Notice2022-28297
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Section 2 Concerning the NOM Pricing Schedule
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 29, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 249 (Thursday, December 29, 2022)</title>
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[Federal Register Volume 87, Number 249 (Thursday, December 29, 2022)]
[Notices]
[Pages 80225-80228]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-28297]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96567; File No. SR-NASDAQ-2022-078]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Options 7, Section 2 Concerning the NOM Pricing Schedule
December 22, 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 14, 2022, 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 and
II, 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 amend The Nasdaq Options Market LLC
(``NOM'') Pricing Schedule at Options 7, Section 2.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules">https://listingcenter.nasdaq.com/rulebook/nasdaq/rules</a>, 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 Exchange proposes to amend NOM's Pricing Schedule at Options 7,
Section 2(1), ``Nasdaq Options Market--Fees and Rebates.'' Today, NOM
Options 7, Section 2(1) provides for various fees and rebates
applicable to NOM Participants.
Customer \3\ and Professional \4\ Rebates to Add Liquidity in Penny
Symbols are paid per the highest tier achieved among the 6 available
tiers. To determine the applicable percentage of total industry
customer equity and ETF option average daily volume, unless otherwise
stated, the Exchange considers the Participant's Penny and Non-Penny
Symbol Customer and/or Professional volume that adds liquidity. Below
is the criteria for each Rebate to Add Liquidity in Penny Symbol tier.
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\3\ The term ``Customer'' or (``C'') applies to any transaction
that is identified by a Participant for clearing in the Customer
range at The Options Clearing Corporation (``OCC'') which is not for
the account of broker or dealer or for the account of a
``Professional'' (as that term is defined in Options 1, Section
1(a)(47)). See Options 7, Section 1(a).
\4\ The term ``Professional'' or (``P'') means any person or
entity that (i) is not a broker or dealer in securities, and (ii)
places more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s) pursuant
to Options 1, Section 1(a)(47). All Professional orders shall be
appropriately marked by Participants. See Options 7, Section 1(a).
Monthly Volume
------------------------------------------------------------------------
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Tier 1..................... Participant adds Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols of up to 0.10% of total
industry customer equity and ETF option
average daily volume (``ADV'') contracts
per day in a month.
Tier 2..................... Participant adds Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols above 0.10% to 0.20% of
total industry customer equity and ETF
option ADV contracts per day in a month.
Tier 3..................... Participant: (a) adds Customer,
Professional, Firm, Non-NOM Market Maker
and/or Broker-Dealer liquidity in Penny
Symbols and/or Non-Penny Symbols above
0.20% to 0.30% of total industry customer
equity and ETF option ADV contracts per
day in a month; or (b) adds Customer and/
or Professional liquidity in Penny Symbols
and/or Non-Penny Symbols of 0.05% to less
than 0.10% of total industry customer
equity and ETF option ADV contracts per
day in a month and qualifies for MARS.
Tier 4..................... Participant adds Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols above 0.30% to 0.40% of
total industry customer equity and ETF
option ADV contracts per day in a month.
Tier 5..................... Participant adds Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols above 0.40% to 0.80% of
total industry customer equity and ETF
option ADV contracts per day in a month.
[[Page 80226]]
Tier 6..................... Participant adds Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols above 0.70% or more of
total industry customer equity and ETF
option ADV contracts per day in a month,
or Participant: (1) adds Customer and/or
Professional liquidity in Penny Symbols
and/or Non-Penny Symbols of 0.10% or more
of total industry customer equity and ETF
option ADV contracts per day in a month,
and (2) has added liquidity in all
securities through one or more of its
Nasdaq Market Center MPIDs that represent
1.00% or more of Consolidated Volume in a
month or qualifies for MARS (defined
below).
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The Exchange proposes to amend the current Customer and
Professional Rebates to Add Liquidity in Penny Symbols to amend Tiers
2-5 to remove the range of total industry customer equity and ETF
option ADV contracts that must be met and, instead, simply note what
percentage of total industry customer equity and ETF option ADV
contracts a Participant needs to exceed. The Exchange is not amending
the qualifications for any of the Customer and Professional Rebates to
Add Liquidity in Penny Symbols tiers, rather the Exchange proposes to
streamline the qualifications as the Customer and Professional Rebate
to Add Liquidity in Penny Symbols are paid per the highest tier
achieved.
For example, Customer and Professional Rebate to Add Liquidity in
Penny Symbols Tier 2 provides that a ``Participant adds Customer,
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity
in Penny Symbols and/or Non-Penny Symbols above 0.10% to 0.20% of total
industry customer equity and ETF option ADV contracts per day in a
month.'' The Exchange would amend Customer and Professional Rebate to
Add Liquidity in Penny Symbols Tier 2 to instead provide, ``Participant
adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Symbols and/or Non-Penny Symbols above 0.10%
of total industry customer equity and ETF option ADV contracts per day
in a month.'' This amendment does not change the criteria, rather it
simply provides a floor that must be exceeded.\5\ The Exchange believes
that this change will make the tier qualifications easier to understand
and review. Similar changes would be made to Customer and Professional
Rebate to Add Liquidity in Penny Symbols Tiers 3-5.
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\5\ Currently, Participants that add Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.20% to 0.30% of total
industry customer equity and ETF option ADV contracts per day in a
month qualify for a Tier 3 Customer and Professional Rebate to Add
Liquidity in Penny Symbols rebate and would be paid the higher
rebate.
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Customer and Professional Rebate to Add Liquidity in Penny Symbols
Tier 3 currently states, ``Participant: (a) adds Customer,
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity
in Penny Symbols and/or Non-Penny Symbols above 0.20% to 0.30% of total
industry customer equity and ETF option ADV contracts per day in a
month; or (b) adds Customer and/or Professional liquidity in Penny
Symbols and/or Non-Penny Symbols of 0.05% to less than 0.10% of total
industry customer equity and ETF option ADV contracts per day in a
month and qualifies for MARS.'' With the proposed change, Customer and
Professional Rebate to Add Liquidity in Penny Symbols Tier 3 instead
would provide, ``Participant: (a) adds Customer, Professional, Firm,
Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols
and/or Non-Penny Symbols above 0.20% of total industry customer equity
and ETF option ADV contracts per day in a month; or (b) adds Customer
and/or Professional liquidity in Penny Symbols and/or Non-Penny Symbols
above 0.05% of total industry customer equity and ETF option ADV
contracts per day in a month and qualifies for MARS.'' \6\
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\6\ Currently, Participants that add Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.30% to 0.40% of total
industry customer equity and ETF option ADV contracts per day in a
month qualify for a Tier 4 Customer and Professional Rebate to Add
Liquidity in Penny Symbols rebate and would be paid the higher
rebate. Also, currently, Participants that add Customer and/or
Professional liquidity in Penny Symbols and/or Non-Penny Symbols of
0.10% or more of total industry customer equity and ETF option ADV
contracts per day in a month qualify for a Tier 6 Customer and
Professional Rebate to Add Liquidity in Penny Symbols rebate and
would be paid the higher rebate provided in this case the
Participant also added liquidity in all securities through one or
more of its Nasdaq Market Center MPIDs that represent 1.00% or more
of Consolidated Volume in a month or qualifies for MARS.
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Customer and Professional Rebate to Add Liquidity in Penny Symbols
Tier 4 currently states, ``Participant adds Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.30% to 0.40% of total industry
customer equity and ETF option ADV contracts per day in a month.'' With
the proposed change, Customer and Professional Rebate to Add Liquidity
in Penny Symbols Tier 4 instead would provide, ``Participant adds
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Symbols and/or Non-Penny Symbols above 0.30% of
total industry customer equity and ETF option ADV contracts per day in
a month.'' \7\
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\7\ Currently, Participants that add Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.40% to 0.80% of total
industry customer equity and ETF option ADV contracts per day in a
month qualify for a Tier 5 Customer and Professional Rebate to Add
Liquidity in Penny Symbols rebate and would be paid the higher
rebate.
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Customer and Professional Rebate to Add Liquidity in Penny Symbols
Tier 5 currently states, ``Participant adds Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.40% to 0.80% of total industry
customer equity and ETF option ADV contracts per day in a month.'' With
the proposed change, Customer and Professional Rebate to Add Liquidity
in Penny Symbols Tier 5 instead would provide, ``Participant adds
Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer
liquidity in Penny Symbols and/or Non-Penny Symbols above 0.40% of
total industry customer equity and ETF option ADV contracts per day in
a month.'' \8\
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\8\ Currently, Participants that add Customer, Professional,
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.70% or more of total
industry customer equity and ETF option ADV contracts per day in a
month qualify for a Tier 6 Customer and Professional Rebate to Add
Liquidity in Penny Symbols rebate and would be paid the higher
rebate.
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The Exchange proposes similar changes to the NOM Market Maker \9\
Rebate to Add Liquidity in Penny Symbol tiers. There are currently 6
NOM Market Maker Rebate to Add Liquidity in Penny Symbol tiers. The NOM
Market Maker Rebates to Add Liquidity in Penny Symbols are paid per
[[Page 80227]]
the highest tier achieved.\10\ The Exchange proposes to amend Tiers 2
and 3 in a similar fashion to reflect only the floor where a range is
provided.
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\9\ The term ``NOM Market Maker'' or (``M'') is a Participant
that has registered as a Market Maker on NOM pursuant to Options 2,
Section 1, and must also remain in good standing pursuant to Options
2, Section 9. In order to receive NOM Market Maker pricing in all
securities, the Participant must be registered as a NOM Market Maker
in at least one security. See Options 7, Section 1(a).
\10\ The Exchange also proposes to make plural the word
``Rebates'' within note 3 of Options 7, Section 2(1).
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NOM Market Maker Rebate to Add Liquidity in Penny Symbols Tier 2
currently states, ``Participant adds NOM Market Maker liquidity in
Penny Symbols and/or Non-Penny Symbols above 0.10% to 0.20% of total
industry customer equity and ETF option ADV contracts per day in a
month.'' With the proposed change, Market Maker Rebate to Add Liquidity
in Penny Symbols Tier 2 instead would provide, ``Participant adds NOM
Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above
0.10% of total industry customer equity and ETF option ADV contracts
per day in a month.'' \11\
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\11\ Currently, Participants that add NOM Market Maker liquidity
in Penny Symbols and/or Non-Penny Symbols above 0.20% to 0.60% of
total industry customer equity and ETF option ADV contracts per day
in a month qualify for a Tier 3 NOM Market Maker rebate and would be
paid the higher rebate.
NOM Market Maker Rebate to Add Liquidity in Penny Symbols Tier 3
currently states,
Participant: (a) adds NOM Market Maker liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.20% to 0.60% of total
industry customer equity and ETF option ADV contracts per day in a
month; or (b)(1) adds NOM Market Maker liquidity in Penny Symbols
and/or Non-Penny Symbols above 0.07% to 0.20% of total industry
customer equity and ETF option ADV contracts per day in a month, (2)
transacts in all securities through one or more of its Nasdaq Market
Center MPIDs that represent (i) 0.70% or more of Consolidated Volume
(``CV'') which adds liquidity in the same month on The Nasdaq Stock
Market or (ii) 70 million shares or more ADV which adds liquidity in
the same month on The Nasdaq Stock Market, (3) transacts in Tape B
securities through one or more of its Nasdaq Market Center MPIDs
that represent 0.10% or more of CV which adds liquidity in the same
month on The Nasdaq Stock Market, and (4) executes greater than
0.01% of CV via Market-on- Close/Limit-on-Close (``MOC/LOC'') volume
within The Nasdaq Stock Market Closing Cross in the same month
With the proposed change, the introductory part of NOM Market Maker
Rebate to Add Liquidity in Penny Symbols Tier 3 instead would provide,
``Participant: (a) adds NOM Market Maker liquidity in Penny Symbols
and/or Non-Penny Symbols above 0.20% of total industry customer equity
and ETF option ADV contracts per day in a month; or (b)(1) adds NOM
Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above
0.07% of total industry customer equity and ETF option ADV contracts
per day in a month . . .''.\12\
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\12\ Currently, Participants that Participants that add NOM
Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols of
above 0.60% of total industry customer equity and ETF option ADV
contracts per day in a month qualify for a Tier 4 NOM Market Maker
rebate and would be paid the higher rebate. Participants would
qualify for a Tier 3 NOM Market Maker rebate if they added NOM
Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols
above 0.20% to 0.60% of total industry customer equity and ETF
option ADV contracts per day in a month.
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The Exchange believes that the proposed amendments will further
clarify the qualifications for the NOM Market Maker Rebate to Add
Liquidity in Penny Symbols.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\13\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\14\ in particular, in that it is designed to
promote just and equitable principles of trade, 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 proposed changes to NOM Options 7, Section 2(1) are not
substantive amendments to the current pricing structure for NOM, rather
these changes streamline the qualifications for the Customer and
Professional Rebate to Add Liquidity in Penny Symbols as well as the
NOM Market Maker Rebate to Add Liquidity in Penny Symbols which are
paid per the highest tier achieved. These amendments do not change the
criteria, rather they simply provide a floor that must be exceeded to
obtain the rebates. The Exchange believes that these amendments will
make the tier qualifications easier to understand.
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\13\ 15 U.S.C. 78f(b)
\14\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
The proposed changes to NOM Options 7, Section 2(1) are not
substantive amendments to the current pricing structure for NOM, rather
these changes streamline the qualifications for the Customer and
Professional Rebate to Add Liquidity in Penny Symbols as well as the
NOM Market Maker Rebate to Add Liquidity in Penny Symbols which are
paid per the highest tier achieved. These amendments do not change the
criteria, rather they simply provide a floor that must be exceeded to
obtain the rebates. The Exchange believes that these amendments will
make the tier qualifications easier to understand.
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
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \15\ and
subparagraph (f)(6) of Rule 19b-4 \16\ thereunder.
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\15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative prior to 30 days after the date of the
filing. Rule 19b-4(f)(6)(iii), however, permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the operative delay so that the
proposed rule change may become operative immediately upon filing. The
Exchange states that this proposed rule change could immediately
benefit market participants by making more clear the qualifications for
achieving rebates on NOM by removing superfluous rule text. The
Commission thus believes that waiver of the operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission hereby waives the operative delay and
designates the proposal operative upon filing.\18\
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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
[[Page 80228]]
it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#295b5c454c044a4644444c475d5a695a4c4a074e465f"><span class="__cf_email__" data-cfemail="90e2e5fcf5bdf3fffdfdf5fee4e3d0e3f5f3bef7ffe6">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2022-078 on the subject line.
Paper Comments
<bullet> 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-2022-078. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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-2022-078 and
should be submitted on or before January 19, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-28297 Filed 12-28-22; 8:45 am]
BILLING CODE 8011-01-P
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