Notice2025-22611
Self-Regulatory Organizations: Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fee Schedule To Modify the Liquidity Incentive Program
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Published
December 12, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 237 (Friday, December 12, 2025)</title>
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[Federal Register Volume 90, Number 237 (Friday, December 12, 2025)]
[Notices]
[Pages 57800-57802]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-22611]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104353; File No. SR-LTSE-2025-24]
Self-Regulatory Organizations: Long-Term Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Fee Schedule To Modify the Liquidity Incentive Program
December 9, 2025. Pursuant to the provisions of Section 19(b)(1) under
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4
thereunder,\2\ notice is hereby given that on November 26, 2025, Long-
Term Stock Exchange, Inc. (``LTSE'' or the ``Exchange'') filed with the
Securities and Exchange Commission (the ``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared by the self-regulatory organization. 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 is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend its Fee Schedule to
modify the Liquidity Incentive Program (``LTSE LIP'' or ``Program'').
The Exchange proposes to implement the changes to the fee schedule
pursuant to this proposal on December 1, 2026.
The text of the proposed rule change is available at the Exchange's
website at <a href="https://longtermstockexchange.com/">https://longtermstockexchange.com/</a>, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement on 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 self-regulatory organization 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
On July 1, 2025, the Exchange implemented the LTSE LIP to enhance
liquidity and improve market quality in LIP Enhanced Securities \3\
traded on the Exchange by incentivizing Members to quote at or better
than the National Best Bid and Offer (``NBBO'') and provide liquidity
in both select securities, the LIP Enhanced Securities and more
generally in all other securities traded on LTSE, the LIP Standard
Securities.<SUP>4 5</SUP> On August 11, 2025, the LIP was subsequently
amended to reduce the quoting threshold in a LIP Enhanced Security from
60% to 30% of the time at the NBBO of the Regular Market Session,\6\ in
order to share in SIP Quote Revenue,\7\ which is distributed
proportionally among eligible Members based on quoting activity.\8\
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\3\ LIP Enhanced Securities means a list of securities
designated as such, that are used for the purposes of qualifying for
the incentives within the LIP. The universe of these securities will
be determined by the Exchange and published on the Exchange's
website. See Definitions Section of the Fee Schedule.
\4\ LIP Standard Securities means a security not defined as a
``LIP Enhanced Security'' and traded on LTSE. See Definitions
Section of the Fee Schedule.
\5\ See Securities Exchange Release No. 34-103517 (July
22,2025), 90 FR 35325 (July 25, 2025) (SR-LTSE-2025-16). The program
includes three key incentives: (1) a proportional share of 80% of
LTSE's SIP Quote Revenue for LIP Enhanced Securities, distributed
among qualifying Members based on Quoting activity; (2) reduced
taker fees for LIP Enhanced Securities, available to all Members
without quoting obligations; and (3) for LIP Standard Securities, a
choice between a proportional share of 20% of LTSE's SIP Quote
Revenue or a quarterly credit, contingent on meeting specific
quoting thresholds.
\6\ Regular Market Session or Regular Market Hours means the
time between 9:30 a.m. and 4:00 p.m. Eastern Time. See Exchange Rule
1.160(kk).
\7\ The Securities Information Processors (``SIPs''), which
include the Unlisted Trading Privileges and Consolidated Tape
Association, collect fees from subscribers for trade and quote tape
data received from trading centers and reporting facilities, such as
the Exchange (collectively, ``SIP Participants''). After deducting
the cost of operating each tape, the profits are allocated among the
SIP Participants on a quarterly basis, according to a complex set of
calculations that consider estimates of anticipated Market Data
Revenue (``MDR''), adjustments to comport to actual MDR from
previous quarters and a non-linear aggregation of total trading and
quoting activity in Tape A, B and C securities in attributing MDR to
each SIP Participant. Based on these calculations, the SIPs provide
MDR payments to each SIP Participant during the second month of each
quarter for trade and quote data from the previous calendar quarter,
which are subject to adjustment through subsequent quarterly
payments. These payments can be divided into six pools (i.e., trade
and quote activity in Tape A, B, and C securities).
\8\ See Securities Exchange Release No. 34-103700 (August 13,
2025), 90 FR 40090 (August 18, 2025) (SR-LTSE-2025-18) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Amend
the Liquidity Incentive Program).
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The Exchange now proposes several additional changes to the Fee
Schedule to modify the LTSE LIP. The proposed amendments would (i)
increase the revenue-sharing percentage for LIP Standard Securities
under Incentive 3 from 20% to 50%; (ii) authorize the Exchange to
change the MQS mid-quarter, with notice to Members; (iii) remove
transitional language that applied to the initial roll-out of the
Program and the third quarter of 2025; and (iv) make other clarifying
edits to the language within LIP section of the Fee Schedule.
Under the current Program, Incentive 3 provides Members quoting in
LIP Standard Securities a proportional share of 20% of LTSE SIP Quote
Revenue. The Exchange is now proposing a midquarter increase of that
allocation to 50%, an increase designed to improve the competitiveness
of the Program and further reward firms that maintain displayed quotes
at the NBBO on LTSE, thereby improving consolidated market quality. The
proposed increase more closely aligns the economic rewards distributed
under the LTSE LIP with the value of displayed liquidity that Members
contribute to the Exchange's market data revenue, fostering a fairer
and more transparent incentive structure. The Exchange expects that
increasing the revenue-sharing percentage will encourage Members to
maintain high-quality, stable quotes throughout the trading day,
improving displayed liquidity and contributing to the overall integrity
of the market. This adjustment is the result of the Exchange's ongoing
evaluation of the Program's effectiveness of increasing participation
and quote quality.
With this midquarter adjustment the Exchange is proposing to add a
description to the LIP Notes section of the Fee Schedule to detail how
the SIP Quote Revenue for Incentive 3 will be calculated for the fourth
quarter of 2025 to account for the fact that the proportional share of
the SIP Quote Revenue will not apply uniformly across the quarter. A
Member that has qualified for Incentive #3 will share in 20% of the
LTSE SIP Quote Revenue for that LIP Standard Security, distributed
proportionally across all qualifying member firms within the calendar
months of October and November. A Member that has qualified for
Incentive #3 will share in 50% of the LTSE SIP Quote Revenue for that
LIP Standard Security, distributed proportionally
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across all qualifying member firms within the calendar month of
December.
By allowing Members to receive increased revenue the Exchange seeks
to encourage greater participation in LIP Standard Securities as soon
as possible and provide the opportunity to share in SIP Quote Revenue,
which is distributed proportionally among eligible Members based on
quoting activity. The Exchange notes that it is not proposing any
changes to the SIP Quote Revenue distribution, which will continue to
occur at the end of each calendar quarter.
The Exchange also proposes to reduce the MQS applicable to LIP
Enhanced Securities to one round lot effective December 1, 2026. The
Exchange established higher MQS levels, after the initial rollout of
the Program, ranging from 200 to 700 shares, in an effort to encourage
participants to display meaningful size at the NBBO. However,
experience during the most recent quarters has shown such thresholds
have created participation barriers for many potential quoting Members
and limited the overall volume of quoting activity on the Exchange.
By returning to one round lot MQS, the same level used at the
Program's initial launch, the Exchange seeks to lower barriers to
entry, attract additional quoting volume, and make LTSE LIP more
accessible and practical for Members to implement within their existing
market-making and risk systems. The Exchange believes that a lower MQS
will promote broader participation, enhance competition among liquidity
providers and contribute to tighter spreads and improved market
quality.
The Exchange is also seeking flexibility to modify MQS in the
future without having to submit a separate rule filing each time an
adjustment is warranted. Specifically, the Exchange is seeking
authority to revise MQS mid-quarter by publishing the updated levels on
its website and providing at least one business day's notice to Members
prior to implementation. This mechanism will allow the Exchange to
respond more nimbly to changes in market conditions, participation
trends and liquidity characteristics, while maintaining transparency
and predictability for Members.
The Exchange believes that this measured approach, lowering MQS now
to foster engagement while establishing the ability to recalibrate in
future quarters, strikes the appropriate balance between accessibility
and market impact. It supports the Exchange's broader objectives of
increasing on-Exchange activity, providing fair and non-discriminatory
access to participation in the Program, and maintaining a transparent,
competitive, and data-driven incentive framework.
The Exchange also proposes to delete language from the Fee Schedule
that is no longer operative. First, the Exchange is deleting language
that addressed the MQS at the initial launch of the Program and no
longer is applicable. Next, the Exchange is proposing to delete text
that applied only to the third quarter of 2025 and has since expired.
Those provisions, adopted in SR-LTSE-2025-18,\9\ temporarily adjusted
quoting thresholds and revenue-sharing parameters that are no longer
operative. These changes are administrative in nature and are intended
to maintain a clear and accurate Fee Schedule by removing obsolete
text. The deletion does not alter any current incentives or modify the
operation of the LTSE LIP.
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\9\ See note 8.
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The Exchange is proposing to add clarifying language to the Percent
Time at NBBO definition within Section B.2 (Liquidity Incentive
Program) of the Fee Schedule. Specifically, the Exchange proposes to
add the word ``displayed'' before quote so the sentence now reads: For
the avoidance of doubt, only displayed quotes that are at the NBB or
NBO during the Regular Market Session count towards the Percent Time at
NBBO calculation.\10\
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\10\ The Exchange believes adding the word ``displayed'' ensures
the term is consistent throughout the LTSE Fee Schedule. Further,
the Exchange notes that displayed quotes can include orders that
rest on the LTSE Order Book and are therefore treated as displayed
quotes within the System.
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Finally, while not included in the Fee Schedule, in the initial LIP
filing the Exchange detailed that Incentive #3 Members who choose the
quarterly credit can apply that credit in the calendar quarter in which
they earned it, or the subsequent calendar quarter.\11\ The Exchange is
proposing to amend this statement to state that the quarterly credit
expires at the end of the calendar quarter a year after it is earned,
on a rolling basis. For example, a Member who earns an Incentive #3
credit in Q1 2026 would have until the end of Q1 2027 to apply the
credit to any monthly invoice. In turn, a Member who earns an Incentive
#3 credit in Q4 2025 would have until the end of Q4 2026 to apply the
credit. The Exchange believes this will allow Members to have more
flexibility when choosing to apply their Incentive #3 credit which may
in turn increase Member participation in the program, benefiting other
investors by providing improved trading conditions for all market
participants.
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\11\ See note 5.
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(b) Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\12\ in general, and furthers the objectives of Section
6(b)(4) of the Act,\13\ in particular, in that it provides for the
equitable allocation of reasonable dues, fees and other charges among
all of its Members and issuers and other persons using its facilities;
Section 6(b)(5) of the Act,\14\ which requires, among other things,
that the rules of the Exchange be 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
to protect investors and the public interest. The Exchange also
believes that the proposed rule change is reasonable, fair and
equitable, and non-discriminatory.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
\14\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow or discontinue or reduce use of certain categories of
products, in response to new or different pricing structures being
introduced into the market. Accordingly, competitive forces constrain
the Exchange's transaction fees and rebates, and market participants
can readily trade on competing venues if they deem pricing levels at
those other venues to be more favorable.
The Exchange believes that increasing the revenue-sharing
percentage under Incentive 3 from 20% to 50% is reasonable and
equitable because it better reflects the value that displayed quotes
contribute to the national market system and provides a stronger
economic incentive for Members to supply liquidity on the Exchange.
The change is not unfairly discriminatory, as all Members that meet
the same quoting criteria are eligible to receive the increased revenue
share on identical terms and it will enhance, rather than burden,
intermarket competition by encouraging additional displayed liquidity
on LTSE.
The Exchange believes that reducing the MQS to one round lot and
permitting future adjustments without separate rule filings is
reasonable, equitable and not unfairly discriminatory. The change
lowers the barriers to entry, aligns quoting requirements with Members'
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operational capabilities, and makes participation in the Program more
accessible to a wider range of Members, including smaller liquidity
providers that may not maintain large inventory positions in each
security.
Providing the Exchange with flexibility to adjust MQS mid-quarter,
with advance public notice, allows it to respond promptly to evolving
market conditions, participation trends, and liquidity characteristics
while maintaining transparency. This adaptive approach supports the
maintenance of fair and orderly markets consistent with Section 6(b)(5)
of the Act and fosters competition among liquidity providers by
ensuring the quoting requirements remain balanced and attainable.
The Exchange believes that deleting text that is no longer
applicable and adding clarifying text is consistent with Section
6(b)(5) and 6(b)(1) of the Act because it enhances transparency and
clarity in the Fee Schedule. The removal is administrative, eliminates
obsolete provisions and ensures that the rule text accurately reflects
the Program currently in effect. It does not modify and incentives or
alter Member obligations and therefore imposes no burden on
competition.
Taken together, these amendments are designed to strengthen the
LTSE LIP by improving participation incentives, aligning Program
parameters with market realities, and maintaining clear and transparent
rule text. The Exchange believes the proposal supports the objectives
of Section 6(b)(5) of the Act by fostering fair competition,
encouraging displayed liquidity, and promoting a more efficient and
transparent market environment for investors.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed change will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act. Instead, as discussed above, the proposal
is intended to enhance market quality on the Exchange by encouraging
additional quoting activity on LTSE and promoting more competitive
displayed markets. The proposed amendments are designed to make the
LTSE LIP more accessible and attractive to a broader range of Members.
Lowering the MQS to one round lot reduces barriers to participation and
enables more Members, particularly smaller or mid-sized liquidity
providers, to qualify for LTSE LIP incentives. Increasing the revenue-
sharing percentage for LIP Standard Securities further strengthens the
economic incentives to post displayed liquidity, while the flexibility
to modify MQS with notice allows the Exchange to maintain requirements
that are appropriately scaled to prevailing market conditions. As a
result, the Exchange believes the proposal would enhance its
competitiveness as a market that attracts actionable orders, thereby
making it a more desirable destination venue for its customers. For
these reasons, the Exchange believes that the proposal furthers the
Commission's goal in efficient pricing of individual stocks for all
types of orders, large and small.'' \15\
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\15\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 47396 (June 29, 2005).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on 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)(ii) of the Act \16\ and paragraph (f)(2) of Rule 19b-4
thereunder.\17\
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\16\ 15 U.S.C. 78s(b)(3)(A)(ii).
\17\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend the rule
change if it appears to the Commission that the action is necessary or
appropriate in the public interest, for the protection of investors, or
would otherwise further the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#ef9d9a838ac28c8082828a819b9caf9c8a8cc1888099"><span class="__cf_email__" data-cfemail="7d0f081118501e1210101813090e3d0e181e531a120b">[email protected]</span></a>. Please include
File Number SR-LTSE-2025-24 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-LTSE-2025-24. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the filing will be available for inspection and copying at
the principal office of LTSE and on its internet website at <a href="https://longtermstockexchange.com/">https://longtermstockexchange.com/</a>. 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-LTSE-2025-24 and should be submitted on or before January 2, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-22611 Filed 12-11-25; 8:45 am]
BILLING CODE 8011-01-P
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