Federal Register / Vol. 86, No. 103 / Tuesday, June 1, 2021 / Notices 29317 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Pursuant to Equity 7, Section 118, a ‘‘Designated 

Retail Order’’ is an agency or riskless principal 

order that meets the criteria of FINRA Rule 5320.03 

and that originates from a natural person and is 

submitted to Nasdaq by a member that designates 

it pursuant to this section, provided that no change 

is made to the terms of the order with respect to 

price or side of market and the order does not 

originate from a trading algorithm or any other 

computerized methodology. 

4Pursuant to Equity 4, Section 4758(a)(1)(A)(xv), 

‘‘SCAR’’ is a routing option under which orders will 

check the System for available shares and 

simultaneously route to BX and Nasdaq PSX in 

accordance with the System routing table. If shares 

remain unexecuted after routing, they are posted on 

the book or cancelled. Once on the book, should the 

order subsequently be locked or crossed by another 

market center, the System will not route the order 

to the locking or crossing market center. 

5Equity 7, Section 118(a) defines ‘‘Consolidated 

Volume’’ to mean the total consolidated volume 

reported to all consolidated transaction reporting 

plans by all exchanges and trade reporting facilities 

during a month in equity securities, excluding 

executed orders with a size of less than one round 

lot. For purposes of calculating Consolidated 

Volume and the extent of a member’s trading 

activity the date of the annual reconstitution of the 

Russell Investments Indexes is excluded from both 

total Consolidated Volume and the member’s 

trading activity. 

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– 

BX–2021–024 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–BX–2021–024. 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–BX–2021–024 and should 

be submitted on or before June 22, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–11403 Filed 5–28–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92012; File No. SR– 

NASDAQ–2021–043] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Exchange’s Transaction Credits at 

Equity 7, Section 118(a) 

May 25, 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 May 19, 

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 

Exchange’s transaction credits at Equity 

7, Section 118(a), as described further 

below. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s 

schedule of credits, at Equity 7, Section 

118(a). Specifically, the Exchange 

proposes to (1) amend an existing credit 

of $0.0030 per share executed for 

members that add at least a certain 

threshold volume of liquidity in 

securities in Tape B; (2) amend an 

existing credit of $0.00295 per share 

executed for members that add at least 

a certain threshold volume of liquidity 

in securities in Tape C and in 

‘‘Designated Retail Orders’’ 3 for 

securities in any Tape; (3) amend an 

existing credit of $0.0027 per share for 

members that meet specified volume 

requirements on both Nasdaq and the 

Nasdaq Options Market (‘‘NOM’’) when 

adding liquidity; and (4) amend an 

existing credit of $0.0025 per share 

executed for orders that are routed using 

the ‘‘SCAR’’ routing option 4 and which 

ultimately execute on Nasdaq BX, Inc. 

(‘‘BX’’). 

Amend Existing Credit for Adding 

Liquidity in Tape B Securities 

First, the Exchange proposes to 

amend an existing credit of $0.0030 per 

share executed to a member with shares 

of liquidity provided in all securities 

through one or more of its Nasdaq 

Market Center MPIDs that represent 

1.30% or more of Consolidated 

Volume 5 during the month, which 

includes shares of liquidity provided 

with respect to securities that are listed 

on exchanges other than Nasdaq or 

NYSE (‘‘Tape B Securities’’) that 

represent 0.40% or more of 

Consolidated Volume. 

The Exchange proposes to lower the 

liquidity adding threshold for the credit 


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29318 Federal Register / Vol. 86, No. 103 / Tuesday, June 1, 2021 / Notices 

6The term ‘‘Customer’’ 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 defined in Option 7, Section 1. 

7A ‘‘Professional’’ is defined in Options 1, 

Section 1(a)(47) as ‘‘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).’’ 

8The term ‘‘Firm’’ or (‘‘F’’) applies to any 

transaction that is identified by a Participant for 

clearing in the Firm range at OCC. 

9The term ‘‘Non-NOM Market Maker’’ or (‘‘O’’) is 

a registered market maker on another options 

exchange that is not a NOM Market Maker. A NonNOM Market Maker must append the proper NonNOM Market Maker designation to orders routed to 

NOM. 

10The term ‘‘Broker-Dealer’’ or (‘‘B’’) applies to 

any transaction which is not subject to any of the 

other transaction fees applicable within a particular 

category. 

11Securities Exchange Act Release No. 91639 

(April 22, 2021), 80 FR 22500 (April 28, 2021). 

12See BX Equity 7 (Pricing Schedule), available 

at https://listingcenter.nasdaq.com/rulebook/bx/ 

rules/BX%20Equity%207. 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(4) and (5). 

from 1.30% of Consolidated Volume to 

1.25% of Consolidated Volume. In 

doing so, the Exchange intends to 

render the credit more readily accessible 

to members. If more members assess 

that this credit is accessible to them, 

and they increase their liquidity adding 

activity on the Exchange to qualify for 

it, then the quality of the market will 

improve, to the benefit of all 

participants. 

Amend Existing Credit for Adding 

Liquidity in Tape C Securities and in 

Designated Retail Orders 

Second, the Exchange proposes to 

amend a credit it presently offers of 

$0.00295 per share executed to a 

member that, through one or more of its 

Nasdaq Market Center MPIDs (i) adds 

shares of liquidity during the month 

representing at least 0.80% of 

Consolidated Volume during the month; 

(ii) adds at least 0.35% of Consolidated 

Volume during the month in securities 

in Tape C; and (iii) adds at least 0.15% 

of Consolidated Volume during the 

month in Designated Retail Orders for 

securities in any Tape. The Exchange 

proposes to amend this credit in several 

ways. 

The Exchange proposes to lower the 

liquidity adding threshold for the credit 

from 0.80% of Consolidated Volume to 

0.65% of Consolidated Volume. In 

doing so, the Exchange intends to 

render the credit more readily accessible 

to members. If more members assess 

that this credit is accessible to them, 

and they increase their liquidity adding 

activity on the Exchange to qualify for 

it, then the quality of the market will 

improve, to the benefit of all 

participants. 

The Exchange also proposes to add a 

new qualifying criterion to the credit 

that would require members to achieve 

at least a 60% ratio of its liquidity 

adding activity to its total activity on the 

Exchange during the month. The 

Exchange proposes to add this new 

criterion so that the credit rewards 

members whose activities on the 

Exchange consist primarily of adding 

liquidity. Again, the Exchange believes 

that all participants will benefit from an 

improvement in market quality to the 

extent that the Exchange successfully 

incentivizes liquidity adding activity. 

Finally, the Exchange proposes to 

eliminate the qualifying criterion that 

members must add at least 0.35% of 

Consolidated Volume during the month 

in securities in Tape C. The Exchange 

proposes to eliminate this criterion 

because the Exchange believes it already 

has adequate incentives for members to 

add liquidity in Tape C securities, such 

that this criterion is not necessary. 

Moreover, the Exchange seeks to avoid 

rendering this credit overly complex 

and onerous for members to attain. 

Amend Existing Credit for Adding 

Liquidity on Nasdaq and NOM 

Third, the Exchange proposes to 

amend an existing credit for securities 

in all three Tapes that it provides (other 

than Supplemental Orders or 

Designated Retail Orders) to members 

that meet a specified volume threshold 

on Nasdaq for orders that add liquidity, 

and that also meet a specified volume 

threshold on NOM when adding 

liquidity. The existing credit provides 

that a member will receive a credit of 

$0.0027 per share executed if the 

member (1) adds liquidity through one 

or more of its Nasdaq Market Center 

MPIDs during the month that, in all 

securities, represents more than 0.10% 

of Consolidated Volume during the 

month, and (2) adds Customer,6

Professional,7 Firm,8 Non-NOM Market 

Maker,9 and/or Broker-Dealer 10

liquidity of 0.40% or more of total 

industry ADV in the customer clearing 

range for Equity and ETF option 

contracts per day during the month on 

the Nasdaq Options Market. 

The Exchange proposes to amend this 

credit by deleting the requirement that 

members must add a threshold 

percentage of liquidity on NOM that is 

classified as ‘‘Customer, Professional, 

Firm, Non-NOM Market Maker, and/or 

Broker-Dealer’’ liquidity. By eliminating 

this requirement, the Exchange intends 

to render the credit easier for members 

to attain, as the addition of any type of 

liquidity in the customer clearing range 

on NOM would be acceptable. The 

Exchange believes that if more members 

find the credit to be attainable, then 

more will seek to qualify for it by 

adding liquidity to the Exchange and 

NOM, which will improve the quality of 

both markets. 

Amend Existing Credit for Routed 

Orders Using SCAR That Execute on BX 

Finally, the Exchange proposes to 

lower from $0.0025 to $0.0016 per share 

executed the credit that it provides to a 

member that uses the SCAR order 

routing option and executes an order in 

a security in any of the three tapes on 

BX. 

BX recently revised its pricing 

schedule to lower the amounts of the 

credits it provides to its members that 

remove liquidity from BX.11 Currently, 

all of the credits that BX provides to its 

members are lower than $0.0025 per 

share executed.12 As a result, the 

Exchange proposes to lower its own 

$0.0025 per share executed credit for 

SCAR routed orders that execute on BX 

in order to better align this credit with 

corresponding credits that BX provides 

to its own members. 

2. Statutory Basis 

The Exchange believes that its 

proposals are consistent with Section 

6(b) of the Act,13 in general, and further 

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

6(b)(5) of the Act,14 in particular, in that 

they provide for the equitable allocation 

of reasonable dues, fees and other 

charges among members and issuers and 

other persons using any facility, and are 

not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. The 

proposals are also consistent with 

Section 11A of the Act relating to the 

establishment of the national market 

system for securities. 

The Proposals Are Reasonable 

The Exchange’s proposals are 

reasonable in several respects. As a 

threshold matter, the Exchange is 

subject to significant competitive forces 

in the market for equity securities 

transaction services that constrain its 

pricing determinations in that market. 

The fact that this market is competitive 

has long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 


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Federal Register / Vol. 86, No. 103 / Tuesday, June 1, 2021 / Notices 29319 

15NetCoalition 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)). 

16Securities Exchange Act Release No. 51808 

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

(‘‘Regulation NMS Adopting Release’’). 

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’. . . .’’ 15

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.’’ 16

Numerous indicia demonstrate the 

competitive nature of this market. For 

example, clear substitutes to the 

Exchange exist in the market for equity 

security transaction services. The 

Exchange is only one of several equity 

venues to which market participants 

may direct their order flow. Competing 

equity exchanges offer similar tiered 

pricing structures to that of the 

Exchange, including schedules of 

rebates and fees that apply based upon 

members achieving certain volume 

thresholds. 

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. Within the foregoing context, 

the proposals represent reasonable 

attempts by the Exchange to increase its 

liquidity and market share relative to its 

competitors. 

The Exchange believes that it is 

reasonable to modify the qualification 

criteria for two of its transaction credits, 

at Equity 7, Section 118(a) because they 

will each encourage the addition of 

liquidity to the Exchange, first by 

making it easier for additional members 

to qualify for the $0.0030 and the 

$0.00295 credit, and second by 

specifying that the $0.00295 per share 

executed credit will go to those 

members whose activities on the 

Exchange consist primarily of adding 

liquidity to the Exchange. If more 

members seek to qualify for these 

credits by adding liquidity to the 

Exchange, and if members seek to 

become net adders of liquidity on the 

Exchange to qualify or continue to 

qualify for the $0.00295 credit, then the 

quality of the market will improve, and 

the Exchange will become more 

attractive to existing and prospective 

participants. 

The Exchange also believes that it is 

reasonable for it to eliminate the 

requirement for the $0.00295 credit that 

members must add at least 0.35% of 

Consolidated Volume during the month 

in securities in Tape C. The Exchange 

believes that this proposal is reasonable 

because it assesses that it already has 

adequate incentives for members to add 

liquidity in Tape C securities, such that 

this requirement is not necessary. 

Moreover, the Exchange seeks to avoid 

rendering this credit overly complex 

and onerous for members to attain. 

Similarly, the Exchange believes that 

it is reasonable to ease the qualification 

criteria for the $0.0027 per share 

executed credit for a member that adds 

certain threshold volumes of liquidity 

on the Exchange and on NOM during a 

month. By eliminating the existing 

requirement that a member must add 

liquidity to NOM that consists of 

Customer, Professional, Firm, Non-NOM 

Market Maker, and/or Broker-Dealer 

liquidity, the Exchange again intends to 

render the credit easier for members to 

attain. If as a result of the proposal, 

more members find the credit to be 

attainable and seek to qualify for it by 

adding liquidity to the Exchange and 

NOM, then the quality of both markets 

will improve, and the Exchange will 

become more attractive to existing and 

prospective participants. 

Finally, the Exchange believes it is 

reasonable to lower the $0.0025 per 

share executed credit that it provides to 

a member that enters a SCAR routed 

order that executes on BX because the 

proposal will better align this credit 

with corresponding credits that BX 

provides to its own members that 

remove liquidity from that exchange. 

The Exchange believes that it is 

appropriate to periodically reassess and 

recalibrate its credits. In this instance, 

aligning the credits will help to ensure 

that market participants do not use the 

Exchange’s SCAR order routing strategy 

solely to obtain a higher rebate on 

orders that are routed and executed on 

BX. 

The Exchange notes that those market 

participants that are dissatisfied with 

the proposals are free to shift their order 

flow to competing venues that offer 

more generous pricing or less stringent 

qualifying criteria. 

The Proposals Are Equitable Allocations 

of Credits 

The Exchange believes that is an 

equitable allocation to ease and 

otherwise modify the eligibility 

requirements for three of its transaction 

credits because the proposals will 

encourage members to add additional 

liquidity to the Exchange. To the extent 

that the Exchange succeeds in 

increasing liquidity on the Exchange, 

then the Exchange will experience 

improvements in its market quality, 

which again stands to benefit all market 

participants. 

The Exchange believes its proposal to 

lower its credit for SCAR routed orders 

that execute on BX is an equitable 

allocation because the proposed 

amended credit amount is better aligned 

with liquidity removal credits that BX 

provides to its members. 

Any participant that is dissatisfied 

with the proposals is free to shift their 

order flow to competing venues that 

provide more generous pricing or less 

stringent qualifying criteria. 

The Proposals Are Not Unfairly 

Discriminatory 

The Exchange believes that its 

proposals are not unfairly 

discriminatory. As an initial matter, the 

Exchange believes that nothing about its 

volume-based tiered pricing model is 

inherently unfair; instead, it is a rational 

pricing model that is well-established 

and ubiquitous in today’s economy 

among firms in various industries—from 

co-branded credit cards to grocery stores 

to cellular telephone data plans—that 

use it to reward the loyalty of their best 

customers that provide high levels of 

business activity and incent other 

customers to increase the extent of their 

business activity. It is also a pricing 

model that the Exchange and its 

competitors have long employed with 

the assent of the Commission. It is fair 

because it incentivizes customer activity 

that increases liquidity, enhances price 

discovery, and improves the overall 

quality of the equity markets. 

The Exchange believes that its 

proposals to ease or otherwise amend 

the qualifying criteria for three of its 

transaction credits are not unfairly 

discriminatory because these credits are 

available to all members. Moreover, 

these proposals stand to improve the 

overall market quality of the Exchange, 

to the benefit of all market participants, 

by incentivizing members to increase 

the extent of their liquidity adding 

activity on the Exchange. 

Meanwhile, the proposal to lower the 

amount of its credit for members that 

use SCAR and execute orders on BX is 


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29320 Federal Register / Vol. 86, No. 103 / Tuesday, June 1, 2021 / Notices 

17 15 U.S.C. 78s(b)(3)(A)(ii). 

not unfairly discriminatory because the 

proposed amended credit is available to 

all members and is in better alignment 

with the amounts of the credits that BX 

itself provides to members that remove 

liquidity from that exchange. 

Any participant that is dissatisfied 

with the proposals is free to shift their 

order flow to competing venues that 

provide more generous pricing or less 

stringent qualifying criteria. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule changes will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Intramarket Competition 

The Exchange does not believe that its 

proposal will place any category of 

Exchange participant at a competitive 

disadvantage. 

As noted above, the proposed changes 

to the qualifying criteria for three of its 

transaction credits are intended to have 

market-improving effects, to the benefit 

of all members. Any member may elect 

to achieve the levels of liquidity 

required in order to qualify for the 

credits. 

Likewise, the Exchange’s proposal to 

lower the amount of the credit it 

provides to members that utilize the 

SCAR routing strategy and execute 

orders on BX will not competitively 

disadvantage any category of Exchange 

member. The proposal will merely 

ensure that the amount of the credit is 

better aligned with the recently lowered 

corresponding credits that BX provides 

to its own members that remove 

liquidity from that exchange. 

The Exchange notes that its members 

are free to trade on other venues to the 

extent they believe that the proposed 

qualification criteria for or amounts of 

these credits are not attractive. As one 

can observe by looking at any market 

share chart, price competition between 

exchanges is fierce, with liquidity and 

market share moving freely between 

exchanges in reaction to fee and credit 

changes. The Exchange notes that its 

pricing tier structure is consistent with 

broker-dealer fee practices as well as the 

other industries, as described above. 

Intermarket Competition 

In terms of inter-market competition, 

the Exchange notes that it operates in a 

highly competitive market in which 

market participants can readily favor 

competing venues if they deem fee 

levels at a particular venue to be 

excessive, or rebate opportunities 

available at other venues to be more 

favorable. In such an environment, the 

Exchange must continually adjust its 

credits and fees to remain competitive 

with other exchanges and with 

alternative trading systems that have 

been exempted from compliance with 

the statutory standards applicable to 

exchanges. Because competitors are free 

to modify their own credits and fees in 

response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

believes that the degree to which credit 

or fee changes in this market may 

impose any burden on competition is 

extremely limited. 

The proposed amended credits are 

reflective of this competition because, 

even as one of the largest U.S. equities 

exchanges by volume, the Exchange has 

less than 20% market share, which in 

most markets could hardly be 

categorized as having enough market 

power to burden competition. Moreover, 

as noted above, price competition 

between exchanges is fierce, with 

liquidity and market share moving 

freely between exchanges in reaction to 

fee and credit changes. This is in 

addition to free flow of order flow to 

and among off-exchange venues which 

comprises upwards of 44% of industry 

volume. 

The Exchange’s proposals to amend 

three of its transaction credits are procompetitive in that the Exchange 

intends for them to increase liquidity on 

the Exchange, thereby rendering the 

Exchange a more attractive and vibrant 

venue to market participants. 

Meanwhile, the Exchange’s proposal to 

lower the credit it offers to members 

that use SCAR and execute orders on BX 

is pro-competitive in that the proposal 

will result in better competitive 

alignment between the SCAR credit and 

the amounts of liquidity removal credits 

that BX provides to its own members 

that remove liquidity from that 

exchange. 

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 members or 

competing order execution venues 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.17

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2021–043 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–2021–043. 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, 


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18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Trust was formed as a Delaware statutory 

trust on March 17, 2021 and is operated as a grantor 

trust for U.S. federal tax purposes. The Trust has 

no fixed termination date. 

4The Commission approved BZX Rule 14.11(e)(4) 

in Securities Exchange Act Release No. 65225 

(August 30, 2011), 76 FR 55148 (September 6, 2011) 

(SR–BATS–2011–018). 

5All statements and representations made in this 

filing regarding (a) the description of the portfolio, 

(b) limitations on portfolio holdings or reference 

assets, or (c) the applicability of Exchange rules and 

surveillance procedures shall constitute continued 

listing requirements for listing the Shares on the 

Exchange. 

6See draft Registration Statement on Form S–1, 

dated March 24, 2021 submitted to the Commission 

by the Sponsor on behalf of the Trust. The 

descriptions of the Trust, the Shares, and the Index 

(as defined below) contained herein are based, in 

part, on information in the Registration Statement. 

The Registration Statement is not yet effective and 

the Shares will not trade on the Exchange until 

such time that the Registration Statement is 

effective. 

7For additional information about bitcoin and the 

Bitcoin Network, see https://bitcoin.org/en/gettingstarted; https://www.fidelitydigitalassets.com/ 

articles/addressing-bitcoin-criticisms; and https://

www.vaneck.com/education/investment-ideas/ 

investing-in-bitcoin-and-digital-assets/. 

8See Securities Exchange Act Release No. 83723 

(July 26, 2018), 83 FR 37579 (August 1, 2018). This 

proposal was subsequently disapproved by the 

Commission. See Securities Exchange Act Release 

No. 83723 (July 26, 2018), 83 FR 37579 (August 1, 

2018) (the ‘‘Winklevoss Order’’). 

9 Digital assets that are securities under U.S. law 

are referred to throughout this proposal as ‘‘digital 

asset securities.’’ All other digital assets, including 

bitcoin, are referred to interchangeably as 

‘‘cryptocurrencies’’ or ‘‘virtual currencies.’’ The 

term ‘‘digital assets’’ refers to all digital assets, 

including both digital asset securities and 

cryptocurrencies, together. 

10See ‘‘In the Matter of Coinflip, Inc.’’ 

(‘‘Coinflip’’) (CFTC Docket 15–29 (September 17, 

Continued 

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–2021–043 and 

should be submitted on or before June 

22, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–11405 Filed 5–28–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91994; File No. SR– 

CboeBZX–2021–039] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing of 

a Proposed Rule Change To List and 

Trade Shares of the Wise Origin 

Bitcoin Trust Under BZX Rule 

14.11(e)(4), Commodity-Based Trust 

Shares 

May 25, 2021. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on May 10, 

2021, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) 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 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 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) is filing with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

to list and trade shares of the Wise 

Origin Bitcoin Trust (the ‘‘Trust’’),3

under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

equities/regulation/rule_filings/bzx/), at 

the Exchange’s Office of the Secretary, 

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 list and 

trade the Shares under BZX Rule 

14.11(e)(4),4 which governs the listing 

and trading of Commodity-Based Trust 

Shares on the Exchange.5 FD Funds 

Management LLC is the sponsor of the 

Trust (‘‘Sponsor’’). The Shares will be 

registered with the Commission by 

means of the Trust’s registration 

statement on Form S–1 (the 

‘‘Registration Statement’’).6

Background 

Bitcoin is a digital asset based on the 

decentralized, open source protocol of 

the peer-to-peer computer network 

launched in 2009 that governs the 

creation, movement, and ownership of 

bitcoin and hosts the public ledger, or 

‘‘blockchain,’’ on which all bitcoin 

transactions are recorded (the ‘‘Bitcoin 

Network’’ or ‘‘Bitcoin’’). The 

decentralized nature of the Bitcoin 

Network allows parties to transact 

directly with one another based on 

cryptographic proof instead of relying 

on a trusted third party. The protocol 

also lays out the rate of issuance of new 

bitcoin within the Bitcoin Network, a 

rate that is reduced by half 

approximately every four years with an 

eventual hard cap of 21 million. It is 

generally understood that the 

combination of these two features—a 

systemic hard cap of 21 million bitcoin 

and the ability to transact trustlessly 

with anyone connected to the Bitcoin 

Network—gives bitcoin its value.7

The first rule filing proposing to list 

an exchange-traded product to provide 

exposure to bitcoin in the U.S. was 

submitted by the Exchange on June 30, 

2016.8 At that time, blockchain 

technology, and digital assets that 

utilized it, were relatively new to the 

broader public. The market cap of all 

bitcoin in existence at that time was 

approximately $10 billion. No registered 

offering of digital asset securities or 

shares in an investment vehicle with 

exposure to bitcoin or any other 

cryptocurrency had yet been conducted, 

and the regulated infrastructure for 

conducting a digital asset securities 

offering had not begun to develop.9

Similarly, regulated U.S. bitcoin futures 

contracts did not exist. The Commodity 

Futures Trading Commission (the 

‘‘CFTC’’) had determined that bitcoin is 

a commodity,10 but had not engaged in 


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