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Notice2025-23935

Self-Regulatory Organizations; Nasdaq GEMX, 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 30, 2025

Issuing agencies

Securities and Exchange Commission

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<title>Federal Register, Volume 90 Issue 246 (Tuesday, December 30, 2025)</title>
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[Federal Register Volume 90, Number 246 (Tuesday, December 30, 2025)]
[Notices]
[Pages 61181-61184]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23935]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-104489; File No. SR-GEMX-2025-35]

Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend SQF Port
and SQF Purge Port Fees

December 22, 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, 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 its Specialized Quote Feed \3\ or
``SQF'' Port and SQF Purge Port pricing at Options 7, Section 6, 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-GEMX-2025-33. On
December 16, 2025, the Exchange withdrew SR-GEMX-2025-33 and filed
this proposal.
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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/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 its SQF Port and SQF Purge Port pricing at
Options 7, Section 6, 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 ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Options 1,
Section 1(a)(22).
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Pursuant to a prior rule change,\6\ as of January 1, 2026, GEMX
will assess an SQF Port Fee and 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. SR-GEMX-2025-22 amended its SQF Port and SQF Purge Port Fees
to be identical to NOM's SQF Port and SQF Purge Port Fees.
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\6\ See Securities Exchange Act Release No. 103887 (September 5,
2025). 90 FR 43698 (September 10, 2025) (SR-GEMX-2025-22).
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Today, NOM aggregates its SQF Port and SQF Purge Port Fees for
purposes of the tier qualification. At this time, to make clear the
manner in which GEMX will determine qualifications for the SQF Port and
SQF Purge Port tiers, the Exchange proposes to note that, ``The SQF
Port Fee and the SQF Purge Port Fee are aggregated for the below
incremental tiers as follows.'' \7\ Additionally, the Exchange would
relocate the tier qualifications to one table instead of two separate
tables. The Exchange intends to calculate SQF Ports and SQF Purge Ports
on January 1, 2026, the effective date of SR-GEMX-2025-22, identical to
NOM.\8\
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\7\ NOM is proposing a similar sentence in its Pricing Schedule
in a separate rule change.
\8\ The Exchange also proposes to remove stray dollar signs.
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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

[[Page 61182]]

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 GEMX 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,\9\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\10\ 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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\9\ 15 U.S.C. 78f(b).
\10\ 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.'' \11\
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\11\ 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
\12\ (``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.\13\ 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.'' \14\
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\12\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\13\ See NetCoalition, at 534-535.
\14\ 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' . . . .'' \15\ 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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\15\ 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
GEMX with which other market participants 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
GEMX because those Market Makers are affording other GEMX Members 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.\16\
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\16\ 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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[[Page 61183]]

GEMX 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 GEMX.
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.\17\ The Exchange proposes to
calculate the Market Maker Non-Penny Symbol volume in an uniform manner
for all Members. 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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\17\ Penny Symbols typically are more liquid symbols.
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A GEMX Market Maker requires only one SQF Port to submit quotes in
its assigned options series into GEMX. 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,\18\ only one SQF Port is
necessary for an GEMX Market Maker to fulfill its regulatory quoting
obligations.\19\
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\18\ 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
Member.
\19\ GEMX Market Makers have various regulatory requirements as
provided for in Options 2, Section 4. Additionally, GEMX Market
Makers have certain quoting requirements with respect to their
assigned options series as provided in Options 2, Section 5. SQF
Ports are the only quoting protocol available on GEMX and only
Market Makers may utilize SQF Ports.
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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 GEMX 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,\20\ and are
subject to various obligations associated with providing liquidity.\21\
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 GEMX 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 to improve the market in all series of options classes to which
the Market Maker is appointed and to update market quotations in
response to changed market conditions in all series of options classes
to which the Market Maker is appointed.\22\ 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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\20\ See GEMX Options 2, Section 5.
\21\ See GEMX Options 2, Section 4.
\22\ See GEMX Options 2, Section 4(b).
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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.
In terms of intra-market competition, the proposed 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,\23\ and are subject to various obligations associated with
providing liquidity.\24\ 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 GEMX 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.\25\ 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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\23\ See Options 2, Section 5.
\24\ See Options 2, Section 4.
\25\ See Options 2, Section 4(a)(3) and (6).
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The Exchange's proposal to note that, ``The SQF Port Fee and the
SQF Purge Port Fee are aggregated for the below incremental tiers as
follows'' and to relocate the tier qualifications to one table instead
of two separate tables does not impose an undue burden on competition
as it will reflect that GEMX intends to calculate the SQF Port Fee and
the SQF Purge Port Fees by aggregating them for purposes of the tier
calculation. This reflects the intent of SR-GEMX-2025-22, which stated
that the GEMX SQF Port Fee and the SQF Purge Port Fee would be
identical to the NOM SQF Port Fee and the SQF Purge Port Fee.
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

[[Page 61184]]

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.\26\ 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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\26\ 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#86f4f3eae3abe5e9ebebe3e8f2f5c6f5e3e5a8e1e9f0"><span class="__cf_email__" data-cfemail="d3a1a6bfb6feb0bcbebeb6bda7a093a0b6b0fdb4bca5">[email&#160;protected]</span></a>. Please include
file number SR-GEMX-2025-35 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-2025-35. 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-GEMX-2025-35 and should be submitted on
or before January 20, 2026.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23935 Filed 12-29-25; 8:45 am]
BILLING CODE 8011-01-P

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