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42 17 CFR 240.17Ad–22(e)(2). 

43Covered Clearing Agency Standards, 81 FR at 

70805–06. 

44Covered Clearing Agency Standards, 81 FR at 

70806. 

45See CMP Approval Order at 5507. 

46 17 CFR 240.17Ad–22(e)(2). 

47 In approving this Proposed Rule Change, the 

Commission has considered the proposed rules’ 

impact on efficiency, competition, and capital 

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

48 15 U.S.C. 78s(b)(2). 

49 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 91208 

(February 25, 2021), 86 FR 12503. 

4 In Amendment No. 1, the Exchange amended 

the proposal to: (1) Specify the dissemination of 

certain imbalance information before the LULD 

closing cross; (2) clarify the process for calculating 

the LULD closing cross price and the benchmark 

prices for the LULD closing cross; (3) specify the 

treatment of imbalance only orders for purposes of 

LULD closing cross price selection; (4) provide 

additional explanation to support the proposal; (5) 

specify the implementation date for the proposal; 

and (6) make other clarifying, technical, and 

conforming changes. Amendment No. 1 is available 

on the Commission’s website at: https://

www.sec.gov/comments/sr-nasdaq-2021-009/ 

srnasdaq2021009-8670132-235426.pdf. 

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

6See Securities Exchange Act Release No. 91581, 

86 FR 20759 (April 21, 2021). The Commission 

designated June 1, 2021, as the date by which the 

Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

disapprove, the proposed rule change, as modified 

by Amendment No. 1. 

7See Rule 4754(a)(6) and (b)(4). See also Rule 

4754(b)(2) (describing the methodology for 

determining the Nasdaq closing cross price). 

8All times referenced are in Eastern Time. 

9See Rule 4754(b). If the Nasdaq closing cross 

price established pursuant to Rule 4754(b)(2)(A)– 

(D) is outside the benchmarks established by the 

Exchange by a threshold amount, the Nasdaq 

closing cross will occur at a price within the 

threshold amounts that best satisfies the conditions 

of Rule 4754(b)(2)(A)–(D). See Rule 4754(b)(2)(E). 

10See Amendment No. 1, supra note 4, at 6. 

Nasdaq management may set and modify the 

benchmarks and thresholds from time to time upon 

prior notice to market participants. See Rule 

4754(b)(2)(E). 

that, among other things, are clear and 

transparent; clearly prioritize the safety 

and efficiency of the covered clearing 

agency; and support the public interest 

requirements of the Exchange Act.42 In 

adopting Rule 17Ad–22(e)(2), the 

Commission discussed comments it 

received regarding the concept of skinin-the-game as a potential tool to align 

the various incentives of a covered 

clearing agency’s stakeholders, 

including management and clearing 

members.43 And, while the Commission 

declined to include a specific skin-inthe-game requirement in the rule, it 

stated its belief that ‘‘the proper 

alignment of incentives is an important 

element of a covered clearing agency’s 

risk management practices,’’ and noted 

that skin-in-the-game ‘‘may play a role 

in those risk management practices in 

many instances.’’ 44 OCC’s current rules 

require the application management 

compensation and excess capital as 

skin-in-the-game, which in turn should 

help further align the interests of OCC’s 

stakeholders, including OCC 

management and Clearing Members.45

As described above, OCC’s proposal 

would not reduce the resources OCC 

would apply to address default losses or 

remove the current skin-in-the-game 

component of OCC’s rules. Rather, OCC 

proposes to set aside a defined amount 

of capital for the sole purpose of 

absorbing losses and shortfalls arising 

out of a Clearing Member default. OCC 

has clearly stated the factors that the 

Board would consider when 

determining the amount of resources to 

hold as skin-in-the-game, a portion of 

which would comprise the Minimum 

Corporate Contribution. OCC also 

proposes to establish a clear process for 

addressing reductions in the Minimum 

Corporate Contribution arising out of a 

Clearing Member’s default. Accordingly, 

the Commission believes that the 

proposed changes to establish a 

persistent minimum level of skin-in-thegame are consistent with Rule 17Ad– 

22(e)(2) under the Exchange Act.46

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the Proposed 

Rule Change is consistent with the 

requirements of the Exchange Act, and 

in particular, the requirements of 

Section 17A of the Exchange Act 47 and 

the rules and regulations thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act,48

that the Proposed Rule Change (SR– 

OCC–2021–003) be, and hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.49

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–11606 Filed 6–2–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92068; File No. SR– 

NASDAQ–2021–009] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing of Amendment No. 1 and Order 

Granting Accelerated Approval of 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Amend Equity 4, 

Rule 4754 Relating to the Limit UpLimit Down Closing Cross 

May 28, 2021. 

I. Introduction 

On February 11, 2021, The Nasdaq 

Stock Market LLC (‘‘Exchange’’ or 

‘‘Nasdaq’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

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

proposed rule change to amend Equity 

4, Rule (‘‘Rule’’) 4754 relating to the 

Limit Up-Limit Down (‘‘LULD’’) closing 

cross. The proposed rule change was 

published for comment in the Federal 

Register on March 3, 2021.3 On April 9, 

2021, the Exchange filed Amendment 

No. 1 to the proposed rule change, 

which amended and superseded the 

proposed rule change as originally 

filed.4 On April 15, 2021, pursuant to 

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

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.6 The Commission 

has not received any comment letters on 

the proposed rule change. The 

Commission is publishing this notice to 

solicit comments on Amendment No. 1 

from interested persons, and is 

approving the proposed rule change, as 

modified by Amendment No. 1, on an 

accelerated basis. 

II. Description of the Proposed Rule 

Change, as Modified by Amendment 

No. 1 

The Nasdaq closing cross is the 

Exchange’s process for determining the 

price at which orders will be executed 

at the close and for executing those 

orders, and the price determined by the 

Nasdaq closing cross is the Nasdaq 

official closing price for securities that 

participate in the cross.7 The Nasdaq 

closing cross begins at 4:00 p.m.,8 and 

the Exchange applies a price range 

within which the Nasdaq closing cross 

must occur.9 Currently, the Exchange 

applies a threshold amount that is the 

greater of $0.50 or 10% of the midpoint 

of the Nasdaq best bid and offer, and 

that amount is then added to the Nasdaq 

best offer and subtracted from the 

Nasdaq best bid to establish the price 

range.10

The LULD closing cross is the 

Exchange’s process for executing closing 

trades in Nasdaq-listed securities when 

an LULD trading pause pursuant to Rule 

4120(a)(12) exists at or after 3:50 p.m. 


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11See Rule 4754(b)(6). 

12See Amendment No. 1, supra note 4, at 4. The 

Exchange proposes to implement the proposed 

changes by the end of Q3 2021, and will provide 

prior notice in an Equity Trader Alert. See id. 

13See Rule 4754(b)(6)(A)(i) and (iii). 

14See Rule 4754(b)(6)(A)(iii). 

15 In connection with eliminating extensions of 

the LULD closing cross, the Exchange proposes to 

remove Rule 4754(b)(6)(A)(iii), which currently 

describes extensions of the LULD closing cross, and 

parts of Rule 4754(b)(6)(C)(iii), which currently 

describe the handling of certain orders after 4:00 

p.m. for purposes of the LULD closing cross. 

16See Rule 4120(c)(10) (describing the auction 

collars for reopening following an LULD trading 

pause). 

17See proposed Rule 4754(b)(6)(E)(i). The 

Exchange states that it would use the last widened 

auction collar in this scenario because a security 

that entered a trading pause prior to 3:50 p.m. 

would be subject to the Exchange’s reopening 

process in Rule 4120(c)(10), where the Exchange 

would halt the security for an initial five-minute 

period and extend the halt in five-minute 

increments if the specified reopening criteria are 

not met, widening the relevant auction collar at the 

start of each five-minute extension. See 

Amendment No. 1, supra note 4, at 9 n.18. 

18See proposed Rule 4754(b)(6)(E)(ii). The 

Exchange states that this scenario would cover 

securities that entered a trading pause between 3:45 

p.m. and 3:50 p.m., and because the Exchange does 

not extend the reopening process in Rule 

4120(c)(10) or widen auction collars past 3:50 p.m., 

it would use the initial reopening auction collar. 

See Amendment No. 1, supra note 4, at 9–10 n.19. 

19See proposed Rule 4754(b)(6)(E)(iii). The 

Exchange states that it would use the LULD band 

that triggered the pause in this scenario because the 

Exchange does not conduct the LULD reopening 

process at or after 3:50 p.m. and therefore there are 

no reopening auction collars in this scenario. See 

Amendment No. 1, supra note 4, at 10 n.20. 

20See Amendment No. 1, supra note 4, at 8. 

21See id. at 8–9. 

22See proposed Rule 4754(b)(6)(E). These 

threshold amounts, like the threshold amounts 

currently used for the regular Nasdaq closing cross, 

would be published on the Exchange’s public 

website. See Amendment No. 1, supra note 4, at 8. 

23See Amendment No. 1, supra note 4, at 12. 

24See Rule 4702(b)(11) (defining a MOC order as 

an order type entered without a price that may be 

executed only during the Nasdaq closing cross). 

25See Rule 4702(b)(12) (defining a LOC order as 

an order type entered with a price that may be 

executed only in the Nasdaq closing cross, and only 

if the price determined by the Nasdaq closing cross 

is equal to or better than the price at which the LOC 

order was entered). 

26See Rule 4702(b)(13) (defining an IO order as 

an order entered with a price that may be executed 

only in the Nasdaq closing cross and only against 

MOC orders or LOC orders). 

27See Amendment No. 1, supra note 4, at 12. 

28See id. 

29See id. at 16. 

30See proposed Rule 4754(b)(6)(D). See also Rule 

4754(b)(2)(A)–(F) (describing the methodology for 

determining the regular Nasdaq closing cross price). 

31For purposes of the LULD closing cross, the 

Exchange proposes to define ‘‘eligible interest’’ to 

have the same meaning as ‘‘close eligible interest’’ 

in Rule 4754(a), with the addition of any new 

orders with an eligible underlying order type and 

order attribute entered during the trading pause. 

See proposed Rule 4754(b)(6)(A)(i). See also Rule 

4754(a)(1) (defining ‘‘close eligible interest’’ to 

mean any quotation or any order that may be 

entered into the system and designated with a timein-force of SDAY, SGTC, MDAY, MGTC, SHEX, or 

GTMC). 

32See proposed Rule 4754(b)(6)(D)(i). The 

Exchange states that proposed Rule 4754(b)(6)(D)(i) 

is similar to Rule 4754(b)(2)(A) (i.e., maximizing the 

number of shares executed in the cross). See 

Amendment No. 1, supra note 4, at 16. 

33See proposed Rule 4754(b)(6)(D)(ii). For 

purposes of the LULD closing cross, the Exchange 

proposes to define ‘‘imbalance’’ to mean the 

Continued 

and before 4:00 p.m.11 The Exchange 

proposes to make certain changes to the 

LULD closing cross in order to further 

align that process with the regular 

Nasdaq closing cross process.12

A. LULD Closing Cross Time and 

Benchmark Prices 

Currently, unlike the regular Nasdaq 

closing cross, the LULD closing cross 

occurs at 4:00 p.m. unless an order 

imbalance exists, in which case the 

Exchange will extend the time of the 

cross by one minute until the order 

imbalance no longer exists.13 If this 

condition persists until 5:00 p.m., the 

Exchange will not conduct an LULD 

closing cross in the security and will 

instead use the last sale on the Exchange 

as the Nasdaq official closing price for 

that security.14 In addition, currently, 

unlike the regular Nasdaq closing cross, 

the Exchange does not apply a price 

range within which the LULD closing 

cross must occur. The Exchange now 

proposes to eliminate extensions of the 

LULD closing cross beyond 4:00 p.m.15

and to require that the LULD closing 

cross occur within certain benchmark 

prices. 

As proposed, for any security that 

entered a trading pause that was 

extended prior to 3:50 p.m., the upper 

(lower) benchmark price would be 

established by adding (subtracting) a 

threshold amount to the upper (from the 

lower) auction collar 16 that was last 

updated with the extension of the 

trading pause, rounded to the nearest 

minimum price increment (with 

midpoint prices being rounded up), and 

the lower (upper) benchmark price 

would be the lower (upper) auction 

collar that was last updated with the 

upper (lower) auction collar used to 

calculate the upper (lower) benchmark 

price.17 For any security that entered a 

trading pause that was not extended 

prior to 3:50 p.m., the upper (lower) 

benchmark price would be established 

by adding (subtracting) a threshold 

amount to the upper auction collar for 

a Limit Up triggered pause (from the 

lower auction collar for a Limit Down 

triggered pause), rounded to the nearest 

minimum price increment (with 

midpoint prices being rounded up), and 

the lower (upper) benchmark price 

would be the lower (upper) auction 

collar disseminated with the upper 

(lower) auction collar used to calculate 

the upper (lower) benchmark price.18

For any security that entered a trading 

pause at or after 3:50 p.m., the upper 

(lower) benchmark price would be 

established by adding (subtracting) a 

threshold amount to the upper band for 

a Limit Up triggered pause (from the 

lower band for a Limit Down triggered 

pause), rounded to the nearest 

minimum price increment (with 

midpoint prices being rounded up), and 

the lower (upper) benchmark price 

would be the lower (upper) band in 

place at the time the trading pause was 

triggered.19 The benchmark prices 

would be published via the Nasdaq UTP 

SIP and Exchange proprietary data 

feeds.20

The Exchange proposes to initially set 

the price threshold amounts at the 

greater of $1.00 or 10% for securities 

with a reference price greater than $1.00 

(or $0.50 for securities with a reference 

price equal to or less than $1.00).21 As 

proposed, Nasdaq management would 

be able to set and modify these 

thresholds from time to time upon prior 

notice to market participants.22

As proposed, at 4:00 p.m., the 

Exchange would conduct the LULD 

closing cross, and if the cross price 

would fall outside of the benchmark 

prices, the LULD closing cross would 

execute all available orders at a price 

within or equal to the benchmark 

prices.23 Any unexecuted orders 

intended for the LULD closing cross 

(i.e., market on close (‘‘MOC’’),24 limit 

on close (‘‘LOC’’),25 and imbalance only 

(‘‘IO’’) orders),26 including those that 

fall outside the benchmark prices, 

would be cancelled.27 All other orders 

not executed in the LULD closing cross 

would be processed according to the 

entering firm’s instructions.28

B. LULD Closing Cross Price 

Determination 

Currently, the LULD closing cross 

price is determined by the same 

execution algorithm as the regular 

Nasdaq closing cross.29 The Exchange 

now proposes to modify the 

methodology for determining the LULD 

closing cross price.30 As proposed, the 

LULD closing cross would occur at the 

price within the benchmark prices 

established pursuant to proposed Rule 

4754(b)(6)(E) that maximizes the 

number of shares of eligible interest,31

MOC, LOC, and IO orders in the Nasdaq 

market center to be executed.32 If more 

than one such price exists, the LULD 

closing cross would occur at the price 

within the benchmark prices that 

minimizes any imbalance.33 If more 


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number of shares of buy or sell MOC or LOC orders 

or eligible interest that cannot be matched with 

other MOC, LOC, or IO orders or eligible interest 

at a particular price at any given time. See proposed 

Rule 4754(b)(6)(A)(ii). The Exchange states that 

proposed Rule 4754(b)(6)(D)(ii) is based on the 

same principle as Rule 4754(b)(2)(B) (i.e., 

minimizing the number of shares that cannot be 

matched in the cross). See Amendment No. 1, supra 

note 4, at 17. 

34See proposed Rule 4754(b)(6)(D)(iii). The 

Exchange states that proposed Rule 

4754(b)(6)(D)(iii) is similar to Rule 4754(b)(2)(C). 

See Amendment No. 1, supra note 4, at 18. 

35See proposed Rule 4754(b)(6)(D)(iv). The 

Exchange states that Rule 4754(b)(2)(D) uses the 

midpoint of the Nasdaq best bid and offer as the 

tiebreaker for the regular Nasdaq closing cross, 

whereas there would be no continuous market prior 

to the execution of the LULD closing cross and 

proposed Rule 4754(b)(6)(D)(iv) would better reflect 

current market forces and conditions for an LULD 

closing cross. See Amendment No. 1, supra note 4, 

at 18–19. 

36See proposed Rule 4754(b)(6)(F)(ii). 

37See Rule 4702(b)(13)(A). 

38See proposed Rule 4754(b)(6)(F)(iii). 

39See proposed Rule 4754(b)(6)(C). 

40See id.; Amendment No. 1, supra note 4, at 21– 

22. See also Rule 4754(b)(1) (describing EOII and 

NOII dissemination for the regular Nasdaq closing 

cross). 

41The Exchange proposes to replace all 

references to the ‘‘near price’’ and ‘‘far price’’ with 

the ‘‘near clearing price’’ and ‘‘far clearing price’’ 

respectively to align with terminology used 

throughout Rule 4754. See Amendment No. 1, 

supra note 4, at 22. 

42See proposed Rule 4754(b)(6)(C); Amendment 

No. 1, supra note 4, at 22. 

43See proposed Rule 4754(b)(6)(C); Amendment 

No. 1, supra note 4, at 22. The far clearing price 

would be different from the near clearing price and 

reference price to indicate that not all marketable 

orders can be filled within the benchmark prices. 

See Amendment No. 1, supra note 4, at 22. 

44See Amendment No. 1, supra note 4, at 23. 

45 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

46 15 U.S.C. 78f(b)(5). 

than one such price exists, the LULD 

closing cross would occur at the entered 

price within the benchmark prices at 

which shares will remain unexecuted in 

the cross.34 If no price within the 

benchmark prices would satisfy these 

conditions, then: (i) If an imbalance 

exists, the LULD closing cross would 

occur at a price equal to the upper 

(lower) benchmark price for a buy (sell) 

imbalance; and (ii) if no imbalance 

exists, the LULD closing cross would 

occur at a price that minimizes the 

distance from the last published upper 

band (lower band) for a Limit Up (Limit 

Down) trading pause.35

Currently, Rule 4754(b)(6) provides 

that, in the event of an LULD closing 

cross, MOC, LOC, and IO orders 

intended for the closing cross entered 

into the system and place on the book 

prior to the trading pause will remain 

on the book to participate in the LULD 

closing cross, but these orders may not 

be modified or cancelled. Rule 

4754(b)(6) also provides that, during the 

pause and prior to 4:00 p.m., new orders 

(other than MOC or LOC orders) may be 

entered, modified, and cancelled and 

may participate in the LULD closing 

cross. The Exchange now proposes to 

modify the handling of MOC, LOC, and 

IO orders such that they could be 

entered, modified, and cancelled 

pursuant to Rules 4702(b)(11), 

4702(b)(12), and 4702(b)(13), 

respectively.36 Therefore, as proposed, 

MOC, LOC, and IO orders could be 

entered, modified, and cancelled during 

the same time periods for an LULD 

closing cross as for a regular Nasdaq 

closing cross. However, unlike the 

regular Nasdaq closing cross where if 

the price of an IO order to buy (sell) is 

higher than (lower than) the highest bid 

(lowest offer) on the Nasdaq book, the 

price of the IO order will be modified 

repeatedly to equal the highest bid 

(lowest offer) on the Nasdaq book,37 for 

purposes of LULD closing cross price 

selection, buy (sell) IO orders would be 

re-priced to one minimum price 

increment below (above) the LULD band 

that triggered the trading pause.38

C. Imbalance Information 

Currently, Rule 4754(b)(6)(B) provides 

that, in the event of an LULD closing 

cross, the Exchange continues 

disseminating the order imbalance 

indicator (‘‘NOII’’) every second until 

after hours trading begins. The 

Exchange proposes to amend this rule to 

also specify the dissemination of the 

early order imbalance indicator (‘‘EOII’’) 

before the LULD closing cross.39 As 

with the regular Nasdaq closing cross, 

EOII would be disseminated every 10 

seconds beginning at 3:50 p.m. until the 

NOII begins to disseminate, and the 

NOII would be disseminated every 

second beginning at 3:55 p.m. until 

market close.40

Currently, Rule 4754(b)(6)(B) also 

provides that the near price, far price, 

and reference prices contained in the 

NOII all represent the price at which the 

LULD closing cross would execute 

should the cross conclude at that time. 

As proposed, the near clearing price 41

and reference price contained in the 

EOII and NOII, as applicable, would 

represent the price at which the LULD 

closing cross would execute should the 

cross conclude at that time (i.e., 

bounded by the benchmark prices),42

and the far clearing price would 

represent the price at which eligible 

interest, MOC, LOC, and IO orders 

would execute (i.e., not bounded by the 

benchmark prices).43

D. Other Changes 

The Exchange proposes to specify in 

Rule 4754(b)(6) that the LULD closing 

cross process only applies to Nasdaqlisted securities, rather than all stocks. 

The Exchange also proposes a 

conforming change in Rule 

4754(b)(6)(B)(i) to clarify that the LULD 

closing cross applies when a trading 

pauses exists (rather than is triggered) at 

or after 3:50 p.m. and before 4:00 p.m. 

Finally, the Exchange proposes to 

update obsolete cross references in 

Rules 4756(c)(3)(B) and 4763(b) to Rule 

4751.44

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change, as 

modified by Amendment No. 1, is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.45 In particular, the 

Commission finds that the proposed 

rule change, as modified by Amendment 

No, 1, is consistent with Section 6(b)(5) 

of the Act,46 which requires, among 

other things, that the rules of a national 

securities exchange be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, 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. 

The Commission believes that the 

proposed benchmark prices and other 

changes to the LULD closing cross 

would more closely align the LULD 

closing cross process with the regular 

Nasdaq closing cross process and would 

promote a more consistent experience 

for those that participate in the crosses. 

The Commission also believes that the 

differences between the proposed LULD 

closing cross process and the regular 

Nasdaq closing cross process are 

reasonably designed to reflect the 

differences in market conditions leading 

up to the crosses. 

More specifically, the Commission 

believes that the proposed benchmark 

prices for the LULD closing cross would 

help ensure that the closing price of a 

security is reasonably related to current 

market conditions. The Commission 

also believes that the addition of 

benchmark prices would further 

harmonize the LULD closing cross 

process with the regular Nasdaq closing 

cross process, while reflecting market 


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47As described above, the benchmark prices for 

the LULD closing cross would be calculated based 

on the reopening auction collars or the LULD 

bands, rather than the midpoint of the Nasdaq best 

bid and offer as is the case with the regular Nasdaq 

closing cross. 

48As described above, the initial threshold 

amounts for determining the benchmark prices for 

the LULD closing cross (i.e., the greater of $1.00 or 

10% for securities with a reference price greater 

than $1.00, and $0.50 for securities with a reference 

price equal to or less than $1.00) may be greater 

than the current threshold amounts for determining 

the price range for the regular Nasdaq closing cross 

(i.e., the greater of $0.50 or 10%). As with the 

regular Nasdaq closing cross, Nasdaq management 

would be able to set and modify these threshold 

amounts from time to time upon prior notice to 

market participants. 

49As described above, the threshold amounts for 

the LULD closing cross would be applied to the 

most recently expanded reopening auction collar (if 

the trading pause was extended before 3:50 p.m.) 

or in the direction of trading that caused the trading 

pause (if the trading pause was not extended before 

3:50 p.m. or if the trading pause occurred at or after 

3:50 p.m.), whereas the threshold amounts for the 

regular Nasdaq closing cross are applied to both the 

Nasdaq best bid and Nasdaq best offer. 

50The Commission also believes that the 

proposed differences between the near clearing 

price and reference price, and the far clearing price, 

would reflect the addition of benchmark prices to 

the LULD closing cross. 51 15 U.S.C. 78s(b)(2). 

conditions for the security leading up to 

the LULD closing cross. In particular, 

the Commission believes that the 

proposed methodology for determining 

the benchmark prices would reflect that 

there is no continuous trading in the 

security and no Nasdaq best bid and 

offer based on continuous trading in the 

security during the pause leading up to 

the cross,47 that the cross would occur 

following a period of increased 

volatility in the security,48 and the 

direction of trading that triggered the 

pause in the security and the existence 

of buy or sell pressure in the security 

leading up to the cross.49

The Commission also believes that the 

proposed methodology for determining 

the LULD closing cross price would 

reflect the proposed benchmark prices 

and allow for similar experiences for 

those that participate in the regular 

Nasdaq closing cross and the LULD 

closing cross. In addition, the 

Commission believes that the proposed 

methodology, including the proposed 

definitions of eligible interest and 

imbalance and the proposed treatment 

of IO orders, are reasonably designed to 

reflect market conditions leading up to 

the LULD closing cross, including that 

there is no continuous trading in the 

security and no Nasdaq best bid and 

offer based on continuous trading in the 

security leading up to the cross, and the 

existence of any buy or sell imbalance 

in the security leading up to the cross. 

Further, the Commission believes that 

the proposal to eliminate extensions of 

the LULD closing cross past 4:00 p.m. 

would provide more certainty regarding 

the timing of the LULD closing cross 

and align that timing with the regular 

Nasdaq closing cross. The Commission 

also believes that the proposed timing 

for entering, modifying, and cancelling 

MOC, LOC, and IO orders for the LULD 

closing cross would allow additional 

interest to participate in the cross and 

further align the LULD closing cross 

process with the regular Nasdaq closing 

cross process with respect to these 

orders. 

Finally, the Commission believes that 

the proposal to specify the 

dissemination of EOII would provide 

transparency regarding the information 

that is disseminated in advance of the 

LULD closing cross.50 Similarly, the 

Commission believes that the proposal 

to specify that the LULD closing cross 

only applies to Nasdaq-listed securities 

and clarify that the LULD closing cross 

applies when a trading pause exists 

(rather than is triggered) at or after 3:50 

p.m. and before 4:00 p.m. would 

provide greater transparency regarding 

the LULD closing cross process. The 

Commission also believes that updating 

obsolete cross references in Rules 

4756(c)(3)(B) and 4763(b) would 

provide greater clarity in the Exchange’s 

rules. 

IV. Solicitation of Comments on 

Amendment No. 1 to the Proposed Rule 

Change 

Interested persons are invited to 

submit written data, views, and 

arguments concerning whether 

Amendment No. 1 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–2021–009 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–2021–009. 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–2021–009, and 

should be submitted on or before June 

24, 2021. 

V. Accelerated Approval of Proposed 

Rule Change, as Modified by 

Amendment No. 1 

The Commission finds good cause to 

approve the proposed rule change, as 

modified by Amendment No. 1, prior to 

the thirtieth day after the date of 

publication of notice of the filing of 

Amendment No. 1 in the Federal 

Register. As discussed above, in 

Amendment No. 1, the Exchange 

specified the dissemination of certain 

imbalance information before the LULD 

closing cross, clarified the process for 

calculating the LULD closing cross price 

and the benchmark prices, specified the 

treatment of IO orders for purposes of 

LULD closing cross price selection, 

provided additional explanation to 

support the proposal, specified the 

implementation date for the proposal, 

and made other clarifying, technical, 

and conforming changes. The 

Commission believes that the changes 

made in Amendment No. 1 do not raise 

any material or novel regulatory issues 

and they provide further clarity to and 

consistency within the proposal. 

Accordingly, the Commission finds 

good cause, pursuant to Section 19(b)(2) 

of the Act,51 to approve the proposed 

rule change, as modified by Amendment 

No. 1, on an accelerated basis. 


khammond on DSKJM1Z7X2PROD with NOTICES
29868 Federal Register / Vol. 86, No. 105 / Thursday, June 3, 2021 / Notices 

52 Id. 

53 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 and Exchange Act Release No. 

87978 (January 15, 2020), 85 FR 3727 (January 22, 

2020) (SR–NYSEArca–2020–03). 

5The term ‘‘Lead Market Maker’’ is defined in 

Rule 1.1(w) to mean a registered Market Maker that 

is the exclusive Designated Market Maker in listings 

for which the Exchange is the primary market. 

6Pursuant to Rule 7.23–E(a)(1), all registered 

Market Makers, including LMMs, have an 

obligation to maintain continuous, two-sided 

trading interest in those securities in which the 

Market Marker is registered to trade. In addition, 

pursuant to Rule 7.24–E(b), LMMs are held to 

higher performance standards in the securities in 

which they are registered as LMM. LMMs can earn 

additional financial incentives for meeting the 

higher performance standards specified from time 

to time in the Fee Schedule. Only one LMM can be 

registered in a NYSE-Arca listed security, but that 

security can have an unlimited number of registered 

Market Makers. Market Makers can also be 

registered in securities that trade on an unlisted 

trading privileges basis on the Exchange. 

7The Exchange originally filed to amend the Fee 

Schedule on May 3, 2021 (SR–NYSEArca–2021–33). 

SR–NYSEArca–2021–33 was subsequently 

withdrawn and replaced by this filing. 

8See Securities Exchange Act Release No. 51808 

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

(File No. S7–10–04) (Final Rule) (‘‘Regulation 

NMS’’). 

9See Securities Exchange Act Release No. 61358, 

75 FR 3594, 3597 (January 21, 2010) (File No. S7– 

02–10) (Concept Release on Equity Market 

Structure). 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,52 that the 

proposed rule change (SR–NASDAQ– 

2021–009), as modified by Amendment 

No. 1, be, and hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.53

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–11693 Filed 6–2–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92053; File No. SR– 

NYSEArca–2021–43] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending the NYSE Arca 

Equities Fees and Charges 

May 27, 2021. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that, on May 14, 

2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III 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 amend the 

NYSE Arca Equities Fees and Charges 

(‘‘Fee Schedule’’) to replace the monthly 

rebate tied to the performance in the 

opening and closing auctions in NYSE 

Arca-listed Securities and the ETF 

Incentive Program for NYSE Arca-listed 

Securities with a new pricing incentive 

for Lead Market Makers and ETP 

Holders registered as Market Makers. 

The Exchange proposes to implement 

the fee changes effective May 14, 2021. 

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 

The Exchange proposes to amend the 

Fee Schedule to replace the monthly 

rebate tied to the performance in the 

opening and closing auctions in NYSE 

Arca-listed Securities and the ETF 

Incentive Program for NYSE Arca-listed 

Securities 4 with a new pricing incentive 

that is tied to meeting enhanced market 

quality metrics. The Exchange now 

proposes to provide financial incentives 

for Lead Market Makers (‘‘LMMs’’) 5 that 

are based on whether the LMM meets 

certain Performance Metrics (as 

described below). Specifically, the 

Exchange would provide incremental 

credits to LMMs based on how many 

Performance Metrics an LMM meets in 

each NYSE Arca-listed Security. The 

Exchange also proposes to make the 

additional credits available for ETP 

Holders registered as Market Maker 

(‘‘Market Makers’’).6 The Exchange 

believes that the proposed rule change 

would encourage LMMs and Market 

Makers to maintain better market 

quality in NYSE Arca-listed Securities 

in which they are registered, including 

in lower volume securities. 

The Exchange notes that its listing 

business operates in a highly 

competitive market in which market 

participants, including issuers of 

securities, LMMs, and other liquidity 

providers, can readily transfer their 

listings, or direct order flow to 

competing venues if they deem fee 

levels, liquidity provision incentive 

programs, or other factors at a particular 

venue to be insufficient or excessive. 

The proposed rule change reflects the 

current competitive pricing 

environment and is designed to 

incentivize market participants to 

participate as LMMs or Market Makers, 

and thereby, further enhance the market 

quality on all securities listed on the 

Exchange and encourage issuers to list 

new products on the Exchange. 

The Exchange proposes to implement 

the fee changes effective May 14, 2021.7

Background 

As noted above, the Exchange 

operates in a highly competitive market. 

The Commission has repeatedly 

expressed its preference for competition 

over regulatory intervention in 

determining prices, products, and 

services in the securities markets. In 

Regulation NMS, 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.’’ 8

While Regulation NMS has enhanced 

competition, it has also fostered a 

‘‘fragmented’’ market structure where 

trading in a single stock can occur 

across multiple trading centers. When 

multiple trading centers compete for 

order flow in the same stock, the 

Commission has recognized that ‘‘such 

competition can lead to the 

fragmentation of order flow in that 

stock.’’ 9 Indeed, equity trading is 

currently dispersed across 16 


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