Notice2025-18142
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend BX Options 7, Section 2
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Published
September 19, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 180 (Friday, September 19, 2025)</title>
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[Federal Register Volume 90, Number 180 (Friday, September 19, 2025)]
[Notices]
[Pages 45268-45271]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-18142]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103981; File No. SR-BX-2025-020]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend BX Options
7, Section 2
September 16, 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 September 10, 2025, Nasdaq BX, Inc. (``BX'' 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 2, BX Options Market-Fees and Rebates.\3\
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\3\ The Exchange filed SR-BX-2025-018 on August 29, 2025. The
Exchange withdrew SR-BX-2025-018 on September 10, 2025 and filed
this proposal.
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The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/bx/rulefilings">https://listingcenter.nasdaq.com/rulebook/bx/rulefilings</a>,
and at the principal office of the Exchange.
[[Page 45269]]
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 new incentives for Lead Market Makers
(``LMMs'') \4\ at BX Options 7, Section 2(1).
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\4\ A ``Lead Market Maker'' is a registered BX Options Market
Maker that is approved pursuant to Options 2, Section 3 to be the
LMM in an options class (or options classes). See Options 7, Section
1(a).
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Today, in Penny Symbols, the Exchange pays the following Maker
Rebates: for LMMs, $0.24 per contract; for Market Makers (``MMs''),\5\
$0.20 per contract; for Non-Customers \6\ and Firms,\7\ $0.12 per
contract; and for Customers,\8\ $0.30 per contract. Today, in Penny
Symbols, the Exchange charges the following Taker Fees: for LMMs, MMs,
Non-Customers, and Firms, $0.50 per contract; and for Customers, $0.40
per contract.
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\5\ A ``BX Options Market Maker'' is a Participant that has
registered as a Market Maker on BX Options pursuant to Options 2,
Section 1, and must also remain in good standing pursuant to Options
2, Section 9. In order to receive Market Maker pricing in all
securities, the Participant must be registered as a BX Options
Market Maker in at least one security. See Options 7, Section 1(a).
\6\ The term ``Non-Customer'' applies to transactions for the
accounts of Lead Market Makers, Market Makers, Firms, Professionals,
Broker-Dealers and JBOs. See Options 7, Section 1(a).
\7\ The term ``Firm'' applies to any transaction that is
identified by a member or member organization for clearing in the
Firm range at The Options Clearing Corporation (``OCC''). See
Options 7, Section 1(a).
\8\ The term ``Customer'' applies to any transaction that is
identified by a Participant for clearing in the Customer range at
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)(48)). See Options 7, Section 1(c).
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Today, in Non-Penny Symbols, the Exchange pays the following Maker
Rebates (or charges the following Maker Fees): for LMMs, a Maker Rebate
of $0.45 per contract; for MMs, a Maker Rebate of $0.40 per contract;
for Non-Customers and Firms, a Maker Fee of $0.45 per contract; and for
Customers, a Maker Rebate of $1.10 per contract. Today, in Non-Penny
Symbols, the Exchange charges the following Taker Fees: for LMMs, MMs,
Non-Customers, and Firms, $1.25 per contract; and for Customers, $0.79
per contract.
Note 2 Incentive
The Exchange proposes to amend the incentives in note 2 of Options
7, Section 2(1), which currently provides as follows:
Lead Market Makers and Market Makers that either (1) execute more
than 0.45% Customer Total Consolidated Volume (``TCV'') per day which
adds liquidity in a given month (excluding Lead Market Maker and Market
Maker volume which adds liquidity in SPY), or (2) increase their
combined Lead Market Maker and Market Maker volume which adds liquidity
in a given month by at least 70% above their September 2024 volume as
measured by a percentage of TCV (excluding Lead Market Maker and Market
Maker volume which adds liquidity in SPY), will receive the following
incentives: (i) an additional $0.05 per contract Maker Rebate in Penny
Symbols excluding SPY, (ii) an additional $0.01 per contract Maker
Rebate in SPY, and (iii) an additional $0.24 per contract Maker Rebate
in Non-Penny Symbols. Lead Market Makers and Market Makers with no
volume in the add liquidity segment for the month of September 2024 may
qualify for the additional Maker Rebates by having any new volume
(excluding SPY volume) considered as added volume. This note 2
incentive will be available through April 30, 2025.
The Exchange proposes to replace this expired note 2 incentive with
the following:
Lead Market Makers whose Lead Market Maker and Market Maker
executed exchange volume, aggregated at the firm level, represents more
than 0.45% of Customer Total Consolidated Volume (``TCV'') per day,
which adds liquidity to the exchange in a given month, will receive the
following incentives on the contracts that they execute as Lead Market
Makers: (i) an additional $0.05 per contract Maker Rebate in Penny
Symbols, and (ii) an additional $0.24 per contract Maker Rebate in Non-
Penny Symbols.
Proposed note 2 provides LMMs an additional Maker Rebate. This
additional Maker Rebate is based on liquidity adding volume on BX as a
percentage of Customer Total Consolidated Volume, which is defined as
the total national volume cleared at OCC in the Customer range in
equity and ETF options in that month.\9\ Because Participants who are
LMMs as to some options classes may also be MMs as to others, this
volume calculation is done at the firm level, so that it captures all
the liquidity that the Participant adds to the Exchange. However, as
proposed, the incentives would only be paid on contracts that the
Participant executes on the option classes in which it is an LMM. This
incentive is based on a percentage of industry volume in recognition of
the fact that the volume executed by a Participant may rise or fall
with industry volume. The Exchange proposes to remove the note 2 from
the table for Penny Symbols and Non-Penny Symbols next to the Maker
Rebates for Market Maker.
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\9\ See Options 7, Section 1(a).
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Currently, the note 2 incentives have expired, as they were
available through April 30, 2025. The Exchange believes that the
proposed note 2 incentives will encourage LMMs to send order flow to
BX.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposed changes to its Pricing Schedule are
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for equity
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 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
[[Page 45270]]
of order flow from broker dealers'. . . .'' \12\
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\12\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (Dec. 2, 2008),
73 FR 74770, 74782-83 (Dec. 9, 2008) (SR-NYSEArca-2006-21)).
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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 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. Within the
foregoing context, the proposal represents a reasonable attempt by the
Exchange to attract additional order flow to the Exchange and increase
its market share relative to its competitors.
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 and market share relative to its competitors.
Note 2 Incentive
The Exchange believes that the new note 2 incentives are reasonable
for several reasons. As discussed above, note 2 would provide LMMs an
opportunity to receive additional Maker Rebates of (i) $0.05 per
contract in Penny Symbols,\13\ and (ii) $0.24 per contract in Non-Penny
Symbols,\14\ on the contracts that they execute as LMMs. These
incentives would be based on liquidity adding volume on BX that the
Participant executes on the Exchange as both an LMM and an MM,
aggregated at the firm level, and calculated as a percentage of
Customer Total Consolidated Volume (``TCV'').\15\ The Exchange believes
that the total industry percentage threshold is reasonable in order to
incentivize greater LMM activity on BX. The Exchange is proposing to
base this incentive on a percentage of industry volume in recognition
of the fact that the volume executed by a Participant may rise or fall
with industry volume. A percentage of industry volume calculation
allows the proposed qualification in note 2 to be calibrated to current
market volumes rather than requiring a static amount of volume
regardless of market conditions. The proposed threshold of 0.45% TCV is
generally intended to reward LMMs for executing more liquidity adding
volume on BX as LMMs, regardless of whether the LMMs execute that
volume as LMMs or MMs. To the extent such activity is increased by this
proposal, market participants may increasingly compete for the
opportunity to trade on Exchange to the benefit of all market
participants. Total industry percentage thresholds are established
concepts within the Pricing Schedules of BX's affiliates.\16\
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\13\ Accordingly, qualifying LMMs would receive a total of $0.29
per contract in Penny Symbols.
\14\ Accordingly, qualifying LMMs would receive a total of $0.69
per contract in Non-Penny Symbols.
\15\ Specifically, LMMs that execute more than 0.45% per day
when acting as LMMs and MMs, aggregated at the firm level, which
adds liquidity in a given month, would receive the proposed note 2
incentives.
\16\ See, e.g., Nasdaq GEMX Options 7, Nasdaq ISE Options 7, and
Nasdaq MRX Options 7.
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The Exchange believes that the proposed note 2 incentives are
equitable and not unfairly discriminatory for the reasons that follow.
As a general matter, the Exchange believes that it is equitable and not
unfairly discriminatory to provide the note 2 incentives to only LMMs
because these market participants have different requirements and
additional obligations to the Exchange that other non-market making
market participants do not (such as quoting requirements). Further, as
compared to MMs, LMMs have greater quoting obligations.\17\ The higher
rebates, therefore, recognize the differing contributions made to the
liquidity and trading environment on the Exchange by LMMs. Overall, the
Exchange believes that incentivizing LMMs to provide greater liquidity
benefits all market participants through the quality of order
interaction.
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\17\ See Options 2, Section 4(j) (setting forth the 90% or
higher quoting obligations for LMMs) and Section 5(d) (setting forth
the 60% or higher quoting obligations for MMs).
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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.
In terms of intra-market competition, the Exchange does not believe
that its proposal will place any category of market participant at a
competitive disadvantage. As it relates to the proposed note 2
incentives offered to LMMs, the Exchange believes that the additional
Maker Rebates should encourage additional liquidity from LMMs that
enhances the quality of the Exchange's market and increases the number
of trading opportunities on the Exchange for all market participants
who will be able to compete for such opportunities.
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.
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\
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\18\ 15 U.S.C. 78s(b)(3)(A)(ii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<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#c1b3b4ada4eca2aeacaca4afb5b281b2a4a2efa6aeb7"><span class="__cf_email__" data-cfemail="1c6e697079317f7371717972686f5c6f797f327b736a">[email protected]</span></a>. Please include
file number SR-BX-2025-020 on the subject line.
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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-BX-2025-020. 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 filing 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-BX-2025-020 and
should be submitted on or before October 10, 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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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2025-18142 Filed 9-18-25; 8:45 am]
BILLING CODE 8011-01-P
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