Nasdaq Stock Market pursuant to 

General 3 (Membership and Access). 16Specifically, notes 6 and 8 in Options 7, 

Section 2(1). 

17See Securities Exchange Act Release No. 91677 

(April 26, 2021), 86 FR 22989 (April 30, 2021) (SR– 

NASDAQ–2021–021). 

18 15 U.S.C. 78f(b). 

19 15 U.S.C. 78f(b)(4) and (5). 

qualify for the note 8 incentives will 

continue to be eligible to earn up to 

$0.25 for the Penny Symbol Customer 

Rebate to Add Liquidity in Tier 1 and 

$0.52 for the Penny Symbol Customer 

Rebate to Add Liquidity in Tier 6 as 

these incentives will not be amended 

under this proposal. The purpose of the 

proposed changes to the Penny Symbol 

Customer Rebates to Add Liquidity 

Tiers 2–5 is to further encourage 

Participants to bring additional 

Customer liquidity to the Exchange by 

reaching for the higher Customer tiers, 

and further fortify participation in 

MARS by encouraging Participants to 

route/execute the requisite number of 

Eligible Contracts that add liquidity in 

order to qualify for any of the MARS 

Payment Tier 1–9 describe above. 

Market Maker Rebate To Add Liquidity 

in Penny Symbols 

Today, the Exchange pays tiered 

Market Maker Rebates to Add Liquidity 

in Penny Symbols that are $0.20 (Tier 

1), $0.25 (Tier 2), $0.30 (Tier 3),12 $0.32 

(Tier 4),13 $0.44 (Tier 5), and $0.48 (Tier 

6). These rebates are paid per the 

highest tier achieved below. 

Monthly volume 

Tier 1 .................................... Participant adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of up to 0.10% of 

total industry customer equity and ETF option average daily volume (‘‘ADV’’) contracts per day in a month. 

Tier 2 .................................... Participant adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above 0.10% to 

0.20% of total industry customer equity and ETF option ADV contracts per day in a month. 

Tier 3 .................................... Participant: (a) Adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above 0.20% to 

0.60% of total industry customer equity and ETF option ADV contracts per day in a month: or (b)(1) transacts 

in all securities through one or more of its Nasdaq Market Center MPIDs that represent 0.80% or more of Consolidated Volume (‘‘CV’’) which adds liquidity in the same month on The Nasdaq Stock Market, (2) transacts in 

Tape B securities through one or more of its Nasdaq Market Center MPIDs that represent 0.15% or more of 

CV which adds liquidity in the same month on The Nasdaq Stock Market, and (3) executes greater than 0.01% 

of CV via Market-on- Close/Limit-on-Close (‘‘MOC/LOC’’) volume within The Nasdaq Stock Market Closing 

Cross in the same month. 

Tier 4 .................................... Participant adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of above 0.60% of 

total industry customer equity and ETF option ADV contracts per day in a month. 

Tier 5 .................................... Participant adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of above 0.40% of 

total industry customer equity and ETF option ADV contracts per day in a month and transacts in all securities 

through one or more of its Nasdaq Market Center MPIDs that represent 0.40% or more of Consolidated Volume (‘‘CV’’) which adds liquidity in the same month on The Nasdaq Stock Market. 

Tier 6 .................................... Participant: (a)(1) Adds NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above 0.95% 

of total industry customer equity and ETF option ADV contracts per day in a month, (2) executes Total Volume 

of 250,000 or more contracts per day in a month, of which 30,000 or more contracts per day in a month must 

be removing liquidity, and (3) adds Firm, Broker-Dealer and Non-NOM Market Maker liquidity in Non-Penny 

Symbols of 10,000 or more contracts per day in a month; or (b)(1) adds NOM Market Maker liquidity in Penny 

Symbols and/or Non-Penny Symbols above 1.50% of total industry customer equity and ETF option ADV contracts per day in a month, and (2) executes Total Volume of 250,000 or more contracts per day in a month, of 

which 15,000 or more contracts per day in a month must be removing liquidity. 

As set forth above, the Exchange 

currently offers two different paths in 

(a) and (b) for Participants to achieve the 

Tier 3 Market Maker rebate. The 

Exchange now proposes to amend the 

Tier 3 qualifications in (b) as follows: 14

Participant . . . (b)(1) adds NOM Market 

Maker liquidity in Penny Symbols and/or 

Non-Penny Symbols above 0.07% to 0.20% 

of total industry customer equity and ETF 

option ADV contracts per day in a month, (2) 

transacts in all securities through one or 

more of its Nasdaq Market Center MPIDs that 

represent 0.70% or more of Consolidated 

Volume (‘‘CV’’) which adds liquidity in the 

same month on The Nasdaq Stock Market, (3) 

transacts in Tape B securities through one or 

more of its Nasdaq Market Center MPIDs that 

represent 0.10% or more of CV which adds 

liquidity in the same month on The Nasdaq 

Stock Market, and (4) executes greater than 

0.01% of CV via Market-on- Close/Limit-onClose (‘‘MOC/LOC’’) volume within The 

Nasdaq Stock Market Closing Cross in the 

same month. 

The proposal adds an options 

component and lowers two of the 

existing equity components, namely by 

decreasing the percentage requirement 

that Market Makers transact in all 

securities through one or more of its 

Nasdaq Market Center MPIDs from 

0.80% to 0.70% and decreasing the 

percentage requirement that Market 

Makers transact in Tape B securities 

through one or more of its Nasdaq 

Market Center MPIDs from 0.15% to 

0.10%.15 By lowering the percentage 

thresholds, the Exchange intends to 

render the Tier 3 rebate more readily 

accessible to Market Makers. If more 

Market Makers find that this rebate is 

accessible to them, then more will seek 

to qualify for it by adding liquidity on 

The Nasdaq Stock Market. Together 

with the proposed options component, 

which is designed to incentivize Market 

Makers to add liquidity on NOM, the 

Exchange believes that its proposal will 

improve the quality of the Exchange’s 

equity and options markets, to the 

benefit of all market participants. 

Technical Amendments 

The Exchange proposes to correct two 

rule citations to the MARS Payment 

Tiers in Section (6).16 The Exchange 

recently renumbered this section to 

Section 2(4) and did not update these 

citations.17

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,18 in general, and furthers the 

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

of the Act,19 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

52276 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

20NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

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

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

21Securities Exchange Act Release No. 51808 

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

(‘‘Regulation NMS Adopting Release’’). 

22Participants are required to add Customer, 

Professional, Firm, Non-NOM Market Maker and/or 

Broker-Dealer liquidity in Penny Symbols and/or 

Non-Penny Symbols above 0.20% to 0.30% of total 

industry customer equity and ETF option ADV 

contracts per day in a month to earn the proposed 

Tier 3 Customer and Professional rebate, and above 

0.30% to 0.40% of total industry customer equity 

and ETF option ADV contracts per day in a month 

to earn the proposed Tier 4 Customer and 

Professional rebate. These qualifications are not 

being amended with this proposal, although the 

Exchange will add an alternative route to earn the 

proposed Tier 3 rebate, as discussed above. 

among members and issuers and other 

persons using any facility, and is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

The Exchange’s proposed changes to 

its Pricing Schedule are reasonable in 

several respects. As a threshold matter, 

the Exchange is subject to significant 

competitive forces in the market for 

options securities transaction services 

that constrain its pricing determinations 

in that market. The fact that this market 

is competitive has long been recognized 

by the courts. In NetCoalition v. 

Securities and Exchange Commission, 

the D.C. Circuit stated as follows: ‘‘[n]o 

one disputes that competition for order 

flow is ‘fierce.’ . . . As the SEC 

explained, ‘[i]n the U.S. national market 

system, buyers and sellers of securities, 

and the broker-dealers that act as their 

order-routing agents, have a wide range 

of choices of where to route orders for 

execution’; [and] ‘no exchange can 

afford to take its market share 

percentages for granted’ because ‘no 

exchange possesses a monopoly, 

regulatory or otherwise, in the execution 

of order flow from broker 

dealers’. . . .’’ 20

The Commission and the courts have 

repeatedly expressed their preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. In Regulation NMS, while 

adopting a series of steps to improve the 

current market model, the Commission 

highlighted the importance of market 

forces in determining prices and SRO 

revenues and, also, recognized that 

current regulation of the market system 

‘‘has been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 21

Numerous indicia demonstrate the 

competitive nature of this market. For 

example, clear substitutes to the 

Exchange exist in the market for options 

security transaction services. The 

Exchange is only one of sixteen options 

exchanges to which market participants 

may direct their order flow. Within this 

environment, market participants can 

freely and often do shift their order flow 

among the Exchange and competing 

venues in response to changes in their 

respective pricing schedules. As such, 

the proposal represents a reasonable 

attempt by the Exchange to increase its 

liquidity and market share relative to its 

competitors. 

Customer and Professional Rebate To 

Add Liquidity in Penny Symbols 

The Exchange believes that the 

proposed changes to the Customer and 

Professional Rebates to Add Liquidity in 

Penny Symbols described above are 

reasonably designed to attract additional 

liquidity to the Exchange. The Exchange 

believes it is reasonable to increase the 

Tier 3 and Tier 4 Customer and 

Professional rebates because 

Participants will be encouraged to 

submit additional order flow to reach 

for the higher rebates.22 The Exchange 

believes that the proposed higher 

rebates will incentivize substantial 

liquidity adding activity on the 

Exchange, and that any increased 

activity and growth that may result from 

this proposal will improve the overall 

quality of the market, to the benefit of 

all market participants. 

The Exchange believes that the 

proposed alternative method to qualify 

for the higher Tier 3 Customer and 

Professional Rebate to Add Liquidity in 

Penny Symbols is reasonable because it 

will create an additional opportunity for 

Participants to earn the Tier 3 rebate by 

incentivizing Participants to add greater 

liquidity on NOM. Specifically, the 

Exchange is proposing to require that 

the Participant add Customer and/or 

Professional liquidity in Penny and/or 

Non-Penny Symbols of 0.15% to less 

than 0.20% of total industry customer 

and ETF option ADV contracts per day 

in a month and qualify for MARS in 

order to receive the proposed $0.43 per 

contract Tier 3 rebate. The Exchange 

believes that this will encourage 

liquidity adding activity in Customer 

and Professional orders to earn the Tier 

3 rebate. The proposal will also 

incentivize Participants to qualify for 

the MARS program, which is designed 

to attract higher volumes of electronic 

equity and ETF options volume to the 

Exchange. As discussed above, to 

qualify for MARS, Participants must 

have System Eligibility, which has 

various requirements for Participants to 

maintain their routing systems, 

including the requirement that NOM be 

one of the top three default destination 

exchanges on the Participant’s routing 

system for execution. If more 

Participants seek to qualify for MARS, 

the proposal will bring higher volumes 

of orders to NOM, which will enhance 

market quality by offering greater price 

discovery and increased opportunities 

to trade, to the benefit of all 

Participants. The Exchange also notes 

that the proposed alternative route to 

achieve the Tier 3 Customer and 

Professional rebate is similar to an 

existing method for achieving the Tier 6 

Customer and Professional rebate except 

the proposal will have lower volume 

requirements, which will be 

commensurate with the lower Tier 3 

rebate provided. In particular, one of the 

ways to earn the Tier 6 rebate ($0.48 per 

contract) currently requires the 

Participant to add (1) Customer and/or 

Professional liquidity in Penny Symbols 

and/or Non-Penny Symbols of 0.20% or 

more of total industry customer equity 

and ETF option ADV contracts per day 

in a month, and (2) add liquidity in all 

securities through one or more of its 

Nasdaq Market Center MPIDs that 

represent 1.00% or more of 

Consolidated Volume in a month or 

qualify for MARS. As discussed above, 

the proposed alternative route to earn 

the Tier 3 rebate ($0.43 with the 

proposed changes) will require the 

Participant to add (1) Customer and/or 

Professional liquidity in Penny Symbols 

and/or Non-Penny Symbols of 0.15% to 

less than 0.20% of total industry 

customer equity and ETF option ADV 

contracts per day in a month, and (2) 

qualify for MARS. 

The Exchange also believes that the 

proposed changes in note 8 to increase 

the supplemental rebates offered to 

Participants that qualify for any MARS 

Payment Tier in Section 2(4) in addition 

to qualifying for Penny Symbol 

Customer Rebates to Add Liquidity in 

Tiers 2–5 from $0.04 to $0.05 per 

contract will further encourage 

Participants to send higher volumes of 

electronic equity and ETF options to 

NOM for execution to receive this 

additional incentive. In particular, to 

receive the increased supplemental 

rebates, Participants will need to have 

System Eligibility and execute the 

requisite number of Eligible Contracts 

ADV to qualify for any of the MARS 

Payment Tiers in Section 2(4). If more 

Participants seek to qualify for MARS 

Payments Tiers by sending and 

executing more Eligible Contracts on 

NOM to earn the increased 

supplemental rebates for Penny Symbol 

Customer rebate tiers 2–5, then market 

Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 52277 

23See Options 2, Sections 4 and 5. 24 15 U.S.C. 78s(b)(3)(A)(ii). 

quality will improve and the Exchange 

will become more attractive to existing 

and prospective market participants. 

The Exchange also believes that the 

proposed changes in note 8 will 

improve market quality by incentivizing 

Participants to submit additional 

qualifying volume that adds liquidity to 

earn the Penny Symbol Customer 

Rebates to Add Liquidity in Tiers 2–5, 

and therefore become eligible for the 

additional note 8 incentives, provided 

that they also qualify for any MARS 

Payment Tier. 

The Exchange also believes that the 

proposed changes to the Customer and 

Professional Rebates to Add Liquidity in 

Penny Symbols discussed above are 

equitable and not unfairly 

discriminatory because the Exchange 

will uniformly apply the changes to all 

qualifying Participants. All Participants 

may qualify for MARS provided they 

have requisite System Eligibility. 

Furthermore, the Exchange believes it is 

equitable and not unfairly 

discriminatory to pay the proposed 

rebates to eligible Customer and 

Professional liquidity adding orders 

(i.e., the proposed Tier 3 and Tier 4 

rebates, and the proposed Tier 3 

alternative route) or to eligible Customer 

liquidity adding orders (i.e., the 

proposed note 8 incentive changes). 

Customer liquidity benefits all market 

participants by providing more trading 

opportunities, which attracts market 

makers. An increase in the activity of 

these market participants in turn 

facilitates tighter spreads, which may 

cause an additional corresponding 

increase in order flow from other market 

participants. The Exchange believes that 

incentivizing Professional liquidity is 

similarly beneficial, as the proposed 

changes may cause market participants 

to select NOM as a venue to send 

Professional order flow, increasing 

competition among the exchanges. As 

with Customer liquidity, the Exchange 

believes that increased Professional 

order flow should benefit other market 

participants. 

Market Maker Rebate To Add Liquidity 

in Penny Symbols 

The Exchange believes that its 

proposal to amend the qualifications for 

the Tier 3 Market Maker Rebate to Add 

Liquidity in Penny Symbols is 

reasonably designed to incentivize 

Market Makers to increase their 

liquidity adding activity on the 

Exchange’s equity and options markets. 

By lowering the percentage thresholds 

for the equity components in the 

manner described above, the Exchange 

intends to render the Tier 3 rebate more 

readily accessible to Market Makers. If 

more Market Makers find that this 

rebate is accessible to them, then more 

will seek to qualify for it by adding 

liquidity on The Nasdaq Stock Market. 

Together with the proposed options 

component, which is designed to 

encourage Market Makers to add 

liquidity on NOM, the Exchange 

believes that its proposal will improve 

the quality of the Exchange’s equity and 

options markets, to the benefit of all 

market participants. 

The Exchange also believes that the 

proposed changes to the qualifications 

for the Tier 3 Market Maker Rebate to 

Add Liquidity in Penny Symbols is 

equitable and not unfairly 

discriminatory because the Exchange 

will pay the Tier 3 rebate uniformly to 

any qualifying Market Maker. Market 

Makers add value through continuous 

quoting and the commitment of 

capital.23 Because Market Makers have 

these obligations to the market and 

regulatory requirements that normally 

do not apply to other market 

participants, the Exchange believes that 

offering the rebate to only Market 

Makers is equitable and not unfairly 

discriminatory in light of their 

obligations. Finally, encouraging Market 

Makers to add greater liquidity benefits 

all market participants, both on NOM 

and The Nasdaq Stock Market, in the 

quality of order interaction. 

Technical Amendments 

The Exchange believes that the 

proposed updates to the rule citations 

for MARS Payment Tiers are reasonable, 

equitable, and not unfairly 

discriminatory as these amendments 

will bring greater clarity to the 

Rulebook. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

In terms of intra-market competition, 

the Exchange does not that its proposals 

will place any category of market 

participant at a competitive 

disadvantage. As discussed above, while 

the Exchange’s proposals provide 

incentives for certain order flow and 

activity on the Exchange (i.e., Customer 

and Professional liquidity adding 

activity in Penny Symbols and Market 

Maker Rebate liquidity adding activity 

in Penny Symbols), the proposed 

changes are ultimately aimed at 

attracting greater liquidity to the 

Exchange, which benefits all market 

participants in the quality of order 

interaction. 

In terms of inter-market competition, 

the Exchange notes that it operates in a 

highly competitive market in which 

market participants can readily favor 

competing venues if they deem fee 

levels at a particular venue to be 

excessive, or rebate opportunities 

available at other venues to be more 

favorable. In such an environment, the 

Exchange must continually adjust its 

fees to remain competitive with other 

exchanges. Because competitors are free 

to modify their own fees in response, 

and because market participants may 

readily adjust their order routing 

practices, the Exchange believes that the 

degree to which fee changes in this 

market may impose any burden on 

competition is extremely limited. 

The Exchange’s proposed changes to 

the Customer and Professional Rebates 

to Add Liquidity in Penny Symbols and 

the Tier 3 Market Maker Rebate to Add 

Liquidity in Penny Symbols are procompetitive in that the Exchange 

intends for the changes to increase 

liquidity addition and activity on the 

Exchange, thereby rendering the 

Exchange a more attractive and vibrant 

venue to existing and prospective 

market participants. 

In sum, if the changes proposed 

herein are unattractive to market 

participants, it is likely that the 

Exchange will lose market share as a 

result. Accordingly, the Exchange does 

not believe that the proposed changes 

will impair the ability of Participants or 

competing exchanges to maintain their 

competitive standing in the financial 

markets. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

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.24

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

52278 Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Notices 

25 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 77724 

(April 27, 2016), 81 FR 30614 (May 17, 2016). 

5See Securities Exchange Act Release No. 79318 

(November 15, 2016), 81 FR 84696 (November 23, 

2016) (‘‘Order Approving the National Market 

System Plan Governing the Consolidated Audit 

Trail) (‘‘Approval Order’’). 

6See Securities Exchange Act Release No. 89679 

(August 26, 2020), 85 FR 54461 (September 1, 2020) 

(Notice of Filing of File No. SR–FINRA–2020–024). 

7See Letter from Lisa C. Horrigan, Associate 

General Counsel, FINRA, to Vanessa Countryman, 

Secretary, Commission, dated October 29, 2020. 

8See Securities Exchange Act Release No. 90535 

(November 30, 2020), 85 FR 78395 (December 4, 

2020) (Notice of Filing of Amendment No. 1 and 

Order Granting Accelerated Approval of SR– 

FINRA–2020–024). 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2021–069 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–2021–069. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2021–069 and 

should be submitted on or before 

October 12, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–20214 Filed 9–17–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92981; File No. SR– 

NYSEAMER–2021–38] 

Self-Regulatory Organizations; NYSE 

American LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Delete the Order Audit 

Trail System Rules in the Rule 7400 

Series 

September 14, 2021. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

September 7, 2021, NYSE American 

LLC (‘‘NYSE American’’ or the 

‘‘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 self-regulatory organization. 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 delete the 

Order Audit Trail System (‘‘OATS’’) 

rules in the Rule 7400 Series as these 

Rules provide for the collection of 

information that is duplicative of the 

data collection requirements of the CAT. 

Further, the Financial Industry 

Regulatory Authority (‘‘FINRA’’) has 

determined to eliminate its OATS rules. 

The proposed rule change is available 

on the Exchange’s website at 

www.nyse.com, 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 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Rule 613 of Regulation NMS requires 

national securities exchanges and 

FINRA to create, implement, and 

maintain a consolidated audit trail to 

capture customer and order event 

information for orders in NMS 

Securities and OTC Equity Securities, 

across all markets, from the time of 

order inception through routing, 

cancellation, modification, or execution 

in a single consolidated data source. 

The Participants filed the Plan to 

comply with Rule 613 of Regulation 

NMS under the Act. The Plan was 

published for comment in the Federal 

Register on May 17, 2016,4 and 

approved by the Commission, as 

modified, on November 15, 2016.5

On August 14, 2020, FINRA filed with 

the Commission a proposed rule change 

to delete the OATS rules once Industry 

Members are effectively reporting to the 

CAT (the ‘‘OATS Retirement Filing’’).6

On October 29, 2020, FINRA filed 

Amendment No. 1 to the proposed rule 

change (‘‘Amendment No. 1’’) and a 

response to the comments that were 

submitted on the original filing 

(‘‘Response to Comments’’).7 On 

November 30, 2020, the Commission 

approved the proposed rule change, as 

modified by Amendment No. 1, on an 

accelerated basis.8 On June 17, 2021, 

FINRA filed a proposed rule change 

setting forth the basis for its 

determination that the accuracy and 

reliability of the CAT meet the 

standards approved by the Commission