Notice2025-23653
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend BX Equity 6, Section 4 (Exchange Sharing of Participant Risk Settings) To Permit the Allocation of Responsibility to Clearing Members
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
December 23, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 244 (Tuesday, December 23, 2025)</title>
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[Federal Register Volume 90, Number 244 (Tuesday, December 23, 2025)]
[Notices]
[Pages 60196-60198]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23653]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104453; File No. SR-BX-2025-031]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend BX
Equity 6, Section 4 (Exchange Sharing of Participant Risk Settings) To
Permit the Allocation of Responsibility to Clearing Members
December 18, 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 December 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 BX Equity 6, Section 4 (Exchange
Sharing of Participant Risk Settings) to permit the allocation of
responsibility to clearing members.
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.
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 to amend BX Equity 6, Section 4 to permit the
allocation of responsibility to clearing members. Specifically, the
Exchange proposes to add a new Section 4(b) (Clearing Member
Designation) to allow a Participant that does not self-clear to
allocate responsibility for establishing and adjusting its risk levels
to a clearing member that clears transactions on behalf of the
Participant.\3\ A clearing member guarantees transactions executed on
the Exchange for Participants with whom it has entered into a clearing
arrangement, and therefore bears the risk associated with those
transactions. Because a clearing member bears the risk on behalf of its
associated Participant, the Exchange believes that it is appropriate
for the clearing member to have knowledge of what risk settings the
Participant may utilize within the Exchange's trading system, as well
as the option to set and adjust the risk levels. Therefore, the
Exchange proposes to make a Participant's risk settings in BX Equity 6,
Section 5 available to a clearing member, as well as the option to set
and adjust the risk levels, if authorized by a Participant.
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\3\ The term ``Participant'' has the meaning set forth in BX
Equity 1, Section 1(a)(9).
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For clarification, the Exchange does not guarantee that these risk
controls will be sufficiently comprehensive to meet all of a
Participant's needs, nor are the controls designed to be the sole means
of risk management, and using these controls will not necessarily meet
a Participant's obligations required by Exchange or federal rules--
including, without limitation, Rule 15c3-5 under the Act \4\ (``Rule
15c3-5''). Use of the
[[Page 60197]]
Exchange's risk settings in BX Equity 6, Section 5 will not
automatically constitute compliance with Exchange or federal rules, and
the responsibility for compliance with all Exchange and federal rules
remains with the Participant.\5\
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\4\ 17 CFR 240.15c3-5.
\5\ See SEC Division of Trading and Markets, Responses to
Frequently Asked Questions Concerning Risk Management Controls for
Brokers or Dealers with Market Access (Apr. 15, 2014), available at
<a href="https://www.sec.gov/rules-regulations/staff-guidance/trading-markets-frequently-asked-questions/divisionsmarketregfaq-0">https://www.sec.gov/rules-regulations/staff-guidance/trading-markets-frequently-asked-questions/divisionsmarketregfaq-0</a>.
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If a Participant chooses to designate responsibility to a clearing
member, the Participant may view any risk levels established by the
clearing member pursuant to proposed BX Equity 6, Section 4(b). Even if
a clearing member is designated, a Participant will continue to be
notified by the Exchange of any action taken regarding its trading
activity. A Participant may revoke the responsibility it has allocated
to a clearing member at any time.
The Exchange also proposes labeling the current rule text at BX
Equity 6, Section 4 as BX Equity 6, Section 4(a) (Sharing Risk
Settings). The text of this newly labeled provision remains completely
unchanged.
The Exchange will announce the implementation date of the change
described in this filing in an Equity Trader Alert at least 30 days
prior to implementation. At present, the Exchange expects that the
functionality described in this filing will be ready for implementation
in the first quarter of 2026, although that time frame is subject to
change.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\7\ 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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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As a preliminary matter, the Exchange notes that this proposal is
not novel. Earlier this year The Nasdaq Stock Market LLC made a
parallel change to its rulebook.\8\ The language of Nasdaq Equity 6,
Section 4(b) is substantively identical to the new rule text proposed
by the Exchange in the present filing.\9\
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\8\ See Securities Exchange Act Release No. 103211 (June 9,
2025), 90 FR 25095 (June 13, 2025) (File No. SR-NASDAQ-2025-043)
(Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change to
Amend Equity 6, Section 4 (Exchange Sharing of Participant Risk
Settings) to Permit the Allocation of Responsibility to Clearing
Members) (``Nasdaq Filing'').
\9\ As adopted in the Nasdaq Filing, this Nasdaq rule reads as
follows: ``Clearing Member Designation. A Participant that does not
self-clear may allocate the responsibility for establishing and
adjusting the risk levels identified in Equity 6, Section 5 to a
clearing member that clears transactions on behalf of the
Participant, if designated in a manner prescribed by the Exchange. A
Participant that chooses to allocate responsibility to its clearing
member may view any risk levels established by the clearing member
pursuant to this Rule, and will be notified of any action taken by
the Exchange with respect to its trading activity. A Participant may
revoke responsibility allocated to its clearing member pursuant to
this paragraph at any time, if designated in a manner prescribed by
the Exchange.''
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The Exchange believes that the proposed amendment to BX Equity 6,
Section 4 would provide clearing members, who have assumed certain
risks of Participants, greater control over risk tolerance and exposure
on behalf of their correspondent Participant, while helping to ensure
that both the Participant and its clearing member are aware of
developing issues.
A clearing member guarantees transactions executed on Nasdaq for
members with whom it has entered into a clearing arrangement, and
therefore bears the risk associated with those transactions. The
Exchange therefore believes that it is appropriate for a clearing
member to have knowledge of what risk settings a Participant may
utilize within the Exchange's trading system, as well as the option to
set and adjust the risk levels. The proposal will permit a clearing
member with whom a Participant has entered into a clearing arrangement
to better monitor and manage the potential risks assumed by the
clearing member, thereby providing the clearing member with greater
control and flexibility over setting its own risk tolerance and
exposure and aiding the clearing member in complying with the
requirements of the Act.
The Exchange also believes that the proposed amendment will assist
Participants and clearing members in managing their financial exposure
which, in turn, could enhance the integrity of trading on the
securities markets and help to ensure the stability of the financial
system. Moreover, a Participant may revoke responsibility allocated to
its clearing member at any time.
The Exchange believes that the proposed rule change does not
unfairly discriminate among Participants because the use of the risk
settings under BX Equity 6, Section 5 would be available to all
Participants and their clearing members, if authorized. In addition,
because all orders on the Exchange pass through the Exchange's risk
checks, there would be no difference in the latency experienced by
Participants who have opted to use the risk settings versus those who
have not opted to use them.\10\
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\10\ All Exchange orders pass through basic risk checks
regardless of whether a Participant opts into a risk setting.
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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. The proposed rule change is
designed to provide Participants and their clearing members with
additional means to monitor and control risk. The proposed rule may
increase confidence in the proper functioning of the markets and
contribute to additional competition among trading venues and broker-
dealers. Rather than impede competition, the proposal is designed to
facilitate more robust risk management by Participants and clearing
members, which, in turn, could enhance the integrity of trading on the
securities markets and help to ensure the stability of the financial
system.
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
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \11\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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
[[Page 60198]]
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 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#750700191058161a1818101b0106350610165b121a03"><span class="__cf_email__" data-cfemail="b7c5c2dbd29ad4d8dadad2d9c3c4f7c4d2d499d0d8c1">[email protected]</span></a>. Please include
file number SR-BX-2025-031 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-BX-2025-031. 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-2025-031 and should be submitted on
or before January 13, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23653 Filed 12-22-25; 8:45 am]
BILLING CODE 8011-01-P
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