Document ID: SEC-2022-0058-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market LLC
Posted Date: 2022-01-18T05:00Z

[Federal Register Volume 87, Number 11 (Tuesday, January 18, 2022)]
[Notices]
[Pages 2643-2647]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-00752]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93950; File No. SR-NASDAQ-2021-107]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Certain Exchange Traded Product Listing Fees

January 11, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 30, 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\ 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 modify certain exchange traded product 
listing fees. While changes proposed herein are effective upon filing, 
the Exchange has designated the proposed amendments to be operative on 
January 1, 2022.
    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

[[Page 2644]]

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 modify certain of the 
Exchange's listing fees for exchange traded products (``ETPs'') covered 
by Listing Rules 5930 and 5940, as well as to modify the Preamble to 
Company Listing Fees in Listing Rule 5901.
    Currently, Listing Rule 5930 addresses listing fees for Linked 
Securities, SEEDS, and Other Securities. The proposed rule change 
relocates the references to the fees for Linked Securities from Listing 
Rule 5930 (Linked Securities, SEEDS, and Other Securities) to Listing 
Rule 5940 (Exchange Traded Products) such that Linked Securities will 
no longer be subject to the fees in Listing Rule 5930 and will instead 
be subject to the fees in Listing Rule 5940. The modified fees for 
Linked Securities will mirror the fees for many of the ETPs that are 
covered by Listing Rule 5940, which are detailed herein. For 
consistency and clarification, all references to Linked Securities and 
related Rule 5710 cites are also being deleted from the Preamble to 
Company Listing Fees in Listing Rule 5901. Also, a clarification is 
being made in the Preamble of changing the term ``Exchange Listed 
Products'' to ``Exchange Traded Products'' for consistency and 
clarification. Additionally, a typographical error in the heading of 
Listing Rule 5930(b) is proposed to be corrected by changing 
``Lisitng'' to ``Listing'' for clarification.
    The introduction to Listing Rule 5940 is being expanded for the 
sake of clarification to say that the securities covered by this rule 
includes not only Portfolio Depository Receipts, Index Fund Shares, 
Managed Fund Shares, and NextShares, but also includes Exchange Traded 
Fund Shares, Commodity-Based Trust Shares, Currency Trust Shares, 
Commodity Index Trust Shares, Commodity Futures Trust Shares, 
Partnership Units, Trust Units, Managed Trust Shares \3\ and Linked 
Securities.\4\
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    \3\ Exchange Traded Fund Shares, Commodity-Based Trust Shares, 
Currency Trust Shares, Commodity Index Trust Shares, Commodity 
Futures Trust Shares, Partnership Units, Trust Units, and Managed 
Trust Shares are already subject to the fees in Listing Rule 
5940(a)(1) and this change is simply being made to increase the 
clarity of the rule.
    \4\ Per existing Listing Rule 5940 the fees in Listing Rule 5940 
will also apply to securities listed under the Rule 5700 Series 
where no other fee schedule is specifically applicable and that 
provision of the rule is not being modified.
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    The Entry Fee under Listing Rule 5940(a)(1) is being modified to 
include all of the securities listed above,\5\ with the exception of 
NextShares (which are subject to the Entry Fee in Listing Rule 
5940(a)(2)) and to eliminate the listing fee of $5,000, which currently 
includes a $1,000 non-refundable application fee. Both the elimination 
of the listing and application fees reflect that the market for listing 
ETPs is extremely competitive and ETPs may freely choose alternative 
listing venues. The Exchange has determined that these proposed fee 
changes, coupled with the fee changes discussed below, will positively 
impact the competition in the ETP listing space.
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    \5\ This includes securities listed under the Rule 5700 Series 
where no other fee schedule is specifically applicable.
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    The All-Inclusive Annual Listing Fee under Listing Rule 5940(b) is 
being modified. First, the list of securities in Listing Rule 
5940(b)(1) will be expanded to not only include, in addition to any 
other security under the Rule 5700 Series where no other fee schedule 
is specifically applicable listed on The Nasdaq Global Market, 
Portfolio Depository Receipts, Index Fund Shares, and Managed Fund 
Shares, but also Exchange Traded Fund Shares, Commodity-Based Trust 
Shares, Currency Trust Shares, Commodity Index Trust Shares, Commodity 
Futures Trust Shares, Partnership Units, Trust Units, Managed Trust 
Shares \6\ and Linked Securities.
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    \6\ Exchange Traded Fund Shares, Commodity-Based Trust Shares, 
Currency Trust Shares, Commodity Index Trust Shares, Commodity 
Futures Trust Shares, Partnership Units, Trust Units, and Managed 
Trust Shares are already subject to the fees in Listing Rule 
5940(b)(1) and this change is simply being made to increase the 
clarity of the rule.
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    Second, the current fee schedule that is calculated on total shares 
outstanding that ranges from up to 1 million shares to 250+ million 
shares with fees that range from $6,000 to $50,000 is being replaced by 
a single fee of $4,000 per product.\7\ Nasdaq is simplifying the fee 
structure (and related rule language) of the All-Inclusive Annual 
Listing Fee under Listing Rule 5940(b) to create a single fee that the 
Exchange believes is more reasonable and equitable because the proposed 
per product fee structure will be the same for all products regardless 
of the product's total shares outstanding. Assessing the fee on a per 
product basis rather than on total shares outstanding, the Exchange 
believes more accurately reflects the level of support required. The 
level of support the Exchange provides does not increase significantly 
as the ETP's shares outstanding grows. It is more closely correlated to 
the number of ETPs listed and thus warrants a separate fee per product. 
This means that an issuer with more ETPs listed on Nasdaq will have a 
higher total annual listing fee under the proposed changes than an 
issuer with fewer ETPs listed on Nasdaq even if the issuer with fewer 
ETPs has more total shares outstanding.
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    \7\ For the avoidance of doubt, in this filing $4,000 per 
product means $4,000 for each symbol listed on the Exchange.
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    Listing Rule 5940(b)(3) is being eliminated because the new fee 
structure of Listing Rule 5940(b) renders it irrelevant.
    Listing Rule 5940(b)(5) is being renumbered as Listing Rule 
5940(b)(8) and will otherwise remain unchanged and still say that 
except as otherwise set forth in Rule 5940(b), the All-Inclusive Annual 
Listing Fee described will be assessed as described in Rule 5910(b)(3). 
Proposed Listing Rule 5940(b)(5) says that in the first calendar year 
of listing, a product's All-Inclusive Annual Listing Fee will be 
prorated based on the number of months listed. Proposed Listing Rule 
5940(b)(5) and Rule 5910(b)(3)(A), both say that in the first calendar 
year of listing, a product's or Company's All-Inclusive Annual Listing 
Fee, respectively, will be prorated based on the number of months 
listed. The difference, as discussed above, is that proposed Listing 
Rule 5940(b)(5) will look to prorate the single fee of $4,000 per 
product while current Rule 5910(b)(3)(A) is based on the total shares 
outstanding as of the date of the Company's listing. This proposed 
change is made for clarity and consistency with the All-Inclusive 
Annual Listing Fee change described above.
    Proposed Listing Rule 5940(b)(6) is being added to modify how 
listing ETP transfers from another national securities exchange to 
Nasdaq will be handled regarding the All-Inclusive Annual Listing Fee. 
Current Listing Rule 5940(b)(5) says that except as otherwise set forth 
in Rule 5940(b), the All-Inclusive Annual Listing Fee described will be 
assessed as described in Rule 5910(b)(3). Proposed Listing Rule 
5940(b)(6) says that for the year in which a product listing transfers 
to

[[Page 2645]]

Nasdaq, as well as for the first full calendar year of its listing, a 
product will not be charged the All-Inclusive Annual Listing Fee. 
Currently, for the year in which a Company transfers its listing to 
Nasdaq, it will not be charged the All-Inclusive Annual Listing Fee.\8\ 
Nasdaq believes that modifying the fee waiver to extend the first full 
calendar year following a product's listing will further incentivize 
issuers to transfer ETPs to Nasdaq and, thereby, promote greater 
competition among ETP listing exchanges, which will be to the benefit 
of issuers, ETPs, and ETP investors.
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    \8\ See IM-5900-4.
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    Proposed Listing Rule 5940(b)(7) is being added to say that 
liquidations will be refunded a portion of the All-Inclusive Annual 
Listing Fee on a prorated basis based on the number of months listed 
during the calendar year of liquidation. Currently Nasdaq does not 
provide for such liquidation refunds. The Exchange is proposing this 
change as another way to make its fee schedule more competitive with 
the other exchanges, who also provide for refunds on a prorated 
basis.\9\
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    \9\ See e.g., NYSE Arca Equities: Listing Fees as of June 30, 
2021, footnote 8 (``The Annual Fees applicable to Exchange Traded 
Products that have liquidated and as a result are delisted from the 
Exchange will be prorated for the portion of the calendar year that 
such issue was listed on the Exchange, based on days listed that 
calendar year, and refunded.''). https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Listing_Fee_Schedule.pdf.
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    As described below, Nasdaq proposes to make the aforementioned fee 
changes to better reflect the Exchange's costs related to listing ETPs 
and would promote competition for ETP listings.
    While these changes are effective upon filing, Nasdaq has 
designated the proposed amendments to be operative on January 1, 2022.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5).
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    Nasdaq believes that it is not unfairly discriminatory and 
represents an equitable allocation of reasonable fees to amend Listing 
Rules 5901, 5930 and 5940 to modify the listing fees for Linked 
Securities, to eliminate the Entry and Application Fees for certain 
ETPs, as well as to modify the All-Inclusive Annual Listing Fee for 
certain ETPs.
    Specifically, the Exchange believes that modifying the fees and 
relocating references to Linked Securities from Listing Rule 5930 to 
Listing Rule 5940 is not unfairly discriminatory and represents an 
equitable allocation of reasonable fees since it aligns the fees for 
Linked Securities with the proposed fees for a broad range of ETPs 
discussed above, which the Exchange believes are more similar to Linked 
Securities than its existing location within Listing Rule 5930 that 
includes SEEDS and Other Securities. This also includes the proposed 
changes to the Preamble to Company Listing Fees in Listing Rule 5901 
and references to Linked Securities and related Rule 5710 cites 
throughout Listing Rule 5930, as well as a clarification being made in 
the Preamble of changing the term ``Exchange Listed Products'' to 
``Exchange Traded Products'' for consistency and clarification and to 
the benefit of market participants. Additionally, a typographical error 
in the heading of Listing Rule 5930(b) is proposed to be corrected by 
changing ``Lisitng'' to ``Listing'' for clarification and to the 
benefit of market participants.
    Nasdaq believes that it is not unfairly discriminatory and 
represents an equitable allocation of reasonable fees to amend Listing 
Rule 5940 to eliminate the Entry and Application Fees for the specified 
ETPs, as well as to modify the All-Inclusive Annual Listing Fee for the 
specified ETPs. Nasdaq believes these changes promote competition for 
the listing of ETPs. Additionally, Nasdaq also believes these changes 
are not unfairly discriminatory and represent an equitable allocation 
of reasonable fees because following the adoption of SEC Rule 6c-11 
\12\ the majority of ETPs are now listed under the generic listing 
standards of Nasdaq Rule 5704 (Exchange Traded Fund Shares) and thus no 
longer require as much in the way of both legal and business resources 
during the initial application process. Moreover, the Exchange believes 
that the proposed $4,000 flat fee per product rather than the current 
fee based on the total shares outstanding, more accurately reflects and 
is more closely correlated to the level of Exchange support required, 
and that the level of support Nasdaq provides does not increase 
significantly as the ETP's shares outstanding grows. This means that an 
issuer with more ETPs listed on Nasdaq will have a higher total annual 
listing fee under the proposed changes than an issuer with fewer ETPs 
listed on Nasdaq even if the issuer with fewer ETPs has more total 
shares outstanding.
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    \12\ See 17 CFR 270.6c-11.
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    Specifically, the Exchange believes that amending the All-Inclusive 
Annual Listing Fee under Listing Rule 5940(b)(1) (and related rule 
language) from the current fee schedule that is calculated on total 
shares outstanding that ranges from up to 1 million shares to 250+ 
million shares with fees that range from $6,000 to $50,000 to being 
replaced by a single fee of $4,000 per product is not unfairly 
discriminatory and represents an equitable allocation of reasonable 
fees because it simplifies the fee schedule and promotes greater 
competition with the other exchange listing venues. Also, a single fee 
per product creates a fee schedule that is more reasonable and 
equitable for products and issuers of all sizes for these ETPs with 
issuers gaining certainty as the number of their ETPs grow. The total 
annual listing fee for an issuer increases as the number of ETPs that 
an issuer has on Nasdaq grows, and the necessary support for the 
additional listings increases as well. In accordance with these 
proposed changes, Listing Rule 5940(b)(3) will be eliminated because 
the new fee structure of the rule renders it irrelevant and 
unnecessary, and its elimination will be to the benefit of market 
participants.
    The Exchange also believes it is not unfairly discriminatory and 
represents an equitable allocation of reasonable fees to amend the 
introduction to Listing Rule 5940 to say that the securities covered by 
this rule includes not only Portfolio Depository Receipts, Index Fund 
Shares, Managed Fund Shares, and NextShares, but also includes Exchange 
Traded Fund Shares, Commodity-Based Trust Shares, Currency Trust 
Shares, Commodity Index Trust Shares, Commodity Futures Trust Shares, 
Partnership Units, Trust Units and Managed Trust Shares \13\ because it 
clarifies that these additional ETPs are already subject to the fees in 
this rule and that this change is simply being made to increase the 
clarity of the rule.
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    \13\ See supra note 4.
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    Additionally, Nasdaq believes it is not unfairly discriminatory and 
represents an equitable allocation of reasonable fees to amend Listing 
Rule 5940(a)(1) and (b)(1) to include Exchange Traded Fund Shares, 
Commodity-Based Trust Shares, Currency Trust Shares, Commodity Index 
Trust Shares, Commodity Futures Trust Shares, Partnership Units, Trust 
Units, and Managed Trust Shares because it clarifies that these 
additional ETPs are

[[Page 2646]]

already subject to the fees in Listing Rule 5940(a)(1) and (b)(1) and 
that this change is simply being made to increase the clarity of the 
rule.
    The Exchange also believes it is not unfairly discriminatory and 
represents an equitable allocation of reasonable fees to add proposed 
Listing Rule 5940(b)(5) to clarify that in the first calendar year of 
listing, a product's All-Inclusive Annual Listing Fee will be prorated 
based on the number of months listed. Current Listing Rule 5940(b)(5) 
says that except as otherwise set forth in Rule 5940(b), the All-
Inclusive Annual Listing Fee described will be assessed as described in 
Rule 5910(b)(3)--specifically it is covered by Rule 5910(b)(3)(A). 
Proposed Listing Rule 5940(b)(5) and Rule 5910(b)(3)(A) both say that 
in the first calendar year of listing, a product's or Company's All-
Inclusive Annual Listing Fee, respectively, will be prorated based on 
the number of months listed. The difference, as discussed above, is 
that proposed Listing Rule 5940(b)(5) will look to prorate the single 
fee of $4,000 per product while current Rule 5910(b)(3)(A) is based on 
the total shares outstanding as of the date of the Company's listing. 
As a result of the proposed changes, current Listing Rule 5940(b)(5) is 
being renumbered as Listing Rule 5940(b)(8).
    Nasdaq believes it is not unfairly discriminatory and represents an 
equitable allocation of reasonable fees to add proposed Listing Rule 
5940(b)(6) to modify how listing transfers from another national 
securities exchange to Nasdaq will be handled regarding the All-
Inclusive Annual Listing Fee. Currently, Listing Rule 5940(b)(5) says 
that except as otherwise set forth in Rule 5940(b), the All-Inclusive 
Annual Listing Fee described will be assessed as described in Rule 
5910(b)(3). Proposed Listing Rule 5940(b)(6) says that for the year in 
which a product listing transfers to Nasdaq, as well as for the first 
full calendar year of its listing, a product will not be charged the 
All-Inclusive Annual Listing Fee. Nasdaq believes this proposed rule 
change is not unfairly discriminatory and represents an equitable 
allocation of reasonable fees and will further incentivize issuers to 
transfer ETPs to Nasdaq and promote greater competition among the ETP 
listing exchanges, which will be to the benefit of issuers, ETPs, and 
ETP investors.
    Additionally, Nasdaq believes it is not unfairly discriminatory and 
represents an equitable allocation of reasonable fees to add proposed 
Listing Rule 5940(b)(7) to provide that liquidations will be refunded a 
portion of the All-Inclusive Annual Listing Fee on a prorated basis 
based on the number of months listed during the calendar year of 
liquidation. Currently the Exchange does not provide for such 
liquidation refunds. The Exchange is proposing this change as another 
way to make its fee schedule more competitive with the other exchanges, 
who also provide for refunds on a prorated basis.\14\
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    \14\ See supra footnote 9.
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    Finally, Nasdaq notes that it operates in a highly competitive 
market in which market participants can readily switch exchanges if 
they deem the listing fees excessive. In such an environment, Nasdaq 
must continually review its fees to assure that they remain 
competitive.

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, as amended. The market for 
listing ETPs is extremely competitive and ETPs may freely choose 
alternative listing venues. Nasdaq must continually review its fees to 
assure that they remain competitive. Also, a single $4,000 fee per 
product creates a fee schedule that is more reasonable and equitable 
for products and issuers of all sizes for these ETPs with issuers 
gaining certainty as to listing fees as the number of their ETPs grow. 
For these reasons, Nasdaq does not believe that the proposed rule 
change will result in any burden on competition for ETP listings.

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.\15\
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    \15\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2021-107 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-2021-107. 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-2021-107 and should be submitted 
on or before February 8, 2022.

[[Page 2647]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-00752 Filed 1-14-22; 8:45 am]
BILLING CODE 8011-01-P