Notice2025-19010
Self-Regulatory Organizations; 24X National Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Connectivity Fees
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Published
September 30, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 187 (Tuesday, September 30, 2025)</title>
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[Federal Register Volume 90, Number 187 (Tuesday, September 30, 2025)]
[Notices]
[Pages 46942-46944]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19010]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104081; File No. SR-24X-2025-10]
Self-Regulatory Organizations; 24X National Exchange LLC; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt
Connectivity Fees
September 26, 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 24, 2025, 24X National Exchange LLC (``24X'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt connectivity fees for cross-connects
at the Primary and Disaster Recovery facilities. The Exchange also
proposes to adopt connectivity fees for Logical Connectivity (Primary),
effective September 29, 2025. The proposed rule change is available on
the Exchange's website at <a href="https://equities.24exchange.com/regulation">https://equities.24exchange.com/regulation</a>
and at the principal office of the Exchange.
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 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 is proposing to establish monthly connectivity fees.
In advance of the Exchange's commencement of operations as a national
securities exchange, the Exchange determined it was reasonable and
appropriate to charge market participants for their connectivity to the
Exchange.
Cross-Connect Fees
The Exchange proposes to offer to both Members \3\ and non-Members
the option to utilize a 10 Gigabit (``Gb'') ultra-low latency (``ULL'')
fiber cross-connection to the Exchange's Primary and Disaster Recovery
facilities, as well as a 10Gb ULL fiber cross-connection to the Test
Environment. The Exchange proposes to establish a Cross-Connect fee of
$5,700 per 10Gb physical interface per month that will be assessed to
Members and non-Members for connecting to the Primary facility. The
Exchange also proposes to establish a Cross-Connect fee of $2,850 per
10Gb physical interface per month that will be assessed to Members and
non-Members for connecting to the Disaster Recovery facility. The
Exchange does not contemplate charging a fee for connection to the Test
Environment at this time. The Exchange believes these fees will
encourage Members to connect to the Exchange's backup trading systems
and to conduct appropriate testing of their use of the Exchange. The
Exchange also believes that it is reasonable to charge a lower fee for
connection to the Disaster Recovery facility than for connection to the
Primary facility given that, pursuant to 24X Rule 2.4, a small number
of Members are expected to be required to connect and participate in
testing of the Exchange's backup systems.
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\3\ The term ``Member'' shall mean any registered broker or
dealer that has been admitted to membership in the Exchange. See 24X
Rule 1.5(u).
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Monthly network connectivity fees for Members and non-Members for
connectivity will be assessed in any month the Member or non-Member is
credentialed to use any of the 24X Application Programming Interfaces
in the Primary facility or Disaster Recovery facility.\4\
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\4\ As proposed, fees for connectivity services would be
assessed based on each active connectivity service product at the
close of business on the first day of each month. If a product is
canceled prior to such fee being assessed, then the Member will not
be obligated to pay the applicable product fee.
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Port Fees
The Exchange proposes to establish a $500 fee for Primary Logical
Connectivity sessions. These application sessions, commonly known as
ports, are utilized to perform a particular function on the Exchange,
such as order entry or order cancellation, receipt of drop copies, or
proprietary market data dissemination. All market participants (Members
and non-Members) will be charged per session per month.
[[Page 46943]]
I. Additional Discussion of Proposed Fees
As illustrated in the following table, the Exchange has sought to
make its connectivity fees consistent with, and in some cases lower
than, those of other exchanges,\5\ thereby assuring that the fees will
not create a financial burden on any participant and will not have an
undue impact on competition among market participants in general or on
smaller market participants in particular.
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\5\ See, e.g., the Long-Term Stock Exchange, Inc. (``LTSE'') fee
schedule, available at: <a href="https://ltse.com/trading/fee-schedules">https://ltse.com/trading/fee-schedules</a>; the
MEMX LLC (``MEMX'') connectivity fee schedule, available at: <a href="https://info.memxtrading.com/connectivity-fees/">https://info.memxtrading.com/connectivity-fees/</a>; and the Cboe EDGX
Exchange, Inc. (``Cboe EDGX'') fee schedule, available at <a href="https://www.cboe.com/us/equities/membership/fee_schedule/edgx/">https://www.cboe.com/us/equities/membership/fee_schedule/edgx/</a>.
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Cross-connect Logical
Exchange Cross-connect (disaster connectivity
(primary) recovery) (primary)
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24X.................................................... $5,700 $2,850 $500
LTSE................................................... 5,500 2,750 450
MEMX................................................... 6,000 3,000 450
Cboe EDGX.............................................. 8,500 6,000 550
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The Exchange believes that this level of diligence and transparency
is called for by the requirements of Section 19(b)(1) under the Act \6\
and Rule 19b-4 thereunder \7\ with respect to the types of information
self-regulatory organizations (``SROs'') should provide when filing fee
changes,\8\ and Section 6(b) of the Act,\9\ which requires, among other
things, that exchange fees be reasonable and equitably allocated,\10\
not designed to permit unfair discrimination,\11\ and that they not
impose a burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.\12\
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\6\ 15 U.S.C. 78s(b)(1).
\7\ 17 CFR 240.19b-4.
\8\ In 2019, Commission staff published guidance suggesting the
types of information that SROs may use to demonstrate that their fee
filings comply with the standards of the Act (``Fee Guidance'').
While 24X understands that the Fee Guidance does not create new
legal obligations of SROs, the Fee Guidance is consistent with 24X's
view about the type and level of transparency that exchanges should
meet to demonstrate compliance with their existing obligations when
they seek to charge new fees. See Staff Guidance on SRO Rule Filings
Relating to Fees (May 21, 2019), available at: <a href="http://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees">http://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees</a>.
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b)(8).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \13\ of the Act in general, and
furthers the objectives of Section 6(b)(4) \14\ of the Act, in
particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees, and other charges among its
Members and other persons using its facilities. Additionally, the
Exchange believes that the proposed fees are consistent with the
objectives of Section 6(b)(5) \15\ of the Act in that they are designed
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and national market
system, and, in general, to protect investors and the public interest,
and, particularly, are not designed to permit unfair discrimination
between customers, issuers, brokers, or dealers.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4).
\15\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed fees for connectivity
services to 24X are reasonable, equitable, not unfairly discriminatory,
and otherwise consistent with the Act because, as described above, they
are consistent with, and in some cases lower than, the connectivity
fees charged by other exchanges,\16\ and because the allocation of the
proposed fees, which increase depending on the number of physical
connections or application sessions used by each Member or non-Member,
is based on the resources consumed by the respective type of market
participant (i.e., lowest resource consuming Members and non-Members
will pay the least, and highest resource consuming Members and non-
Members will pay the most).
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\16\ See supra note 5.
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In addition, the proposed fees will help to encourage connectivity
services usage in a way that aligns with the Exchange's regulatory
obligations. As a national securities exchange, the Exchange is subject
to Regulation Systems Compliance and Integrity (``Reg SCI'').\17\ Reg
SCI Rule 1001(a) requires that the Exchange establish, maintain, and
enforce written policies and procedures reasonably designed to ensure
(among other things) that its Reg SCI systems have levels of capacity
adequate to maintain the Exchange's operational capability and promote
the maintenance of fair and orderly markets.\18\ By encouraging market
participants to be efficient with their usage of connectivity services,
the fees will support the Exchange's Reg SCI obligations in this regard
by ensuring that unused application sessions are available to be
allocated based on individual Member or Non-Member needs and as the
Exchange's overall order and trade volumes increase. This will
encourage market participants to purchase only what they need.
Additionally, because the Exchange will charge a lower rate for a
physical connection to the Disaster Recovery facility and no fee for
connection to the Test Environment, the proposed fee structure will
further support the Exchange's Reg SCI compliance by reducing the
potential impact of a disruption should the Exchange be required to
switch to its Disaster Recovery facility and encouraging Members to
engage in any necessary system testing with low or no cost imposed by
the Exchange.\19\
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\17\ 17 CFR 242.1000-1007.
\18\ 17 CFR 242.1001(a).
\19\ While some Members might directly connect to the Disaster
Recovery facility and incur the proposed $2,850 per month fee, there
are other ways to connect to the Exchange, such as through a service
bureau or extranet. A Member connecting through another method would
not incur any fees charged directly by the Exchange. However, the
Exchange notes that a third-party service provider providing
connectivity to the Exchange likely would charge a fee for providing
such connectivity; such fees are not set by or shared in by the
Exchange.
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In conclusion, the Exchange submits that its proposed fee structure
satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of the Act
\20\ for the reasons discussed above in that it provides for the
equitable allocation of reasonable dues, fees, and other charges among
its Members and other persons using its facilities, does not permit
unfair discrimination between customers,
[[Page 46944]]
issuers, brokers, or dealers, and 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, particularly
as the proposal neither targets nor will it have a disparate impact on
any particular category of market participant.
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\20\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\21\ the Exchange
does not believe that the proposed rule change would impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of the Act.
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\21\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition
The Exchange does not believe that the proposed rule change to
establish connectivity fees would place certain market participants at
the Exchange at a relative disadvantage compared to other market
participants because the proposed connectivity pricing is associated
with relative usage of the Exchange by each market participant and does
not impose a barrier to entry to smaller participants. The Exchange
believes its proposed pricing is reasonable considering what other
exchanges charge and, when coupled with the availability of third-party
providers that also offer connectivity solutions, that participation on
the Exchange is affordable for all market participants, including
smaller trading firms. As described above, the connectivity services
purchased by market participants typically increase based on their
additional message traffic and the complexity of their operations. The
market participants that utilize more connectivity services typically
utilize the most bandwidth, and those are the participants that consume
the most resources from the network. Accordingly, the proposed fees for
connectivity services do not favor certain categories of market
participants in a manner that would impose a burden on competition;
rather, the allocation of the proposed fees for connectivity reflects
the network resources consumed by the various sizes of market
participants.
Intermarket Competition
The Exchange does not believe the proposed connectivity fees place
an undue burden on competition on other SROs that is not necessary or
appropriate. In particular, the proposed fees are comparable to and in
some cases lower than fees charged by other exchanges for the same or
similar services.\22\ The Exchange is also unaware of any assertion
that the proposed fees for connectivity services would somehow unduly
impair its competition with other exchanges, and competing equities
exchanges are free to adopt comparable fee structures subject to the
SEC rule filing process.
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\22\ See supra note 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 solicited or received with respect to the
proposed rule change.
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) \23\ of the Act and subparagraph (f)(2) of Rule 19b-4
thereunder,\24\ because it establishes a due, fee, or other charge
imposed by the Exchange. 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 necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. If the Commission takes such action, the Commission shall
institute proceedings under Section 19(b)(2)(B) \25\ of the Act to
determine whether the proposed rule change should be approved or
disapproved.
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\23\ 15 U.S.C. 78s(b)(3)(A).
\24\ 17 CFR 240.19b-4(f)(2).
\25\ 15 U.S.C. 78s(b)(2)(B).
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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="81f3f4ede4ace2eeecece4eff5f2c1f2e4e2afe6eef7">[email protected]</span></a>. Please include
file number SR-24X-2025-10 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-24X-2025-10. 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-24X-2025-10 and should be submitted on
or before October 21, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-19010 Filed 9-29-25; 8:45 am]
BILLING CODE 8011-01-P
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