Notice2025-11101
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend MRX's Pricing Schedule Regarding a Complex Order Market Maker Fee Discount
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
June 17, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 115 (Tuesday, June 17, 2025)</title>
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[Federal Register Volume 90, Number 115 (Tuesday, June 17, 2025)]
[Notices]
[Pages 25657-25659]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-11101]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103245; File No. SR-MRX-2025-12]
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend MRX's
Pricing Schedule Regarding a Complex Order Market Maker Fee Discount
June 12, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 30, 2025, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``SEC'' or ``Commission'') the
proposed rule change as described in Items I, II, and III, below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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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 Exchange's Pricing Schedule at
Options 7, Section 4, Complex Order Fees, to increase a complex order
Market Maker \3\ fee discount in Penny and Non-Penny Symbols, when the
Market Maker trades against Priority Customer \4\ orders that originate
from an Affiliated Member \5\ or an Affiliated Entity.\6\
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\3\ A ``Market Maker'' is a market maker as defined in Nasdaq
MRX Rule Options 1, Section 1(a)(21). See Options 7, Section 1(c).
\4\ A ``Priority Customer'' is a person or entity that is not a
broker/dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s), as defined in Nasdaq MRX Options 1,
Section 1(a)(36). Unless otherwise noted, when used in this Pricing
Schedule the term ``Priority Customer'' includes ``Retail.'' See
Options 7, Section 1(c).
\5\ An ``Affiliated Member'' is a Member that shares at least
75% common ownership with a particular Member as reflected on the
Member's Form BD, Schedule A. See Options 7, Section 1(c).
\6\ An ``Affiliated Entity'' is a relationship between an
Appointed Market Maker and an Appointed OFP for purposes of
qualifying for certain pricing specified in the Pricing Schedule.
Market Makers and OFPs are required to send an email to the Exchange
to appoint their counterpart, at least 3 business days prior to the
last day of the month to qualify for the next month. The Exchange
will acknowledge receipt of the emails and specify the date the
Affiliated Entity is eligible for applicable pricing, as specified
in the Pricing Schedule. Each Affiliated Entity relationship will
commence on the 1st of a month and may not be terminated prior to
the end of any month. An Affiliated Entity relationship will
automatically renew each month until or unless either party
terminates earlier in writing by sending an email to the Exchange at
least 3 business days prior to the last day of the month to
terminate for the next month. Affiliated Members may not qualify as
a counterparty comprising an Affiliated Entity. Each Member may
qualify for only one (1) Affiliated Entity relationship at any given
time. See Options 7, Section 1(c).
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While the changes proposed herein are effective upon filing, the
Exchange has designated the proposed rule change to be operative on
June 2, 2025.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/mrx/rulefilings">https://listingcenter.nasdaq.com/rulebook/mrx/rulefilings</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
MRX proposes to amend the Exchange's Pricing Schedule at Options 7,
Section 4, Complex Order Fees, to increase a complex order Market Maker
fee discount in Penny and Non-Penny Symbols, when the Market Maker
trades against Priority Customer orders that originate from an
Affiliated Member or an Affiliated Entity.
As set forth in Options 7, Section 4, the Exchange presently
assesses all market participants, except Priority Customers, a $0.35
per contract fee for Penny Symbol complex order transactions and a
$0.85 per contract fee for Non-Penny Symbol complex order
transactions.\7\ Priority Customers are assessed no fees for Penny and
Non-Penny Symbol complex order transactions. Currently, the Exchange
reduces Penny and Non-Penny Symbol complex order transactions to $0.00
per contract for Market Makers that trade against Priority Customer
orders that originate from an Affiliated Member or Affiliated Entity.
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\7\ With the exception of complex PIM orders, which are subject
to separate pricing in Options 7, Section 3.A.
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At this time, the Exchange proposes to amend the fee discount for
Market Makers that trade against Priority Customer complex orders that
originate from an Affiliated Member or Affiliated Entity from $0.00 to
$0.10 per contract. While the Exchange's proposal reduces the discount
to Market Makers that trade against Priority Customer complex orders
that originate from an Affiliated Member or Affiliated Entity, the
Exchange believes the proposed $0.10 per contract discount will
continue to incentivize Market Makers, Affiliated Members, and/or
Affiliated Entities to direct additional Priority Customer order flow
to MRX.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\9\ 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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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4) and (5).
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The proposed changes are reasonable in several respects. As a
threshold matter, the Exchange is subject to significant competitive
forces in the market for options securities transaction services that
constrain its pricing determinations in that market. The fact that this
market is competitive has long been recognized by the courts. In
NetCoalition v. Securities and Exchange Commission, the D.C. Circuit
stated as follows: ``[n]o one disputes that competition for order flow
is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and
[[Page 25658]]
sellers of securities, and the broker-dealers that act as their order-
routing agents, have a wide range of choices of where to route orders
for execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers' . . . .'' \10\
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\10\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \11\
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\11\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options security transaction services. The Exchange is only one of
eighteen options exchanges to which market participants may direct
their order flow. Within this environment, market participants can
freely and often do shift their order flow among the Exchange and
competing venues in response to changes in their respective pricing
schedules. As such, the proposal represents a reasonable attempt by the
Exchange to increase its liquidity.
The Exchange's proposal to amend the complex order fee discount for
Market Makers that trade against Priority Customer complex orders that
originate from an Affiliated Member or Affiliated Entity from $0.00 to
$0.10 per contract is reasonable because while the Exchange proposes to
reduce the fee discount to Market Makers that trade against Priority
Customer complex orders that originate from an Affiliated Member or
Affiliated Entity, the Exchange believes the discount will continue to
incentivize Market Makers, Affiliated Members, and/or Affiliated
Entities to direct additional Priority Customer order flow to MRX.
Priority Customer order flow is unique in that it attracts valuable
liquidity from Market Makers to the market, which in turn benefits all
market participants by providing more trading opportunities. This
increased activity from all market participants attracts Market Makers
and in turn facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants.
Market Makers will continue to benefit from a reduced fee, and other
market participants will benefit because they will have an opportunity
to trade with the order flow that Marker Makers, their Affiliated
Member and/or Appointed Member bring to MRX. When a Priority Customer
order is submitted to MRX, a Market Maker that wishes to interact with
that order flow does not know whether that order originated from one of
its Affiliated Members and/or Appointed Members. The Exchange believes
this incentive will cause Market Makers to aggressively pursue order
flow in order to receive the benefit of the reduced fee when the Market
Maker executes a complex order contra a Priority Customer. Discounting
fees in this manner rewards Market Makers that bring more order flow to
the Exchange. This is the case because a Market Maker through its
Affiliated Member or its Appointed Member directing additional order
flow would increase the chances of a Market Maker qualifying for a
reduced complex order fee of $0.10 (i.e., because it increases the
chances that a contra-side order is entered by the Market Maker or its
Affiliated Member and/or Appointed Member).
The Exchange's proposal to amend the complex order fee discount for
Market Makers that trade against Priority Customer complex orders that
originate from an Affiliated Member or Affiliated Entity from $0.00 to
$0.10 per contract is equitable and not unfairly discriminatory because
the discounted fee will apply uniformly to Market Makers that meet the
criteria for the fee discount. With respect to the reduced fee offered
to Market Makers, the Exchange notes that Priority Customers do not pay
a complex order fee. Other market participants, such as a Non-Nasdaq
MRX Market Maker (FarMM),\12\ a Firm Proprietary,\13\ a Broker-Dealer
\14\ and a Professional Customer,\15\ would not be entitled to the same
fee reduction as a Market Maker. The Exchange notes that Market Makers,
their Affiliated Members and their Appointed Members are being
incentivized to direct Priority Customer order flow to MRX. Other
market participants benefit from this order flow because they may
interact with it. Unlike other participants, Market Makers add value to
MRX through quoting obligations \16\ and their commitment of capital.
Encouraging Market Makers to add greater liquidity benefits all market
participants in the quality of order interaction.
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\12\ A ``Non-Nasdaq MRX Market Maker'' is a market maker as
defined in Section 3(a)(38) of the Securities Exchange Act of 1934,
as amended, registered in the same options class on another options
exchange. See Options 7, Section 1(c).
\13\ A ``Firm Proprietary'' order is an order submitted by a
Member for its own proprietary account. See Options 7, Section 1(c).
\14\ A ``Broker-Dealer'' order is an order submitted by a Member
for a broker-dealer account that is not its own proprietary account.
See Options 7, Section 1(c).
\15\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer. See Options 7,
Section 1(c).
\16\ See MRX Options 2, Section 5.
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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.
Intermarket Competition
The Exchange believes its proposal remains competitive with other
options markets, and will offer market participants with another choice
of venue to transact options. The Exchange notes that it operates in a
highly competitive market in which market participants can readily
favor competing venues if they deem fee levels at a particular venue to
be excessive, or rebate opportunities available at other venues to be
more favorable. Because competitors are free to modify their own fees
in response, and because market participants may readily adjust their
order routing practices, the Exchange believes that the degree to which
fee changes in this market may impose any burden on competition is
extremely limited.
Intramarket Competition
The Exchange's proposal to amend the complex order fee discount for
Market Makers that trade against Priority Customer complex orders that
originate from an Affiliated Member or Affiliated Entity from $0.00 to
$0.10 per contract does not impose an undue burden on competition
because the discounted fee will apply uniformly to Market Makers that
meet the criteria for the fee discount. With respect to the reduced fee
offered to Market Makers, the Exchange notes that Priority Customers do
not pay a complex order fee. Other market participants, such as a Non-
Nasdaq MRX Market Maker (FarMM), a Firm Proprietary, a Broker-
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Dealer and a Professional Customer, would not be entitled to the same
fee reduction as a Market Maker. The Exchange notes that Market Makers,
their Affiliated Members and their Appointed Members are being
incentivized to direct Priority Customer order flow to MRX. Other
market participants benefit from this order flow because they may
interact with it. Unlike other participants, Market Makers add value to
MRX through quoting obligations \17\ and their commitment of capital.
Encouraging Market Makers to add greater liquidity benefits all market
participants in the quality of order interaction.
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\17\ See MRX Options 2, Section 5.
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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.\18\ 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.
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\18\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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="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#f587809990d8969a9898909b8186b5869096db929a83"><span class="__cf_email__" data-cfemail="a2d0d7cec78fc1cdcfcfc7ccd6d1e2d1c7c18cc5cdd4">[email protected]</span></a>. Please include
file number SR-MRX-2025-12 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-MRX-2025-12. 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-MRX-2025-12 and should be
submitted on or before July 8, 2025.
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).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-11101 Filed 6-16-25; 8:45 am]
BILLING CODE 8011-01-P
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