Document ID: SEC-2021-1734-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2021-12-13T05:00Z

[Federal Register Volume 86, Number 236 (Monday, December 13, 2021)]
[Notices]
[Pages 70872-70874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26858]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93728; File No. SR-NASDAQ-2021-095]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Pricing Schedule at Options 7, Section 1, General Provisions

December 7, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\

[[Page 70873]]

notice is hereby given that on December 1, 2021, The Nasdaq Stock 
Market LLC (``Nasdaq'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend The Nasdaq Options Market LLC's 
(``NOM'') Pricing Schedule at Options 7, Section 1, General Provisions.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated the amendments become operative on December 1, 
2021.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NOM proposes to amend its Pricing Schedule at Options 7, Section 1, 
General Provisions. Specifically, NOM proposes to amend the way an 
Exchange Participant indicates its participation in the Affiliated 
Entity Program. Specifically, the Exchange proposes to amend the 
description of ``Affiliated Entity'' within Options 7, Section 1, 
General Provisions. Currently, the term ``Affiliated Entity'' is 
described as,

a relationship between an Appointed MM and an Appointed OFP for 
purposes of aggregating eligible volume for pricing in Options 7, 
Sections 2(1) and 2(6) for which a volume threshold or volume 
percentage is required to qualify for higher rebates or lower fees. 
NOM Market Makers and OFPs are required to send an email to the 
Exchange to appoint their counterpart at least 3 business days prior 
to the last day of the month to qualify for the next month. The 
Exchange will acknowledge receipt of the emails and specify the date 
the Affiliated Entity is eligible for applicable pricing in Options 
7, Sections 2(1) and 2(6). Each Affiliated Entity relationship will 
commence on the 1st of a month and may not be terminated prior to 
the end of any month. An Affiliated Entity Relationship will 
terminate after a one (1) year period, unless either party 
terminates earlier in writing by sending an email to the Exchange at 
least 3 business days prior to the last day of the month to 
terminate for the next month. Affiliated Entity relationships must 
be renewed annually. Participants under Common Ownership may not 
qualify as a counterparty comprising an Affiliated Entity. Each 
Participant may qualify for only one (1) Affiliated Entity 
relationship at any given time.

    Today, Participants are required to annually renew their Affiliate 
Entity relationship at the end of one year if they desire to continue 
the relationship. The parties must both send an email to the Exchange 
to avoid termination of the relationship, provided the relationship was 
not terminated earlier in the year. The Exchange believes that this 
process is burdensome for Participants that desire to remain in the 
program. The consequence of not renewing is termination. The Exchange 
desires to remove the administrative burden associated with the 
requirement to annually renew and instead provide that the Affiliated 
Entity relationship will automatically renew each month, unless 
otherwise terminated. The proposed new rule text would provide,

    The term ``Affiliated Entity'' is a relationship between an 
Appointed MM and an Appointed OFP for purposes of aggregating 
eligible volume for pricing in Options 7, Sections 2(1) and 2(6) for 
which a volume threshold or volume percentage is required to qualify 
for higher rebates or lower fees. NOM Market Makers and OFPs are 
required to send an email to the Exchange to appoint their 
counterpart at least 3 business days prior to the last day of the 
month to qualify for the next month. The Exchange will acknowledge 
receipt of the emails and specify the date the Affiliated Entity is 
eligible for applicable pricing in Options 7, Sections 2(1) and 
2(6). Each Affiliated Entity relationship will commence on the 1st 
of a month and may not be terminated prior to the end of any month. 
An Affiliated Entity Relationship will automatically renew each 
month until or unless either party terminates earlier in writing by 
sending an email to the Exchange at least 3 business days prior to 
the last day of the month to terminate for the next month. 
Participants under Common Ownership may not qualify as a 
counterparty comprising an Affiliated Entity. Each Participant may 
qualify for only one (1) Affiliated Entity relationship at any given 
time.

    As is the case today, parties to the Affiliated Entity relationship 
may decide to terminate the relationship during any month by sending an 
email to the Exchange at least 3 business days prior to the last day of 
the month to terminate for the next month. Cboe Exchange, Inc. 
(``Cboe'') has a similar automatic renewal process for its Appointed 
OFP and Appointed Market-Maker Program.\4\ The Exchange believes that 
this amendment will streamline the workflow for Participants by not 
requiring Participants to renew each year to continue the affiliated 
relationship.
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    \4\ See Cboe's Fees Schedule at footnote 23 ``A Market-Maker may 
designate an Order Flow Provider (``OFP'') as its ``Appointed OFP'' 
and an OFP may designate a Market-Maker to be its ``Appointed 
Market-Maker'' for purposes of qualifying for credits under AVP. In 
order to effectuate the appointment, the parties would need to 
submit the Appointed Affiliate Form to the Exchange by 3:00 p.m. CST 
on the first business day of the month in order to be eligible to 
qualify for credits under AVP for that month. The Exchange will 
recognize only one such designation for each party once every 
calendar month, which designation will automatically renew each 
month until or unless the Exchange receives an email from either 
party indicating that the appointment has been terminated. A Market-
Maker that has both an Affiliate OFP and Appointed OFP will only 
qualify based upon the volume of its Appointed OFP. The volume of an 
OFP that has both an Affiliate Market-Maker and Appointed Market-
Maker will only count towards qualifying the Appointed Market-Maker. 
Volume executed in open outcry is not eligible to receive a credit 
under AVP.''
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\6\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among members and issuers and other persons using any facility, 
and is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange's proposal to amend the way Exchange Participants 
indicate their participation in the Affiliated Entity Program is 
reasonable. Today, Participants are required to annually renew their 
Affiliated Entity relationship at the end of one year if they desire to 
continue the relationship. The parties must both send an email to the 
Exchange to avoid termination of the relationship, provided the 
relationship was not terminated earlier in the year. The Exchange 
believes that this process is burdensome for Participants that desire 
to remain in the program. The consequence of not renewing is 
termination of their participation in the

[[Page 70874]]

program. The Exchange desires to remove the administrative burden 
associated with the requirement to annually renew and instead provide 
that the Affiliated Entity relationship will automatically renew each 
month, unless otherwise terminated. As is the case today, parties to 
the Affiliated Entity relationship may decide to terminate the 
relationship during any month by sending an email to the Exchange at 
least 3 business days prior to the last day of the month to terminate 
for the next month. Also, Cboe has a similar automatic renewal process 
for its Appointed OFP and Appointed Market-Maker Program.\7\ The 
Exchange believes that this amendment will streamline the workflow for 
Participants by not requiring Participants to renew each year to 
continue the affiliated relationship.
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    \7\ See Cboe's Fees Schedule at footnote 23 ``A Market-Maker may 
designate an Order Flow Provider (``OFP'') as its ``Appointed OFP'' 
and an OFP may designate a Market-Maker to be its ``Appointed 
Market-Maker'' for purposes of qualifying for credits under AVP. In 
order to effectuate the appointment, the parties would need to 
submit the Appointed Affiliate Form to the Exchange by 3:00 p.m. CST 
on the first business day of the month in order to be eligible to 
qualify for credits under AVP for that month. The Exchange will 
recognize only one such designation for each party once every 
calendar month, which designation will automatically renew each 
month until or unless the Exchange receives an email from either 
party indicating that the appointment has been terminated. A Market-
Maker that has both an Affiliate OFP and Appointed OFP will only 
qualify based upon the volume of its Appointed OFP. The volume of an 
OFP that has both an Affiliate Market-Maker and Appointed Market-
Maker will only count towards qualifying the Appointed Market-Maker. 
Volume executed in open outcry is not eligible to receive a credit 
under AVP.''
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    The Exchange's proposal to amend the way Exchange Participants 
indicate their participation in the Affiliated Entity Program is 
equitable and not unfairly discriminatory. Today, any Participant may 
participate in the Affiliated Entity Program. The proposed changes 
would impact all Participants that voluntarily elect to participate in 
the Affiliated Entity Program in a uniform manner.

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.
Inter-Market Competition
    The proposal does not impose an undue burden on inter-market 
competition. Cboe has a similar automatic renewal process for its 
Appointed OFP and Appointed Market-Maker Program \8\ as proposed herein 
for the Affiliated Entity Program.
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    \8\ Id.
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Intra-Market Competition
    The Exchange's proposal to amend the way Exchange Participants 
indicate their participation in the Affiliated Entity Program does not 
impose an undue burden on competition. Today, any Participant may 
participate in an Affiliated Entity relationship. The proposed changes 
would impact all Participants that voluntarily elect to participate in 
the Affiliated Entity Program in a uniform manner.

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.\9\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    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 [email protected]. Please include 
File Number SR-NASDAQ-2021-095 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-2021-095. 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-2021-095, and should be submitted 
on or before January 3, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-26858 Filed 12-10-21; 8:45 am]
BILLING CODE 8011-01-P