Notice2025-09401
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 1, and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Introduce Functionality To Initiate a Trading Halt for Exchange-Traded Products on Launch Day
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
May 27, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 100 (Tuesday, May 27, 2025)</title>
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[Federal Register Volume 90, Number 100 (Tuesday, May 27, 2025)]
[Notices]
[Pages 22424-22431]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-09401]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103085; File No. SR-NASDAQ-2025-011]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Amendment No. 1, and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To
Introduce Functionality To Initiate a Trading Halt for Exchange-Traded
Products on Launch Day
May 20, 2025.
I. Introduction
On January 31, 2025, The Nasdaq Stock Market LLC (the ``Exchange''
or ``Nasdaq'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to introduce an optional functionality for
Exchange-Traded Products to initiate a trading halt on the launch day
of an Exchange-Traded Product, similar to the halt used in initial
public offerings (``IPOs''). The proposed rule change was published for
comment in the Federal Register on February 20, 2025.\3\ On March 6,
2025, pursuant to Section 19(b)(2) of the Exchange Act,\4\ the
Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ On May 6, 2025, the Exchange filed Amendment No. 1, which
amends and replaces the proposed rule change in its entirety.\6\ The
Commission has received no comments on the proposed rule change. The
Commission is publishing this notice to solicit comments on Amendment
No. 1 to the proposed rule change from interested persons, and is
approving the proposed rule change, as modified by Amendment No. 1, on
an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 102413 (February 13,
2025), 90 FR 10001.
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 102537, 90 FR 11866
(March 12, 2025). The Commission designated May 21, 2025, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
\6\ In Amendment No. 1, the Exchange added clarifying or
corrective changes that, among other things: (1) provides additional
background on how an ETP opens today and rationale on why the
Exchange is proposing the Initial ETP Open; (2) specifies that the
Exchange would only assign one DLP per ETP in the context of the
proposed Initial ETP Open; (3) deletes the Regulation M statement
relating to the DLP in proposed Rule 4120(c)(11)(A) because the
Exchange inadvertently included this statement when it does not
apply in the context of this proposal; (4) adds more granularity in
proposed Rule 4120(c)(11)(B)(i) about the DLP notifying the Exchange
that the ETP is ready to trade; (5) clarifies that price bands would
be set exchange-wide and not on a security-by-security basis; (6)
specifies the DLP's responsibilities in the proposed Initial ETP
Open; and (7) clarifies that the IPO Indicator will provide the same
information in the Order Imbalance Indicator under this proposal.
Amendment No. 1 to the proposed rule change is available on the
Commission's website at: <a href="https://www.sec.gov/comments/sr-nasdaq-2025-011/srnasdaq2025011.htm">https://www.sec.gov/comments/sr-nasdaq-2025-011/srnasdaq2025011.htm</a>.
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II. Exchange's Description of the Proposed Rule Change, as Modified by
Amendment No. 1
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Equity 1--Equity Definitions and
Equity 4--Equity Trading Rules to allow Exchange-Traded Products
(``ETPs'') \7\ to utilize an optional new halt on launch day
(hereinafter, the ``Initial ETP Open''), and resume trading using the
Nasdaq Halt Cross.\8\ As discussed in detail below, the proposed
Initial ETP Open is designed to operate similarly to Nasdaq's IPO
opening process for
[[Page 22425]]
corporate securities with specified differences to account for the
unique characteristics of ETPs. With this proposal, an ETP issuer
launching the ETP on the first day of trading would have the option to
open the security at the start of Pre-Market Hours \9\ at 4:00 a.m.
Eastern Time (``ET''), which is the case today, or delay the opening of
the security pursuant to the proposed Initial ETP Open process until
Market Hours.\10\
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\7\ As discussed later in this filing, the Exchange will add
``Exchange-Traded Products'' as a defined term in Equity 1, Section
1(a).
\8\ The ``Nasdaq Halt Cross'' is the process for determining the
price at which Eligible Interest shall be executed at the open of
trading for a halted security and for executing that Eligible
Interest. See Rule 4753(a)(4). ``Eligible Interest'' shall mean any
quotation or any order that has been entered into the system and
designated with a time-in-force that would allow the order to be in
force at the time of the Halt Cross. See Equity 4, Rule 4753(a)(5).
\9\ The term ``Pre-Market Hours'' means the period of time
beginning at 4:00 a.m. ET and ending immediately prior to the
commencement of Market Hours. See Equity 1, Section 1(a)(9).
\10\ The term ``Market Hours'' means the period of time
beginning at 9:30 a.m. ET and ending at 4:00 p.m. ET (or such
earlier time as may be designated by Nasdaq on a day when Nasdaq
closes early). See Equity 1, Section 1(a)(9).
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This functionality is intended to support efficient price discovery
by enabling ETP issuers to enter a halt on launch day, for a specified
time period, after which the ETP can be manually opened. This proposed
rule would enable ETP issuers to maximize the chances of more efficient
price discovery on launch day while also ensuring there are safeguards
for the opening price to protect investors against unexpected
volatility in the pricing of the ETP. As proposed, an ETP's initial
price would be determined based on market interest and, similar to
other auction processes, the matching of buy and sell orders in this
auction would be open to all market participants.
Background
Today, ETPs open for trading on Nasdaq at 4:00 a.m. ET at the start
of Pre-Market Hours where the ETP becomes available for buying and
selling during that time period. The ETP then participates in Nasdaq's
Opening Cross at 9:30 a.m. ET pursuant to Rule 4752. This is the case
for an ETP's initial day of trading as well as any other trading day
for the ETP. While the Exchange has not experienced issues with opening
ETPs at 4:00 a.m. ET, ETP issuers have indicated to the Exchange their
desire for a more high-touch launch day opening process for some ETPs,
similar to the Exchange's IPO opening process for corporate securities.
Similar to the existing IPO process for corporate securities, the
proposed process for ETPs would delay the opening of the security until
Market Hours, and the security would be released for trading pursuant
to the Halt Cross process in Rule 4753. The Exchange is not proposing
to use the Opening Cross under Rule 4752 to release the ETP for trading
in this instance because the Exchange is seeking to prevent trading in
the ETP on its first day under this proposal until at least 9:40 a.m.
ET, as described below, and then have the ETP enter the Halt Cross
process under Rule 4753 in order to be released for trading. In
contrast, the Opening Cross contemplates that there could be active
trading in a security prior to that auction process, as the Opening
Cross utilizes prevailing market bids and offers to establish
thresholds for establishing Nasdaq opening prices.\11\
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\11\ See Rule 4752(d). See also <a href="https://nasdaqtrader.com/content/productsservices/trading/crosses/openclose_faqs.pdf">https://nasdaqtrader.com/content/productsservices/trading/crosses/openclose_faqs.pdf</a>.
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Today, securities of companies listing on Nasdaq in an IPO are
halted pursuant to Equity 4, Rule 4120(a)(7) until such time as the
conditions in 4120(c)(8) are satisfied, and the Exchange releases the
IPO security for trading pursuant to the Nasdaq Halt Cross in Rule
4753.\12\ In the context of an IPO, the Nasdaq Halt Cross is also
referred to herein as the ``IPO Halt Cross.'' Prior to the cross
execution, market participants may enter quotes and orders eligible for
participation in the cross. Pursuant to Rule 4120(c)(8), prior to
terminating the IPO halt, the security enters a Display Only Period
during which indicative information about the potential outcome of the
Nasdaq Halt Cross is displayed to market participants every second via
the Order Imbalance Indicator,\13\ and during which market participants
may continue to enter orders and quotes in that security in Nasdaq
systems.\14\
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\12\ In general, Equity 4, Rule 4120(a) sets forth Nasdaq's
authority to initiate trading halts or pauses in the circumstances
specified thereunder. Equity 4, Rule 4120(c) then sets forth the
various procedures for initiating and terminating such trading
halts. Equity 4, Rule 4753 then sets forth procedures for the
resumption of trading following various trading halts enumerated in
Rule 4120(a). Specifically, Rule 4753(b) provides, in part, that for
Nasdaq-listed securities that are the subject of a trading halt
initiated pursuant to Rule 4120(a)(7) (i.e., the IPO halt), the
Nasdaq Halt Cross shall occur at the time specified by Nasdaq
pursuant to Rule 4120, and Market Hours trading would commence when
the Nasdaq Halt Cross concludes.
\13\ ``Order Imbalance Indicator'' means a message disseminated
by electronic means containing information about Eligible Interest
and the price at which such interest would execute at the time of
dissemination. The Order Imbalance Indicator shall disseminate the
following information: (A) Current Reference Price, (B) the number
of shares of Eligible Interest that are paired at the Current
Reference Price, (C) the size of any Imbalance or Market Order
Imbalance, as applicable, (D) the buy/sell direction of any
Imbalance or Market Order Imbalance, as applicable, and (E)
indicative prices at which the Nasdaq Halt Cross would occur if the
Nasdaq Halt Cross were to occur at that time. See Rule 4753(a)(3).
\14\ Equity 4, Rule 4753(b)(1) provides that at the beginning of
the Display Only Period and continuing through the resumption of
trading, Nasdaq would disseminate by electronic means an Order
Imbalance Indicator every second.
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Rule 4120(c)(8) further states that after the conclusion of the
Display Only Period, the IPO security enters a ``Pre-Launch Period'' of
indeterminate duration, during which indicative information continues
to be disseminated,\15\ and market participants are able to submit and
cancel orders as they are currently able to do so during the Display
Only Period. The Pre-Launch Period ends and the security is released
for trading by Nasdaq when the conditions described in paragraphs
(c)(8)(A)(i), (ii), and (iii) of Rule 4120 are all met:
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\15\ See Equity 4, Rule 4753(b)(1).
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<bullet> Nasdaq receives notice from the underwriter of the IPO
that the security is ready to trade. The Nasdaq system then calculates
the Current Reference Price \16\ at that time (the ``Expected Price'')
and displays it to the underwriter. If the underwriter then approves
proceeding, the Nasdaq system will conduct two validation checks.
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\16\ ``Current Reference Price'' means: (i) The single price at
which the maximum number of shares of Eligible Interest can be
paired. (ii) If more than one price exists under subparagraph (i),
the Current Reference Price shall mean the price that minimizes any
Imbalance. (iii) If more than one price exists under subparagraph
(ii), the Current Reference Price shall mean the entered price at
which shares will remain unexecuted in the cross. (iv) If more than
one price exists under subparagraph (iii), the Current Reference
Price shall mean: (a) In the case of an IPO, the price that is
closest to the Issuer's Initial Public Offering Price; (b) In the
case of the initial pricing of a security listing under Listing
Rules IM-5315-1, IM-5405-1, or IM-5505-1, for a security that has
had recent sustained trading in a Private Placement Market (as
defined in Rule 5005(a)(34)) prior to listing, the most recent
transaction price in that market or, if none, a price determined by
the Exchange in consultation with the financial advisor to the
issuer identified pursuant to Rule 4120(c)(9); (c) In the case of
the initial pricing of a security listing under Listing Rule IM-
5315-2, the price that is closest to the price that is 20% below
(calculated as provided for in Listing Rule IM-5315-2) the lowest
price of the price range disclosed by the issuer in its effective
registration statement; (d) In the case of another halt type in
which the security has already traded during normal market hours on
that trading day, the price that is closest to the last Nasdaq
execution prior to the trading halt; (e) In the case of another halt
type in which the security has not already traded during normal
market hours on that trading day, the price that is closest to the
previous Nasdaq Official Closing Price; and (f) In the case of the
initial pricing of a security that traded in the over-the-counter
market pursuant to FINRA Form 211 immediately prior to the initial
pricing, the price that is closest to the most recent transaction
price in that market. Notwithstanding the foregoing, the Order
Imbalance Indicator will not include the Current Reference Price if
there is a Market Order Imbalance. See Rule 4753(a)(3)(A).
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<bullet> First, the Nasdaq system must determine that all market
orders will be executed in the Nasdaq Halt Cross; and
<bullet> Second, the security must pass the price validation test
described in subparagraph (C) of Rule 4120(c)(8), which essentially
provides that if the actual price calculated by the Nasdaq Halt Cross
differs from the Expected
[[Page 22426]]
Price by an amount in excess of a price band previously selected by the
underwriter, the security will not be released for trading and the Pre-
Launch period will continue.
As provided in Rule 4120(c)(8)(A), the failure to satisfy these
conditions during the process to release the security for trading would
result in a delay of the release for trading of the IPO security, and a
continuation of the Pre-Launch Period, until all conditions have been
satisfied. Market participants may continue to enter orders and order
cancellations for participation in the IPO Halt Cross during the Pre-
Launch Period up to the point that the IPO Halt Cross auction process
commences pursuant to Equity 4, Rule 4753(b).
The Exchange believes that the IPO opening process described above
has worked well in the context of Nasdaq-listed corporate securities to
provide fair executions for investors through an open and transparent
process that protects against unexpected volatility in the pricing of
an IPO security. Accordingly, the Exchange proposes to adopt a similar
process for Nasdaq-listed ETPs. Unlike the IPO opening process, the
Initial ETP Open will involve a Designated Liquidity Provider (``DLP'')
\17\ (i.e., the Nasdaq market maker for the ETP) instead of an
underwriter, such that Nasdaq would display the Expected Price of the
Nasdaq Halt Cross for the ETP to the DLP, who will select price bands
to ensure that the actual calculated price at which the Nasdaq Halt
Cross would occur does not deviate from the Expected Price by more than
the selected price band amounts. Additionally, the Exchange is
proposing to submit the ETP for validation checks at 9:45 a.m. ET at
the latest without exception, whereas under the existing IPO process,
the Exchange does not submit the IPO security for validation checks
until the underwriter approves proceeding.
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\17\ Equity 7, Section 11(f)(2) provides that a ``Designated
Liquidity Provider'' or ``DLP'' is a registered Nasdaq market maker
for a Qualified Security (i.e., an ETP) that has committed to
maintain minimum performance standards. A DLP shall be selected by
Nasdaq based on factors including, but not limited to, experience
with making markets in exchange-traded products, adequacy of
capital, willingness to promote Nasdaq as a marketplace, issuer
preference, operational capacity, support personnel, and history of
adherence to Nasdaq rules and securities laws. Nasdaq may limit the
number of DLPs in a security, or modify a previously established
limit, upon prior written notice to members.
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Proposal
The Exchange proposes to amend (1) Equity 1, Section 1(a) to add a
new definition for ``Exchange-Traded Products,'' (2) Equity 4, Rule
4120(a) to provide the Exchange with explicit authority to declare a
trading halt in a Nasdaq-listed ETP on its first day of trading,
provided specified conditions are met, (3) Equity 4, Rule 4120(c) to
add the process by which the Exchange will initiate and terminate the
proposed trading halt for Nasdaq-listed ETPs, (4) Equity 4, Rule
4753(b) to include the proposed trading halt in the list of enumerated
provisions that would be subject to the Nasdaq Halt Cross, and (5)
Equity 7, Section 115(i) to specify that an ETP issuer may subscribe to
the IPO Workstation at no cost.
The Exchange first proposes to add a new definition for ``Exchange-
Traded Products'' in Equity 1, Section 1(a). Specifically, the Exchange
proposes to add in new paragraph (15) that the term ``Exchange-Traded
Product'' means a security listed on Nasdaq pursuant to Nasdaq Rules
5704, 5705, 5710, 5711, 5713, 5715, 5720, 5735, 5745, 5750 or 5760. The
proposed definition aligns to the definition of ``Qualified
Securities'' set forth in the Exchange's Designated Liquidity Provider
program in Equity 7, Section 114(f).\18\
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\18\ As set forth in Equity 7, Section 114(f)(1), a security may
be designated as a ``Qualified Security'' if: (A) it is an exchange-
traded product listed on Nasdaq pursuant to Nasdaq Rules 5704, 5705,
5710, 5711, 5713, 5715, 5720, 5735, 5745, 5750 or 5760; and (B) it
has at least one Designated Liquidity Provider.
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In proposed Equity 4, Rule 4120(a)(15), the Exchange proposes to
explicitly provide that the Exchange has authority to halt trading in a
Nasdaq-listed ETP on its first day of trading, provided specified
conditions are met. Specifically, proposed Rule 4120(a)(15) will
provide that Nasdaq may halt trading in an ETP for which Nasdaq is the
primary listing market on the first day of trading, provided that (i)
the issuer of the ETP being listed opts into this process, and (ii) a
broker-dealer serving in the role of DLP to the issuer of the ETP being
listed is willing to perform the functions under this Rule.\19\ The
proposed Initial ETP Open will be offered on an optional basis such
that an ETP issuer would have the option on the ETP's initial launch
day of opening the ETP at 4:00 a.m. ET (i.e., the current process), or
delaying the opening until Market Hours with the new Initial ETP Open
process. The Exchange notes that certain ETP issuers may want to open
at 4:00 a.m. ET on launch day instead of delaying the opening until
Market Hours as proposed hereunder because of the availability for
earlier buying and selling in the ETP. Other ETP issuers may seek to
use the Initial ETP Open to delay the opening of the ETP until Market
Hours because of increased trading activity in the ETP and its
underlying component securities, making pricing in the ETP potentially
less volatile. The Exchange believes that ETP issuers, in consultation
with the DLP, with their understanding of the ETP, are best situated to
make the decision whether to open during pre-market or regular market
hours, and therefore proposes to give them the option to choose one
process over the other. The Exchange further believes that the DLP,
with their market knowledge of the book and an understanding of the
ETP, would be well placed to notify the Exchange when the ETP should be
released for trading and approve the Exchange proceeding with the price
validation checks after the DLP receives the Expected Price.
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\19\ In practice, Nasdaq currently only assigns one DLP per ETP.
Should Nasdaq determine to assign more than one DLP per ETP in the
context of this proposed Initial ETP Open, Nasdaq will submit
another rule filing to describe which DLP would perform which
function in the Initial ETP Open.
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The Exchange proposes in new paragraph (c)(11) to Equity 4, Rule
4120 to add the process by which the Exchange will initiate and
terminate the trading halt that is being proposed under Rule
4120(a)(15), as described above. Specifically, Nasdaq proposes under
Equity 4, Rule 4120(c)(11)(A) that the process for halting and initial
pricing of a Nasdaq-listed ETP that is the subject of an Initial ETP
Open pursuant to Rule 4120(a)(15) and this Rule, respectively, will be
available on an optional basis, provided that the conditions in Rule
4120(a)(15)(i) and (ii) above are met.\20\
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\20\ As discussed above, the conditions in proposed Rule
4120(a)(15)(i) and (ii) provide that Nasdaq may halt trading in an
ETP for which Nasdaq is the primary listing market on the first day
of trading, provided that (i) the issuer of the ETP being listed
opts into this process, and (ii) a broker-dealer serving in the role
of DLP to the issuer of the ETP being listed is willing to perform
the functions under this Rule.
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Proposed Rule 4120(c)(11)(B) will set forth the process and
conditions for terminating a trading halt initiated under proposed Rule
4120(a)(15), which will be similar to the existing IPO opening process
in Rule 4120(c)(8) in the manner discussed below. Similar to the
current IPO opening process, beginning at 9:30 a.m. ET, the ETP would
enter a 10-minute Display Only Period prior to the termination of the
halt, during which (and up until the resumption of trading) indicative
information about the potential outcome of the Nasdaq Halt Cross that
will be conducted for the ETP will be displayed to market participants
every second
[[Page 22427]]
through an Order Imbalance Indicator,\21\ and during which market
participants may continue to enter orders, quotes, and cancellations in
that ETP in Nasdaq systems.
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\21\ See supra note 10.
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Specifically, proposed Rule 4120(c)(11)(B) will provide that a
trading halt initiated under Rule 4120(a)(15) shall be terminated when
Nasdaq releases the security for trading and the conditions described
in sub-paragraphs (B)(i)-(iii) are satisfied.\22\ Prior to terminating
the halt, there will be a 10-minute Display Only Period during which
market participants may enter quotes and orders in that security in
Nasdaq systems. Before the Display Only Period begins and once the
security is set up in the Nasdaq system during Pre-Market Hours, market
participants may enter orders in a security that is the subject of an
Initial ETP Open on Nasdaq.\23\ Such orders will be accepted and
entered into the system.
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\22\ As discussed later in this filing, proposed sub-paragraphs
(B)(i)-(iii) will set forth the conditions for when the Pre-Launch
period will end and when the ETP will be released for trading.
\23\ Nasdaq will begin accepting orders in ETP securities when
Nasdaq staff manually starts up the order window during Pre-Market
Hours and before the Display Only Period.
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Proposed Rule 4120(c)(11)(B) will also provide that after the
conclusion of the 10-minute Display Only Period, the security will
enter a ``Pre-Launch Period.'' Similar to the IPO opening process
discussed above, the Exchange would continue to disseminate throughout
the Pre-Launch Period (and up until the resumption of trading) an Order
Imbalance Indicator every second.\24\ Market participants would also be
able to submit and cancel interest during the Pre-Launch Period for the
Initial ETP Open as they do today during the Pre-Launch Period for an
IPO opening process. Proposed Rule 4120(c)(11)(B) will further provide
that the Pre-Launch Period shall end and the security shall be released
for trading by Nasdaq when the following conditions in proposed sub-
paragraphs (B)(i)-(iii) are all met:
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\24\ See supra note 10.
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<bullet> The ETP will be submitted for the validation checks
pursuant to subparagraphs (B)(ii) and (iii) below by 9:45 a.m. ET at
the latest. Prior to this time, if Nasdaq receives notice by 9:40 a.m.
ET from the DLP of the Initial ETP Open that the ETP is ready to
trade,\25\ the Nasdaq system will calculate the Current Reference Price
(as defined in Rule 4753(a)(3)(A)) (the ``Expected Price'') at 9:40
a.m. ET and display it to the DLP.\26\ If the DLP then approves
proceeding, the Nasdaq system will conduct the validation checks in
subparagraphs (B)(ii) and (iii) below before releasing the ETP for
trading pursuant to the Nasdaq Halt Cross.\27\ If no notice is received
by 9:40 a.m. ET, the Nasdaq system will assume the DLP is ready to
trade. Accordingly, the Nasdaq system will calculate the Expected
Price, and then conduct the validation checks in subparagraphs (B)(ii)
and (iii) below before releasing the ETP for trading pursuant to the
Nasdaq Halt Cross.\28\ If the DLP notifies the Exchange by 9:40 a.m. ET
that the ETP is not ready to trade, Nasdaq will recalculate the
Expected Price and display it to the DLP until the DLP approves
proceeding. However, by 9:45 a.m. at the latest, the Nasdaq system will
conduct the following validation checks:
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\25\ The Exchange notes that if the DLP instead notified Nasdaq
that the ETP was not ready to trade, the Exchange would wait until
9:45 a.m. ET at the latest for the DLP to confirm that the ETP was
ready, and once confirmation is received within that time frame, the
Exchange would conduct the validation checks and open the ETP for
trading pursuant to the Nasdaq Halt Cross once the validation checks
were passed.
\26\ See supra note 13. The Exchange will display the Expected
Price (i.e., the Current Reference Price as defined in the Nasdaq
Halt Cross rule in Rule 4753(a)(3)(A)) to the DLP and all market
participants via the Order Imbalance Indicator.
\27\ Upon passing the validation checks, the Pre-Launch Period
will end and Nasdaq will open the ETP for trading pursuant to the
Nasdaq Halt Cross in Rule 4753. If the ETP does not pass the
validation checks, the Pre-Launch Period will continue and Nasdaq
will recommence another round of validation checks. This is an
iterative process. The ETP will not open for trading until it passes
the validation checks. Further, if the DLP does not approve
proceeding, then the Nasdaq system will recalculate the Expected
Price and display it to the DLP (and all other market participants)
via Order Imbalance Indicator until the DLP approves proceeding to
the Nasdaq system conducting the two validation checks in
subparagraphs (B)(ii) and (B)(iii). Notwithstanding the foregoing,
the ETP will be submitted for the validation checks by 9:45 a.m. ET
at the latest. See Rule 4120(c)(8)(i) for similar provisions with
respect to the underwriter and the IPO opening process, except the
Exchange is proposing to submit the ETP for validation checks by
9:45 a.m. ET at the latest and is also proposing to add a scenario
where Nasdaq receives no notice by 9:40 a.m. ET.
\28\ In this instance, the Exchange will conduct the validation
checks in proposed subparagraphs (B)(ii) and (B)(iii) of Rule
4120(c)(11) at 9:40 a.m. ET, and then open the ETP for trading
pursuant to the Nasdaq Halt Cross upon passing the validation
checks.
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<bullet> First, the Nasdaq system must determine that all market
orders will be executed in the Nasdaq Halt Cross; and \29\
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\29\ The intent of this restriction is to ensure that if a
market participant enters an order offering to buy or sell in the
Nasdaq Halt Cross at any price, the cross should not occur unless
all such orders can be executed. The Exchange notes that the IPO
opening process has an identical restriction for the same reasons.
See Rule 4120(c)(8)(A)(ii).
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<bullet> Second, the security must pass the price validation test
described below in proposed subparagraph (C) of Rule 4120(c)(11).\30\
---------------------------------------------------------------------------
\30\ See Rule 4120(c)(8)(A)(iii) for identical provisions.
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Proposed subparagraph (C) of Rule 4120(c)(11) will provide that
prior to the conclusion of the Pre-Launch Period, the DLP may select
price bands for purposes of applying the price validation test.\31\
Under the price validation test, the System compares the Expected Price
with the actual price calculated by the Nasdaq Halt Cross. If the
actual price calculated by the Nasdaq Halt Cross differs from the
Expected Price by an amount in excess of the price band, the security
will not be released for trading and the Pre-Launch Period will
continue. The DLP may select an upper price band (i.e., an amount by
which the actual price may not exceed the Expected Price) and a lower
price band (i.e., an amount by which the actual price may not be lower
than the Expected Price). If a security does not pass the price
validation test, the DLP may, but is not required to, select different
price bands before recommencing the process to release the security for
trading.
---------------------------------------------------------------------------
\31\ The DLP can select the price bands at any time before or
during the Display Only Period or Pre-Launch Period, and can modify
them at any time prior to the conclusion of the Pre-Launch Period.
As discussed later in this filing, DLPs may choose price bands
within the range of $0.00 to $0.50. If the DLP does not select any
price bands, the default bands will be set at $0.00.
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For example, assume that the Expected Price for the Nasdaq Halt
Cross shown to the DLP was $32 per share, and the DLP selected an upper
price band of $0.10 and a lower price band of $0.05. In that case, the
actual price calculated by the system for the cross could not be higher
than $32.10 nor lower than $31.95.
The price bands available for selection shall be in such
increments, and at such price points, as may be established from time
to time by Nasdaq; the available price bands shall include $0 but shall
not be in excess of $0.50. The initial available price bands will range
from $0 to $0.50, with increments of $0.01. Thus, the DLP may select a
price band of $0 (i.e., no change from the Expected Price would be
permitted in this instance), $0.01, $0.02, or any other $0.01 increment
up to $0.50. The DLP may select different price bands above and below
the Expected Price. The Exchange reserves the right to stipulate wider
increments (such as $0.05) or price bands that include certain price
points but exclude others (for example, increments of $0.01
[[Page 22428]]
up to $0.10, and increments of $0.05 thereafter). However, the Exchange
will not (in the absence of the submission of a proposed rule change)
allow price bands wider than $0.50, as proposed in Rule 4120(c)(11)(C).
Nasdaq will notify member organizations and the public of changes in
available price band or increments through a notice that is widely
disseminated at least one week in advance of the change.\32\ In
selecting available price bands and increments, Nasdaq will consider
input from DLPs and other market participants and the results of past
usage of price bands to adopt price bands and increments that promote
efficiency in the initiation of trading and protect investors and the
public interest.\33\
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\32\ Price bands will be set exchange-wide, not on a security-
by-security basis.
\33\ See proposed Rule 4120(c)(11)(C), which is similar to Rule
4120(c)(8)(B). The Exchange is proposing to add language about
reserving the right to use wider bands, which is also true for the
IPO process today even though the current IPO rule is silent in this
regard.
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Similar to the IPO opening process, the failure to satisfy the
conditions in proposed Rule 4120(c)(11)(B)(i)-(iii) during the process
to release the security for trading will result in a delay of the
release for trading of the Initial ETP Open, and a continuation of the
Pre-Launch Period, until all conditions have been satisfied.\34\ Thus,
if the conditions have not been satisfied, the Pre-Launch Period would
continue seamlessly, with members able to continue to enter or cancel
orders. The ETP would then repeat the process for release until such
time the conditions required for launch (i.e., proposed Rule
4120(c)(11)(B)(i)-(iii)) were satisfied). Thus, the DLP would be shown
the applicable Expected Price, and the ETP would launch if all market
orders would be executed and the price validation in proposed Rule
4120(c)(11)(C) was satisfied. This process can continue until 9:45 a.m.
ET, at which point the ETP would open pursuant to the Nasdaq Halt Cross
upon passing the validation checks. The Exchange believes that opening
the ETP at 9:45 a.m. ET with no exceptions is appropriate because by
that time, the DLP would be expected to step in and respond to any
excess demand, and any excess volatility in the ETP would be protected
through the proposed validation checks. Under the proposed Initial ETP
Open, DLPs may set the price bands that would apply in the price
validation checks,\35\ notify Nasdaq that the ETP is ready to trade
prior to 9:45 a.m. ET, and approve Nasdaq proceeding with the price
validation checks after the DLP receives the Expected Price. Further,
DLPs are incentivized under Nasdaq's DLP program in Equity 7, Section
114(f) to provide liquidity and participate in the Initial ETP Open.
---------------------------------------------------------------------------
\34\ See proposed Rule 4120(c)(11)(B), which is similar to Rule
4120(c)(8)(A).
\35\ See supra note 28 and accompanying text.
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In addition, unlike an IPO where only the underwriter may provide
markets in the corporate security on the first day of trading, other
liquidity providers in addition to the DLP may step in and begin
providing markets in an ETP on its first day of trading, which could
further promote price stability in the ETP . Similar to the IPO opening
process, a DLP would be able (but not required) to select different
price bands for each attempt to launch the ETP. Thus, a DLP might
select an upper and a lower band of $0 initially, such that the
security would not launch unless the calculated price equaled the
Expected Price. If the security did not pass the validation check,
however, the DLP could subsequently choose to widen the price bands to
allow the Initial ETP Open to proceed at a price that might vary from
the Expected Price. Such price deviations are possible because market
participants may continue to enter and cancel orders during the period
between the display of the Expected Price to the DLP and the
commencement of Nasdaq Halt Cross. Nasdaq may determine at any point
during the cross auction process up through the conclusion of the Pre-
Launch Period to postpone and reschedule the Initial ETP Open.\36\
Market participants may continue to enter orders and order
cancellations for participation in the cross auction during the Pre-
Launch Period up to the point that the cross auction process
commences.\37\
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\36\ See proposed Rule 4120(c)(11)(B), which is similar to Rule
4120(c)(8)(A), except the Exchange is not adopting language that
provides that it would consult with the underwriter to postpone and
reschedule the IPO. This language is designed to allow IPOs to be
postponed and rescheduled because the underwriter, for example, did
not think the corporate security was ready to trade, or Nasdaq had
to postpone and reschedule the IPO due to a market event or system
disruption. As discussed above, the Exchange is proposing to open
the ETP at 9:45 a.m. ET at the latest, even if the DLP does not
indicate that the ETP is ready to trade. However, the Exchange would
like to retain the ability to postpone and reschedule the proposed
Initial ETP Launch in the event of a serious market event or system
disruption.
\37\ See proposed Rule 4120(c)(11)(B), which is similar to Rule
4120(c)(8)(A).
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The Exchange notes that the DLP's involvement in timing the
commencement of trading in the ETP is consistent with the underwriter's
involvement in the existing IPO opening process. Similar to the
underwriter in an IPO, the Exchange believes that the DLP, with their
market knowledge of the book and an understanding of the security,
would be well placed to notify Nasdaq when the ETP should be released
for trading and approve Nasdaq proceeding with the price validation
checks after the DLP receives the Expected Price.
Accordingly, the Exchange believes it is in the best interest of
the market to give DLPs input into the timing of when to proceed with
opening the ETP via the Nasdaq Halt Cross to help ensure the fair and
orderly launch of trading in the ETP. The proposed language allowing
the DLP to postpone and reschedule the Initial ETP Open with the
concurrence of Nasdaq is designed to allow flexibility if unforeseen
market or system events make it inadvisable to proceed with the Initial
ETP Open.
The Exchange is also proposing to update Rule 4753(b) to include
proposed Rule 4120(a)(15) in the list of enumerated provisions that
would be subject to the Nasdaq Halt Cross. As such, any ETP that is
subject to the Initial ETP Open will be opened using the Nasdaq Halt
Cross for trading during Market Hours.
Lastly, the Exchange proposes to amend Equity 7, Section 115, which
sets forth pricing for various Nasdaq services such as the Nasdaq IPO
Workstation. Today, the Nasdaq IPO Workstation provides subscribing
member firms with access to the IPO Indicator service, which provides
information on orders that would be received in an IPO during the
launch process. This tool assists subscribing member firms in
monitoring their orders in the Nasdaq Halt Cross leading up to the
launch of an IPO.\38\ The IPO Indicator provides the same information
in the Order Imbalance Indicator \39\ together with information about
the subscribing member firms on Nasdaq in the IPO security. The IPO
Indicator allows the subscriber to select an IPO security by ticker and
see the Current Reference Price, the number of paired shares, and the
number of imbalance shares during the Display Only and Pre-Launch
Periods. The subscriber can also see the total number of IPO shares the
member firm has entered for execution in the IPO Halt Cross, the nature
of such shares (buy or sell), and the number of IPO shares that would
be executed in the Nasdaq Halt Cross at that time for each of those
categories. A subscriber can also access further detail on its IPO
shares
[[Page 22429]]
presented by individual order or order block, which will include the
number of IPO shares in a particular order or order block, the number
and percentage of IPO shares of the order or order block that would be
executed in the Nasdaq Halt Cross if it occurred at any given time in
the process, based on the Order Imbalance Indicator disseminated every
second, and the price at which the order or order block was submitted.
As such, the IPO Indicator provides member firms with information
consistent with what Nasdaq currently disseminates during the IPO
opening process, but as it relates to the member firm's orders and in
greater detail.
---------------------------------------------------------------------------
\38\ See Securities Exchange Act Release No. 74041 (January 13,
2015), 80 FR 2762 (January 20, 2015) (SR-NASDAQ-2014-110) (Order
Approving a Proposed Rule Change to Offer the New IPO Workstation).
\39\ See supra note 10.
---------------------------------------------------------------------------
The Exchange now proposes to offer this tool to subscribing member
DLPs and non-member ETP issuers so that they may receive similar
information described above for the ETP securities subject to the
Initial ETP Open.\40\ Today, member firms may subscribe to the Nasdaq
IPO workstation at no cost.\41\ DLPs are member firms, so they would
also be able to subscribe to the Nasdaq IPO workstation at no cost to
access the IPO Indicator under this proposal. The Exchange proposes in
new paragraph (k) to Equity 7, Section 115 that an ETP issuer may
likewise subscribe to the IPO Workstation at no cost so that they may
receive similar information on orders in the proposed Initial ETP Open.
This information will be the same information that is in the Order
Imbalance Indicator.\42\
---------------------------------------------------------------------------
\40\ The DLP and ETP issuer would receive the information
described above for the IPO Indicator on a consolidated basis and
not on an individual member firm's order basis.
\41\ See Equity 7, Section 115(i).
\42\ See supra note 10.
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Implementation
To implement this proposal, Nasdaq will release an Equity Trader
Alert no later than the second quarter of 2025 announcing the
implementation date.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\43\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\44\ 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 rule change aims to protect investors and the
public interest by strengthening safeguards against unexpected
volatility in the pricing of ETPs on their launch day.
---------------------------------------------------------------------------
\43\ 15 U.S.C. 78f(b).
\44\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The proposed rule change achieves these goals by offering an
optional new issuer halt that enhances the price discovery process for
ETPs on their initial day of trading. This function is similar to the
IPO opening process in Rules 4120(a)(7), 4120(c)(8), and 4753, which
has proven effective in managing price discovery for newly listed
securities. While the IPO opening process currently provides protection
by ensuring the final price does not deviate from recent indicative
prices beyond set price band thresholds (such a $0.50 change), similar
safeguards are required to ensure stability and investor confidence in
ETP pricing upon launch.
The Exchange believes that its proposal to offer optional
functionality to permit ETP issuers the ability to open on launch day
by entering into a new issuer halt would maximize the chances of more
efficient price discovery and remove impediments to and perfect the
mechanism of a free and open market and a national market system and,
in general, protect investors because the initial sale price would be
based on market interest and the matching of buy and sell orders in an
auction would be open to all market participants. Today, the ETP would
simply open for trading at 4:00 a.m. ET during Pre-Market Hours at an
initial price that is based on the ETP's Net Asset Value, as provided
by the ETP issuer to Nasdaq. Accordingly, the Exchange believes that
the proposed process would provide safeguards for the opening price of
the ETP that is based on additional market information thereby
protecting investors and the public interest.
Although the Exchange is providing ETP issuers the discretion to
elect either the current process or the new proposed process, the
Exchange believes that each price discovery process is designed to
arrive at an opening price that represents the price for the underlying
ETP. In particular, Nasdaq believes that the change will facilitate the
commencement of orderly trading in ETPs on their first day of trading,
by providing the DLP with flexibility throughout the initial launch
process to allow order entry and the development of price stability
prior to opening. The Exchange believes that the DLP's involvement in
timing the commencement of trading in the ETP, as described above, is
consistent with the Act as this will promote the fair and orderly
launch of trading in the ETP. The Exchange believes that the DLP, with
their market knowledge of the book and an understanding of the
security, would be well placed to notify Nasdaq when the ETP should be
released for trading and approve Nasdaq proceeding with the price
validation checks after the DLP receives the Expected Price.
The Exchange also believes that it is reasonable and appropriate to
use the Nasdaq Halt Cross process under Rule 4753 to open trading in
the ETP (upon passing the validation checks) because it is consistent
with the process that is used by Nasdaq when opening an IPO security.
It will ensure that the process for resuming trading following the
Initial ETP Launch is consistent with other types of halts initiated by
Nasdaq, including the IPO halt. The Exchange also believes that it is
reasonable, equitable and not unfairly discriminatory to offer the IPO
Workstation to all subscribing DLP member firms and non-member ETP
issuers at no cost because they will be provided with more information
regarding orders submitted for participation in the Initial ETP Open,
similar to the IPO process as discussed above. Both the DLP and ETP
issuer would be able to subscribe for this tool for the Initial ETP
Open at no cost, just as all subscribing member firms do today for
IPOs.
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. Specifically, the change will
not affect the ability of market participants to participate fully in
an ETP's launch day because it is an optional functionality that
permits ETPs to enter into a new issuer halt on its launch day, for a
specified time period, and then manually open. Rather, the change is
designed to promote stability and reduce volatility in the pricing of
the ETP on its launch day, and therefore does not impose any
restriction on competition. In particular, the Exchange believes that
the optional initial launch process will enhance the competitiveness of
its process for initial pricing of ETPs without imposing any burdens on
the ability of DLP or other market participants to participate in that
process.
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.
[[Page 22430]]
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 1, is consistent with the Act and
rules and regulations thereunder applicable to a national securities
exchange.\45\ In particular, the Commission finds that the proposed
rule change, as modified by Amendment No. 1, is consistent with Section
6(b)(5) of the Act,\46\ which requires, among other things, that the
Exchange's rules be designed to prevent fraudulent and manipulative
acts and practices, 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.
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\45\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\46\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange states that its proposal to permit ETP issuers to
begin trading on launch day by conducting an auction at the beginning
of regular trading hours would maximize the chances of more efficient
price discovery and remove impediments to and perfect the mechanism of
a free and open market and a national market system and, in general,
protect investors because the initial sale price would be based on
market interest and the matching of buy and sell orders in an auction
that would be open to all market participants. The Exchange states the
proposed process would protect investors and the public interest by
providing safeguards for the opening price of the ETP based on
additional market information, as opposed to the current process in
which the ETP would open for trading at 4:00 a.m. ET during Pre-Market
Hours at an initial price informed by the ETP's Net Asset Value as
provided by the ETP to the Exchange.
Further, the Exchange represents that the proposed Initial ETP Open
process is similar to the IPO opening process, which has ``proven
effective in managing price discovery for newly listed securities.''
\47\ Unlike the IPO opening process, (1) the Initial ETP Open would
provide that a DLP, instead of an underwriter, select price bands to
ensure that the actual calculated price at which the Nasdaq Halt Cross
would occur does not deviate from the Expected Price by more than the
selected price band amounts and (2) the ETP would be submitted for
validation checks at 9:45 a.m. ET at the latest without exception,
whereas under the existing IPO process underwriter approval is required
prior to the Exchange submitting the IPO security for validation
checks. The Exchange's proposal to provide an alternative opening
process for ETPs on the first day of trading modeled on the IPO opening
process could benefit investors by enhancing the price discovery
process for ETPs on their initial day of trading, and the role of the
DLP could be an additional safeguard against unexpected volatility in
the pricing of the ETP.
---------------------------------------------------------------------------
\47\ See Amendment No. 1 at 19.
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Finally, the Exchange's proposal to offer the IPO Workstation to
all subscribing DLP member firms and non-member ETP issuers at no cost,
as is done for all subscribing member firms for IPOs, will promote just
and equitable principles of trade. Access to the IPO Workstation will
provide the DLP and ETP Issuer with information regarding orders
submitted for participation in the Initial ETP Open. The Exchange
represents that the information made available through the IPO
Workstation will be the same information that is in the Order Imbalance
Indicator.\48\
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\48\ See page 17.
---------------------------------------------------------------------------
For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment No. 1, is consistent with Section
6(b)(5) of the Act \49\ and the rules and regulations thereunder
applicable to a national securities exchange.
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\49\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
IV. Solicitation of Comments on Amendment No. 1 to the Proposed Rule
Change
Interested persons are invited to submit written data, views, and
arguments concerning whether Amendment No. 1 is consistent with the
Act. Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#2052554c450d434f4d4d454e5453605345430e474f56"><span class="__cf_email__" data-cfemail="295b5c454c044a4644444c475d5a695a4c4a074e465f">[email protected]</span></a>. Please include
file number SR-NASDAQ-2025-011 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-2025-011. 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="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NASDAQ-2025-011 and should
be submitted on or before June 17, 2025.
V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\50\ to approve the proposed rule change, as modified by
Amendment No. 1, prior to the thirtieth day after the date of
publication of notice of Amendment No. 1 in the Federal Register. As
described in greater detail above, in Amendment No. 1, the Exchange:
(1) provided additional background on how an ETP opens today and
rationale on why the Exchange is proposing the Initial ETP Open; (2)
specified that the Exchange would only assign one DLP per ETP in the
context of the proposed Initial ETP Open; (3) deleted the Regulation M
statement relating to the DLP in proposed Rule 4120(c)(11)(A) because
the Exchange inadvertently included this statement when it does not
apply in the context of this proposal; (4) added more granularity in
proposed Rule 4120(c)(11)(B)(i) about the DLP notifying the Exchange
that the ETP is ready to trade; (5) clarified that price bands would be
set exchange-wide and not on a security-by-security basis;
[[Page 22431]]
(6) specified the DLP's responsibilities in the proposed Initial ETP
Open; and (7) clarified that the IPO Indicator will provide the same
information in the Order Imbalance Indicator under this proposal. The
changes and clarifications in Amendment No. 1 assist the Commission in
evaluating the Exchange's proposal and do not materially change the
terms of the Exchange's original proposal. Accordingly, the Commission
finds good cause, pursuant to Section 19(b)(2) of the Act,\51\ to
approve the proposed rule change, as modified by Amendment No. 1 on an
accelerated basis.
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\50\ 15 U.S.C. 78s(b)(2).
\51\ Id.
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VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\52\ that the proposed rule change (SR-NASDAQ-2025-011), as
modified by Amendment No. 1, be, and it hereby is, approved on an
accelerated basis.
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\52\ Id.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\53\
---------------------------------------------------------------------------
\53\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-09401 Filed 5-23-25; 8:45 am]
BILLING CODE 8011-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.