Notice2025-23671
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 7, Sections 3 and 4 Regarding the Crossing Fee Cap
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 60180-60182]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23671]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104446; File No. SR-GEMX-2025-34]
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 7,
Sections 3 and 4 Regarding the Crossing Fee Cap
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 15, 2025, Nasdaq GEMX, LLC (``GEMX'' 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 Options 7, Section 3, Regular Order
Fees and Rebates, and Options 7, Section 4, Other Options Fees and
Rebates.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/gemx/rulefilings">https://listingcenter.nasdaq.com/rulebook/gemx/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
GEMX proposes to amend Options 7, Section 3, Regular Order Fees and
Rebates, and Options 7, Section 4, Other Options Fees and Rebates with
respect the Crossing Fee Cap.
Options 7, Section 4
The Exchange currently offers a Crossing Fee Cap at Options 7,
Section 4,C. By way of background, Crossing Orders \3\ are contracts
that are submitted as part of a Facilitation, Solicitation, Price
Improvement Mechanism, Block or Qualified Contingent Cross Order. The
Crossing Fee Cap is $85,000 per month, per Member on all Firm
Proprietary \4\ transactions that are part of the originating or contra
side of a Crossing Order. All eligible volume from affiliated Members
is aggregated for purposes of the Crossing Fee Cap, provided there is
at least 75% common ownership between the Members as reflected on each
Member's Form BD, Schedule A. Fees charged by the Exchange for
Responses to Crossing Orders are not included in the calculation of the
monthly fee cap. Surcharge fees charged by the Exchange for licensed
products and the fees for index options as set forth in Options 7,
Section 3 are not included in the calculation of the monthly fee cap. A
service fee of $0.00 per side applies to all order types that are
eligible for the fee cap. The service fee applies once a Member has
reached the fee cap level and would apply to every contract side above
the fee cap. A Member who did not reach the monthly fee cap is not
charged the service fee. Once the fee cap is reached, the service fee
applies to eligible Firm Proprietary orders in all Nasdaq GEMX
products. The service fee is not calculated in reaching the cap. For
purposes of the Crossing Fee Cap, the Exchange attributes eligible
volume to the GEMX Member on whose behalf the Crossing Order was
executed.
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\3\ ``Crossing Order'' is an order executed in the Exchange's
Facilitation Mechanism, Solicited Order Mechanism, Price Improvement
Mechanism or submitted as a Qualified Contingent Cross order. For
purposes of this Pricing Schedule, orders executed in the Block
Order Mechanism are also considered Crossing Orders. See Options 7,
Section 1(c).
\4\ A ``Firm Proprietary'' order is an order submitted by a
member for its own proprietary account. See Options 7, Section 1(c).
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[[Page 60181]]
At this time, the Exchange proposes to remove the Crossing Fee Cap
from its Pricing Schedule in Options 7, Section 4,C. The Exchange also
proposes to remove note 8 at Options 7, Section 3 that refers to the
Crossing Fee Cap. Note 8 of Options 7, Section 3 states, ``Firm
Proprietary contracts traded are subject to the Crossing Fee Cap, as
provided in Options 7, Section 4C.'' Finally, the Exchange proposes to
remove references to note 8 in the tables in Options 7, Section 3.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\5\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\6\ 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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\5\ See 15 U.S.C. 78f(b).
\6\ See 15 U.S.C. 78f(b)(4) and (5).
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The proposed changes to the Pricing Schedule are reasonable in
several respects. As a threshold matter, the Exchange is subject to
significant competitive forces in the market for order flow, which
constrains its pricing determinations. The fact that the market for
order flow is competitive has long been recognized by the courts. In
NetCoalition v. Securities and Exchange Commission, the D.C. Circuit
stated, ``[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 of
order flow from broker dealers'. . . .'' \7\
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\7\ See NetCoalition, 615 F.3d at 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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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.
The Exchange's proposal to remove the Crossing Fee Cap of $85,000
within Options 7, Section 4,C and note 8 in Options 7, Section 3 is
reasonable because the Exchange no longer seeks to incentivize Members
for executing a high volume of Firm Proprietary Crossing Orders on the
Exchange. While the Exchange's Crossing Fee Cap could have potentially
lowered transaction fees for Members providing liquidity on the
Exchange, the program did not attract Members. While the Exchange
believed the Crossing Fee Cap would provide additional opportunities
for market participants to interact with this Crossing Order Flow,
contributing to a robust and competitive market, the Exchange notes
that the fee [sic] did not achieve those goals and therefore the
Exchange seeks to remove the fee [sic].
The Exchange's proposal to remove the Crossing Fee Cap of $85,000
in Options 7, Section 4,C and note 8 in Options 7, Section 3 is
equitable and not unfairly discriminatory as no Member would be
eligible for the Crossing Fee Cap.
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 remove the Crossing Fee Cap of $85,000
in Options 7, Section 4,C and note 8 in Options 7, Section 3 does not
impose an undue burden on competition as no Member would be eligible
for the Crossing Fee Cap.
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.\8\ 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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\8\ 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#90e2e5fcf5bdf3fffdfdf5fee4e3d0e3f5f3bef7ffe6"><span class="__cf_email__" data-cfemail="2755524b420a44484a4a424953546754424409404851">[email protected]</span></a>. Please include
file number SR-GEMX-2025-34 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-GEMX-2025-34. 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.
[[Page 60182]]
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-GEMX-2025-34 and should
be submitted on or before January 13, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23671 Filed 12-22-25; 8:45 am]
BILLING CODE 8011-01-P
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