Notice2025-23813
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend SQF Port and SQF Purge Port Fees
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Published
December 29, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 245 (Monday, December 29, 2025)</title>
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[Federal Register Volume 90, Number 245 (Monday, December 29, 2025)]
[Notices]
[Pages 60841-60844]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23813]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104469; File No. SR-NASDAQ-2025-107]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend SQF Port and SQF Purge Port Fees
December 19, 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 16, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' 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 Nasdaq Options Market LLC
(``NOM'') Specialized Quote Feed \3\ or ``SQF'' Port and SQF Purge Port
pricing at Options 7, Section 3, Nasdaq Options Market--Ports and other
Services.\4\
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\3\ ``Specialized Quote Feed'' or ``SQF'' is an interface that
allows Market Makers to connect, send, and receive messages related
to quotes, Immediate-or-Cancel Orders, and auction responses into
and from the Exchange. Features include the following: (1) options
symbol directory messages (e.g., underlying instruments); (2) system
event messages (e.g., start of trading hours messages and start of
opening); (3) trading action messages (e.g., halts and resumes); (4)
execution messages; (5) quote messages; (6) Immediate-or-Cancel
Order messages; (7) risk protection triggers and purge
notifications; (8) opening imbalance messages; (9) auction
notifications; and (10) auction responses. The SQF Purge Interface
only receives and notifies of purge requests from the Market Maker.
Market Makers may only enter interest into SQF in their assigned
options series. Immediate-or-Cancel Orders entered into SQF are not
subject to the Order Price Protection, Market Order Spread
Protection, or Size Limitation Protection in Options 3, Section
15(a)(1), (a)(2), and (b)(2) respectively. See Options 3, Section
7(e)(1)(B).
\4\ On December 8, 2025 the Exchange filed SR-NASDAQ-2025-100.
On December 16, 2025 the Exchange withdrew SR-NASDAQ-2025-100 and
filed this rule change.
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While the changes proposed herein are effective upon filing, the
Exchange has designated the amendments become operative on January 1,
2026.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings">https://listingcenter.nasdaq.com/rulebook/nasdaq/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
NOM proposes to amend its SQF Port and SQF Purge Port pricing at
Options 7, Section 3, Nasdaq Options Market--Ports and other Services
by offering an incentive to Market Makers \5\ to lower their SQF Port
and SQF Purge Port Fees.
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\5\ The term ``NOM Market Maker'' or (``M'') is a Participant
that has registered as a Market Maker on NOM pursuant to Options 2,
Section 1, and must also remain in good standing pursuant to Options
2, Section 9. In order to receive NOM Market Maker pricing in all
securities, the Participant must be registered as a NOM Market Maker
in at least one security. See Options 1, Section 1(a).
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[[Page 60842]]
NOM currently assess an SQF Port Fee and an SQF Purge Port Fee as
follows: The first 5 ports (1-5) would be assessed $1,620 per port, per
month; the next 15 ports (6-20) would be assessed $1,080 per port, per
month; and all ports over 20 ports (21 and above) would be assessed
$540 per port, per month. Today, NOM aggregates the SQF Port and SQF
Purge Ports for purposes of determining the applicable tier
qualification.
At this time, the Exchange proposes to amend the rule text to
state, ``The SQF Port Fee and the SQF Purge Port Fee are aggregated for
the below incremental tiers as follows.'' The addition of this language
will add clarity to the current billing of these port.
Additionally, at this time, the Exchange proposes to offer an
opportunity to lower SQF Port and SQF Purge Port Fees. Specifically,
the Exchange proposes to offer certain discounts to Market Makers that
have transacted a certain percentage of Total National Volume in the
prior month. For purposes of this proposal, the percentage of Total
National Volume is calculated by taking the total Market Maker Penny
Symbol and Market Maker Non-Penny Symbol volume (excluding index
options) executed on the Exchange in the prior month and attributing a
multiple of five times to that Non-Penny Symbol volume (numerator) and
dividing that by Market Maker volume (``M'' capacity at The Options
Clearing Corporation (``OCC'')) in multiply listed options across all
options exchanges (denominator or Total National Volume).
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Percentage SQF Port and SQF
Tier Percentage of Total National Volume Purge Port discount
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1....................................... less than 0.10%........................ 0
2....................................... greater than or equal to 0.10% and less 10
than 0.25%.
3....................................... greater than or equal to 0.25% and less 30
than 0.40%.
4....................................... greater than or equal to 0.40%......... 50
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With this proposal, a Market Maker that transacted less than 0.10%
of Total National Volume in the prior month would not receive a
discount on SQF Port and SQF Purge Port Fees. A Market Maker that
transacted greater than or equal to 0.10% and less than 0.25% of Total
National Volume in the prior month will be afforded a discount of 10%
on their SQF Port and SQF Purge Port Fees. A Market Maker that
transacted greater than or equal to 0.25% and less than 0.40% of Total
National Volume in the prior month will be afforded a discount of 30%
on their SQF Port and SQF Purge Port Fees. Finally, a Market Maker that
transacted greater than or equal to 0.40% of Total National Volume in
the prior month will be afforded a discount of 50% on their SQF Port
and SQF Purge Port Fees. By way of example, a Market Maker that
executed 3,000,000 in Penny Volume and 200,000 in Non-Penny Volume in a
given month on the Exchange, where the Total National Volume was
1,000,000,000, would qualify for a discount of 50% on their SQF Port
and SQF Purge Port Fees ((200,000 x 5 = 1,000,000) + 3,000,000 =
4,000,000 which is 0.40% of 1,000,000,000).
The Exchange proposes to calculate Market Maker Non-Penny Symbol
volume at five times the weight as compared to Market Maker Penny
Symbol volume because Non-Penny Symbols tend to have lower volumes and
this incentive should encourage a greater amount of volume in Non-Penny
Symbols. Overall, the proposed discounts should encourage Market Makers
to transact additional order flow on NOM with which other market
participants may interact, for an opportunity to lower SQF Port and SQF
Purge Port Fees. The Exchange proposes to exclude index options as
index options are generally not multiply listed.
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 Sections
6(b)(4) and 6(b)(5) of the Act,\7\ 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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) and (5).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \8\
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\8\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Likewise, in NetCoalition v. Securities and Exchange Commission \9\
(``NetCoalition'') the D.C. Circuit upheld the Commission's use of a
market-based approach in evaluating the fairness of market data fees
against a challenge claiming that Congress mandated a cost-based
approach.\10\ As the court emphasized, the Commission ``intended in
Regulation NMS that `market forces, rather than regulatory
requirements' play a role in determining the market data . . . to be
made available to investors and at what cost.'' \11\
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\9\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\10\ See NetCoalition, at 534-535.
\11\ Id. at 537.
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Further, ``[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'. . . .'' \12\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
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\12\ Id. at 539 (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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The proposed fee discounts for SQF Ports and SQF Purge Ports are
reasonable because they will attract a greater amount of order flow to
NOM with which other market participants
[[Page 60843]]
may interact while also lowering costs for certain Market Makers that
are able to transact greater than 0.10% of Total National Volume in the
prior month. The Exchange believes it is reasonable to lower costs for
certain Market Makers that transact greater than 0.10% of Total
National Volume on NOM because those Market Makers are affording other
NOM Participants an opportunity to interact with that order flow. The
proposal provides an incremental incentive for Market Makers that
transact at least 0.10% of Total National Volume, which provides a
higher benefit for satisfying increasingly more stringent criteria. The
Exchange believes that the value of the proposed discounts is
commensurate with the difficulty to achieve the corresponding
threshold. Additionally, the discounts may incentivize and attract more
volume and liquidity to the Exchange, which will benefit all Exchange
participants through increased opportunities to trade as well as
enhancing price discovery. The Exchange's proposed discounts are
substantially similar to Cboe Exchange, Inc.'s (``Cboe'') credit for
their BOE Bulk Port Fees.\13\
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\13\ Cboe currently offers its market makers credits on their
monthly BOE Bulk Port Fees. Specifically, if a Cboe market maker
affiliate (``affiliate'' defined as having at least 75% common
ownership between the two entities as reflected on each entity's
Form BD, Schedule A) or Cboe Appointed OFP receives a credit under
the Exchange's Volume Incentive Program (``VIP''), the Cboe market
maker will receive an access credit on their BOE Bulk Ports
corresponding to the VIP tier reached. The credit is based on the
Performance Tier earned by a market maker under Cboe's Liquidity
Provider Sliding Scale Adjustment Table. Tiers 4 and 5 earn a 40%
credit on monthly Cboe Bulk Port Fees. Cboe assesses BOE Bulk
Logical Ports a fee of $1,500 for 1 to 5 ports, a fee of $2,500 for
6 to 30 ports and a fee of $3,000 for over 30 ports. Additionally,
each BOE Bulk Logical Port will incur the logical port fee indicated
when used to enter up to 30,000,000 orders per trading day per
logical port as measured on average in a single month. Each
incremental usage of up to 30,000,000 orders per day per BOE Bulk
Logical Port will incur an additional logical port fee of $3,000 per
month. Incremental usage will be determined on a monthly basis based
on the average orders per day entered in a single month across all
subscribed BOE Bulk Logical Ports.
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NOM believes it is reasonable to offer fee discounts to those
Market Makers that primarily provide and post liquidity to the
Exchange, as it should encourage Market Makers to continue to
participate on the Exchange and add liquidity. Greater liquidity
benefits all market participants by providing more trading
opportunities and tighter spreads. The proposal would also mitigate the
costs incurred by Market Makers on NOM.
Calculating Market Maker Non-Penny Symbol volume at five times the
weight as compared to Penny Symbol volume is reasonable, equitable and
not unfairly discriminatory as Non-Penny Symbols tend to have lower
volumes and this incentive should encourage a greater amount of volume
in Market Maker Non-Penny Symbols.\14\ The Exchange proposes to
calculate the Market Maker Non-Penny Symbol volume in an uniform manner
for all Participants. The Exchange proposes to exclude index options as
index options are generally not multiply listed. Index Options would be
uniformly excluded.
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\14\ Penny Symbols typically are more liquid symbols.
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A NOM Market Maker requires only one SQF Port to submit quotes in
its assigned options series into NOM. A Market Maker may submit all
quotes through one SQF Port. This is also the case for an SQF Purge
Port. While a Market Maker may elect to obtain multiple SQF Ports and
SQF Purge Ports to organize its business,\15\ only one SQF Port is
necessary for a NOM Market Maker to fulfill its regulatory quoting
obligations.\16\
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\15\ For example, a Market Maker may desire to utilize multiple
SQF Ports for accounting purposes, to measure performance, for
regulatory reasons or other determinations that are specific to that
Participant.
\16\ Market Makers have various regulatory requirements as
provided for in Options 2, Section 4. Additionally, Market Makers
have certain quoting requirements with respect to their assigned
options series as provided in Options 2, Section 5. NOM also offers
a QUO protocol. Orders submitted by Market Makers into QUO are
treated as quotes.
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The proposed fee discounts for SQF Ports and SQF Purge Ports are
equitable and not unfairly discriminatory as they would apply uniformly
to each NOM Market Maker. The Exchange would uniformly calculate the
Market Maker's percentage each month. Although only Market Makers may
receive the proposed discounts, the Exchange notes that Market Makers
are valuable market participants that provide liquidity in the
marketplace and incur costs that other market participants do not
incur. Unlike other market participants, Market Makers are required to
provide continuous two-sided quotes on a daily basis,\17\ and are
subject to various obligations associated with providing liquidity.\18\
While the Exchange is not offering a discount to those Market Makers
that transact less than 0.10% of Total National Volume, the Exchange
notes that these Market Makers transact a much lower amount of
contracts on NOM as compared to other Market Makers who qualify for a
discount. In some cases, these Market Makers are not executing the
requisite amount of Penny Symbols or Non-Penny Symbols to obtain the
discount. Market Makers are required to compete with other Market
Makers and maintain active markets in all options in which the Market
Maker is registered.\19\ The Exchange believes that all Market Makers
are capable of quoting tighter or in a greater amount of options
classes to obtain the requisite volume to achieve a discount.
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\17\ See Options 2, Section 5.
\18\ See Options 2, Section 4.
\19\ See Options 2, Section 4(a)(3) and (6).
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The Exchange's proposal to amend the rule text to state, ``The SQF
Port Fee and the SQF Purge Port Fee are aggregated for the below
incremental tiers as follows'' is reasonable, equitable and not
unfairly discriminatory. The addition of this language will add clarity
to the current billing of these port.
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 proposed fee discounts
for SQF Ports and SQF Purge Ports do not impose a burden on competition
because they would apply uniformly to each Market Maker and the
Exchange would uniformly calculate the Market Maker's percentage each
month. Although only Market Makers may receive the proposed discounts,
the Exchange notes that Market Makers are valuable market participants
that provide liquidity in the marketplace and incur costs that other
market participants do not incur. Unlike other market participants,
Market Makers are required to provide continuous two-sided quotes on a
daily basis,\20\ and are subject to various obligations associated with
providing liquidity.\21\ Further, while the Exchange is not offering a
discount to those Market Makers that transact less than 0.10% of Total
National Volume, the Exchange notes that these Market Makers transact a
much lower amount of contracts on NOM as compared to other Market
Makers that qualify for the discount and/or these Market Makers are not
executing the requisite amount of Penny Symbols or Non-Penny Symbols to
obtain the discount. The Exchange's proposal does not impose an undue
burden on competition because Market Makers are required to compete
with other Market Makers and maintain active markets in all options in
which the Market Maker is registered.\22\ The
[[Page 60844]]
Exchange believes that all Market Makers are capable of quoting tighter
or in a greater amount of options classes to obtain the requisite
volume to achieve a discount.
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\20\ See Options 2, Section 5.
\21\ See Options 2, Section 4.
\22\ See Options 2, Section 4(a)(3) and (6).
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The Exchange's proposal to amend the rule text to state, ``The SQF
Port Fee and the SQF Purge Port Fee are aggregated for the below
incremental tiers as follows'' does not impose an undue burden on
competition because the addition of this language will add clarity to
the current billing of these port.
In terms of inter-market competition, 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. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
options exchanges. In addition to the Exchange, market participants
have alternative options exchanges that they may participate on and
direct their order flow. In sum, if the changes proposed herein are
unattractive to market participants, it is likely that the Exchange
will lose market share as a result. Accordingly, the Exchange does not
believe that the proposed changes will impair the ability of members or
competing options exchanges to maintain their competitive standing in
the financial markets.
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.\23\
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\23\ 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#3d4f485158105e5250505853494e7d4e585e135a524b"><span class="__cf_email__" data-cfemail="c4b6b1a8a1e9a7aba9a9a1aab0b784b7a1a7eaa3abb2">[email protected]</span></a>. Please include
file number SR-NASDAQ-2025-107 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-NASDAQ-2025-107. 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-NASDAQ-2025-107 and
should be submitted on or before January 20, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23813 Filed 12-23-25; 8:45 am]
BILLING CODE 8011-01-P
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