Notice2026-01120
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Pricing Schedule for Exchange-Traded Products To Add Class ETF Shares, Eliminate Prorated Refunds for Liquidations, and Make Modifications to the Designated Liquidity Provider and Market Quality Supporter Incentive Programs
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
January 22, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 14 (Thursday, January 22, 2026)</title>
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[Federal Register Volume 91, Number 14 (Thursday, January 22, 2026)]
[Notices]
[Pages 2815-2820]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-01120]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104626; File No. SR-NASDAQ-2026-003]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Pricing Schedule for Exchange-Traded Products To Add Class
ETF Shares, Eliminate Prorated Refunds for Liquidations, and Make
Modifications to the Designated Liquidity Provider and Market Quality
Supporter Incentive Programs
January 16, 2026.
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 January 12, 2026, 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 Exchange's fees and incentives
for Exchange-Traded Products (``ETPs'') by: (i) adding Class ETF Shares
(as defined below) to the listing fees and pricing programs applicable
to other Nasdaq-listed ETPs; (ii) eliminating prorated refunds for ETP
liquidations; (iii) modifying how certain market quality metrics in the
Designated Liquidity Provider (as defined below) and Market Quality
Supporter (as defined below) programs will be calculated; and (iv)
modifying how Low Volume ETPs (as defined below) will be measured for
purposes of Market Quality Supporter assignments.
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
The purpose of the proposed rule change is to amend the Exchange's
fees and incentives for ETPs by: (i) adding Class ETF Shares \3\ listed
pursuant to Rule 5703 to the Exchange's listing fees and pricing
programs applicable to other Nasdaq-listed ETPs; (ii) eliminating pro-
rated refunds for ETP liquidations; (iii) modifying how certain market
quality metrics in the Designated Liquidity Provider \4\ (``DLP'') and
Market Quality Supporter \5\ (``MQS'') programs will be calculated; and
(iv) modifying
[[Page 2816]]
how Low Volume ETPs \6\ will be measured for purposes of MQS
assignments.
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\3\ The term ``Class ETF Shares'' means shares of the ETF Class
issued by a Multi-Class Fund. The term ``ETF Class'' means the class
of exchange-traded shares of a Multi-Class Fund that (i) operates as
an exchange-traded fund pursuant to exemptive relief granted by
order under the Investment Company Act of 1940 (``Multi-Class Fund
Exemptive Relief''), and (ii) is in compliance with the requirements
of Rules 5703(d)(ii) and 5703(d)(2)(A)(i)(2) on an initial and
continued listing basis. The term ``Multi-Class Fund'' means a
registered open-end management company that (i) pursuant to Multi-
Class Fund Exemptive Relief, issues Class ETF Shares and one or more
classes of shares that are not exchange traded, and (ii) is in
compliance with the conditions and requirements of the Multi-Class
Fund Exemptive Relief. See Rule 5703(c)(1)-(3).
\4\ A ``Designated Liquidity Provider'' is a registered Nasdaq
market maker for a Qualified Security that has committed to maintain
minimum performance standards. A DLP is selected by Nasdaq based on
factors including, but not limited to, experience with making
markets in exchange-traded products, adequacy of capital,
willingness to promote Nasdaq as a marketplace, issuer preference,
operational capacity, support personnel, and history of adherence to
Nasdaq rules and securities laws. For purposes of the DLP program, a
security may be designated as a ``Qualified Security'' if: (A) it is
an exchange-traded product listed on Nasdaq pursuant to Nasdaq Rules
5703, 5704, 5705, 5710, 5711, 5713, 5715, 5720, 5735, 5745, 5750 or
5760; and (B) it has one Designated Liquidity Provider. See Equity
7, Section 114(f)(1) and (2).
\5\ A ``Market Quality Supporter'' has committed to maintain
minimum performance standards in Low Volume ETPs as defined in
Equity 7, Section 114(g)(4)(A). A MQS is selected by Nasdaq based on
factors including, but not limited to, experience with making
markets in exchange-traded products, adequacy of capital,
willingness to promote Nasdaq as a marketplace, issuer preference,
operational capacity, support personnel, and history of adherence to
Nasdaq rules and securities laws. See Equity 7, Section 114(g)(2).
\6\ As presently used in the MQS program, the term ``Low
Volume'' ETPs means ETPs with a monthly ADV of 1 million shares or
less in the prior month. See current Equity 7, Section 114(g)(4)(A).
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The Exchange initially filed the proposed pricing changes on
January 2, 2026 (SR-NASDAQ-2026-001). On January 12, 2026, the Exchange
withdrew that filing and submitted this filing.
Class ETF Shares
The Exchange recently received approval to list and trade Class ETF
Shares pursuant to Rule 5703.\7\ The Exchange now proposes to amend its
listing fees in Rule 5940 to begin charging the same fees it presently
assesses to the vast majority of other ETPs listed on the Exchange.\8\
First, the introductory paragraph of Rule 5940 will be expanded to
clarify that the securities covered by this Rule include, but are not
limited to, Class ETF Shares.\9\ Second, the Exchange proposes to add
Class ETF Shares to the list of ETPs covered by Rule 5940(a). As a
result of this change, when a Company \10\ submits an application for
listing a series of Class ETF Shares, there shall be no initial listing
fee or application fee. This mirrors how the Exchange currently charges
no initial listing or application fees for the other ETPs covered by
Rule 5940(a). Third, the Exchange proposes to add Class ETF Shares to
the list of ETPs covered by Rule 5940(b). As a result, the issuer of a
series of Class ETF Shares will be assessed an annual listing fee of
$4,000 per product, consistent with how the other ETPs covered by Rule
5940(b) are charged today.
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\7\ See Securities Exchange Release No. 104252 (November 24,
2025), 90 FR 54781 (November 28, 2025) (SR-NASDAQ-2025-037).
\8\ The Exchange notes that it assesses separate listing fees in
Rule 5930 for Selected Equity-linked Debt Securities (``SEEDS'') and
other securities listed pursuant to Rules 5715 and 5730,
respectively. The Exchange assesses separate listing fees in Rule
5935 for Non-Convertible Bonds listed pursuant to Rule 5702. For all
other securities listed under the Rule 5700 Series, the listing fees
in Rule 5940 would apply.
\9\ Today, the other securities listed under the Rule 5700
Series that are covered by the listing fees in Rule 5940 include
Portfolio Depository Receipts, Index Fund Shares, Managed Fund
Shares, Exchange Traded Fund Shares, Commodity-Based Trust Shares,
Currency Trust Shares, Commodity Index Trust Shares, Commodity
Futures Trust Shares, Partnership Units, Trust Units, Managed Trust
Shares, Linked Securities and NextShares.
\10\ ``Company'' means the issuer of a security listed or
applying to list on Nasdaq. For purposes of the Rule 5000 Series,
the term ``Company'' includes an issuer that is not incorporated,
such as, for example, a limited partnership. See Rule 5005(a)(6).
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The Exchange also proposes to add Class ETF Shares to the list of
ETPs that may be designated as a Qualified Security \11\ under the
Exchange's DLP and MQS programs under Equity 7, Sections 114(f)(1) and
114(g)(1), respectively. The Exchange currently offers rebates and
stipends under the DLP and MQS programs, which applies to transactions
in a Qualified Security by the DLP or MQS associated with its DLP or
MQS program market participant identifier (``MPID''). Both the DLP and
MQS programs are intended to encourage DLPs and MQSs to maintain better
market quality in Nasdaq-listed securities. While there are currently
no Class ETF Shares listed and trading on the Exchange pursuant to Rule
5703, the Exchange believes that any future Class ETF Shares would
benefit from support from a market quality perspective, consistent with
the other ETPs designated as Qualified Securities under the DLP and MQS
programs.
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\11\ A security may be designated as a ``Qualified Security''
if: (A) it is an exchange-traded product listed on Nasdaq pursuant
to Nasdaq Rules 5704, 5705, 5710, 5711, 5713, 5715, 5720, 5735,
5745, 5750 or 5760; and (B) it has one Designated Liquidity Provider
(for the DLP program) or at least one Market Quality Supporter (for
the MQS program). See current Equity 7, Sections 114(f)(1) and
114(g)(1).
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ETP Liquidation Refunds
Today, pursuant to Rule 5940(b)(7), the Exchange refunds
liquidations a portion of the $4,000 annual listing fee on a prorated
basis based on the number of months listed during the calendar year of
liquidation. The Exchange has determined that the prorated refund is
not operationally efficient for ETP liquidations. Following
liquidation, ETPs cease operations, making it necessary to engage in
additional backend processing and coordination with sponsors or other
third-party service providers in order to identify refund recipients
and complete payment. Accordingly, the Exchange will no longer provide
a prorated refund of the $4,000 annual listing fee for ETP
liquidations, and proposes to eliminate the language in Rule
5940(b)(7).
DLP and MQS Market Quality Metrics
Pursuant to Equity 7, Sections 114(f) and 114(g), the Exchange
presently maintains a DLP program and MQS program, each of which are
designed to enhance liquidity and market quality in Nasdaq-listed ETPs
by providing incentives to the DLP or MQS for an ETP that is designated
as a Qualified Security. The MQS program is designed to complement the
DLP program by allowing up to three MQSs per Nasdaq-listed ETP to
support market quality for Low Volume ETPs. As set out in Equity 7,
Section 114(f)(4) and Section 114(g)(4), the DLP and MQS programs use
market quality performance standards (``Market Quality Metrics'' or
``MQMs'') based on the ETP's underlying investment strategy, which
determine eligibility for DLP and MQS program incentives.\12\ The MQMs
for the DLP program as set out in Equity 7, Section 114(f)(4)(B) are as
follows:
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\12\ The Exchange recently adopted the current iteration of the
DLP program and the new MQS program in SR-NASDAQ-2025-102. See
Securities Exchange Act Release No. 104444 (December 18, 2025), 90
FR 60168 (December 23, 2025).
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Investment Investment Investment
Market quality metrics High volume strategy Group A strategy Group B strategy Group C
ETPs ETPs ETPs ETPs
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Time at the NBBO with a minimum notional 40% 45% 45% 45%
size of $5,000..........................
Average Notional Depth within 25 basis $75,000 $40,000 $30,000 $20,000
points of the NBBO......................
Average Spread in basis points........... 25 35 60 100
Auction Reference Price Difference 150 150 150 150
(Opening) of first reference price
within 30 seconds prior to the market
open must be within basis points........
Auction Reference Price Difference 50 50 50 50
(Closing) of first reference price
within 120 seconds prior to the market
close must be within basis points.......
Auction Spread in basis points with 75 105 180 300
$37,500 notional depth (Opening)........
[[Page 2817]]
Auction Spread in basis points with 25 35 60 100
$75,000 notional depth (Closing)........
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The MQMs for the MQS program as set out in Equity 7, Section
114(g)(4)(B) are as follows:
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Investment Investment Investment
Market quality metrics strategy Group A strategy Group B strategy Group C
ETPs ETPs ETPs
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Average Notional Depth within 75 basis points of the $125,000 $75,000 $50,000
NBBO..................................................
Average Spread in basis points......................... 35 60 100
Auction Spread in basis points with $37,500 notional 105 180 300
depth (Opening).......................................
Auction Spread in basis points with $75,000 notional 35 60 100
depth (Closing).......................................
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Today, these Market Quality Metrics are generally measured on
average in the assigned ETP during regular market hours, except the
Auction Spread (opening and closing) metrics are measured at and
directly before each auction, respectively, against the metrics and
averaged for the period.
The Exchange now proposes to amend how it calculates the following
MQMs when the DLP or MQS does not meet the applicable notional
requirements on a given trading day: the Time at the NBBO with a
minimum notional size of $5,000 (DLP program only), Auction Spread in
basis points with $37,500 notional depth (Opening), and Auction Spread
in basis points with $75,000 notional depth (Closing). Under the
proposal, if a DLP fails to meet the notional thresholds for the
metrics of Time at the NBBO and Auction Spread (both opening and
closing) on a given day, that day will be excluded from those average
calculations. However, to ensure consistent participation, the DLP will
have to meet the applicable notional thresholds on at least 50% of the
days in a given month.\13\ Otherwise, the DLP will be deemed to have
failed that MQM for that month. Likewise, if a MQS fails to meet the
notional thresholds for Auction Spread (both opening and closing)
metrics on a given day, that day will be excluded from those average
calculations, except that the MQS must meet such notional thresholds at
least 50% of the days in a given month.\14\
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\13\ See proposed Equity 7, Section 114(f)(4)(B).
\14\ See proposed Equity 7, Section 114(g)(4)(B).
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The Time at the NBBO and Auction Spread (opening and closing)
metrics each include a minimum notional size requirement as a component
of the applicable quoting obligation. When a DLP or a MQS does not meet
the required notional threshold on a given trading day, the resulting
quote does not reflect the same level of liquidity provision (even if
it met the requisite quoting obligation) compared to a quote that
satisfies the notional threshold and the requisite quoting obligation.
The Exchange therefore believes that including such days in the monthly
average calculation would not provide an accurate measure of DLP and
MQS performance. At the same time, requiring DLPs and MQSs to meet the
notional thresholds on at least 50% of the trading days ensures that
DLPs and MQSs provide consistent and appropriate liquidity throughout
the month.
The Exchange recently adopted the above MQMs containing dual
requirements as part of SR-NASDAQ-2025-102.\15\ As discussed in that
rule filing, the Exchange did not require DLPs and MQSs to meet the
MQMs in the amended DLP program and new MQS program for the month of
December 2025 in order to provide them with adequate time to transition
to the MQMs, including the new ones with dual requirements like the
Time at the NBBO and Auction Spread (opening and closing) metrics.
January 2026 is therefore the first month that these new MQMs go into
effect for DLPs and MQSs. Accordingly, the proposed 50% threshold
discussed above is not a reduction of existing obligations, but rather
a clarification of how the new dual requirements will be evaluated each
month.
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\15\ See supra note 12.
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MQS Program Eligibility
Today, the Exchange offers the MQS program in Equity 7, Section
114(g), which allows up to three MQSs per Nasdaq-listed ETP to support
market quality for Low Volume ETPs. Under the current rules,
eligibility for the MQS program is based on the ETP's trading volume,
as measured by its average daily volume (``ADV'') \16\ during the prior
month. Today, ETPs with a monthly ADV of 1 million shares or less in
the prior month qualify as Low Volume ETPs and may be eligible for MQS
assignment and associated MQS incentives. Because the Low Volume ETP
threshold is calculated month-by-month, an ETP's eligibility for the
MQS program may change as the ETP's trading volume fluctuates over
time. Under the current framework, this can result in ETPs
automatically moving in and out of the MQS program based on short-term
changes in trading activity.
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\16\ The term average daily volume (``ADV'') means the total
consolidated volume reported to all consolidated transaction
reporting plans, for each individual security, by all exchanges and
trade reporting facilities during a month divided by the number of
trading days during the month. If a security is not listed for a
full month, the number of trading days will only include the days
which the security is listed. See Equity 7, Section 114(g).
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The Exchange now proposes in Equity 7, Section 114(g)(4)(A) to
amend how eligibility for the MQS program will be determined and
reviewed. Specifically, the Exchange proposes to amend the definition
of Low Volume ETPs as ETPs with a monthly ADV of 1 million shares or
less in the prior month, measured at the time the MQS is assigned in
the MQS program with respect to such ETP. The Exchange also proposes to
add the following provision in Section 114(g)(4)(A) to specify how the
Exchange will review for MQS program eligibility: ``Annually, the
Exchange will review ETPs with MQS assignments and those that are above
1 million shares ADV on average over the prior year will be removed
from the program.'' The Exchange believes that the proposed
[[Page 2818]]
changes will provide transparency and predictability regarding MQS
program eligibility.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\17\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\18\ 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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\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposed changes to its schedule of credits are
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for equity
securities transaction services that constrain its pricing
determinations in that market. The fact that this market is competitive
has long been recognized by the courts. In NetCoalition v. Securities
and Exchange Commission, the D.C. Circuit stated as follows: ``[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'. . . .'' \19\
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\19\ NetCoalition v. SEC, 615 F.3d 525, 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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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.'' \20\
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\20\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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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
equity security transaction services. The Exchange is only one of
several equity venues 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. As such,
the proposal represents a reasonable attempt by the Exchange to
increase its liquidity and market share relative to its competitors.
Class ETF Shares
The Exchange believes that the proposed changes to add Class ETF
Shares to the listing fees set forth in Rule 5940 are reasonable
because they would align the fees charged to the vast majority of other
ETPs listed on the Exchange.\21\ Specifically with the proposed
changes, the Exchange would assess Class ETF Shares no initial listing
fee or application fee and an annual listing fee of $4,000 per product,
consistent with the other ETPs covered by Rule 5940. Similar to the
other ETPs covered by Rule 5940, the Exchange believes that the annual
listing fee of $4,000 per product for Class ETF Shares are reasonable
and necessary to support the anticipated Exchange costs associated with
listing and trading Class ETF Shares on the Exchange, including costs
related issuer services and listing administration. The Exchange
further believes that its proposal is equitable and not unfairly
discriminatory because the listing fees in Rule 5940 will apply
uniformly to all issuers of Class ETF Shares on the Exchange.
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\21\ See supra notes 8 and 9.
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The Exchange also believes that it is reasonable to expand the list
of ETPs that may be designated as a Qualified Security under the DLP
and MQS programs to add Class ETF Shares because these incentive
programs are designed to encourage better market quality. By adding
Class ETF Shares to these programs, the Exchange believes that these
ETPs would benefit from market quality support, similar to the other
ETPs that are currently designated as Qualified Securities in Equity 7,
Sections 114(f)(1) and 114(g)(1). The Exchange further believes that
its proposal to add Class ETF Shares as Qualified Securities in the DLP
and MQS programs is equitable and not unfairly discriminatory because
it will apply uniformly to all issuers of Class ETF Shares on the
Exchange. The Exchange believes that its proposal is equitable and not
unfairly discriminatory because the expanded list of securities that
may be designated as a Qualified Security under the DLP and MQS
programs would allow for more ETPs to be designated as Qualified
Securities and thereby allow more DLPs and MQSs to receive incentives
under the respective programs in exchange for meeting MQMs that are
designed to improve market quality in Qualified Securities. Further,
the tightened spreads and increased liquidity from the proposal will
benefit all market participants and investors by deepening the
Exchange's liquidity pool, offering additional flexibility for all
investors to enjoy cost savings, supporting the quality of price
discovery, enhancing quoting competition across exchanges, promoting
market transparency, and improving investor protection. Accordingly,
the Exchange believes that the proposal is equitable and not unfairly
discriminatory because it would improve the quality of the Nasdaq
market to the benefit of all market participants and investors.
ETP Liquidation Refunds
The Exchange believes that its proposal to sunset the prorated
refund of the annual listing fee for ETP liquidations in Rule
5940(b)(7) is reasonable because the proposed change will increase the
efficiency of operating the Exchange's fee program. As discussed above,
the liquidation refund process currently requires additional and
individualized handling to identify refund recipients and complete
payment. The Exchange further believes that the proposal is equitable
and not unfairly discriminatory because it will apply uniformly to all
ETPs covered by Rule 5940 and the issuers of such ETPs.\22\ Lastly, the
Exchange notes that it does not presently provide a prorated refund of
annual listing fees for liquidations of other types of listed ETPs.\23\
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\22\ See supra note 9.
\23\ See e.g., Rule 5930.
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DLP and MQS Market Quality Metrics
The Exchange believes that the proposed changes to the DLP and MQS
programs are reasonable because the changes will clarify how certain
MQMs (i.e., Time at the NBBO for the DLP program and Auction Spread
(opening and closing) for both the DLP and MQS programs) are calculated
when a DLP or a MQS does not meet the applicable notional threshold on
a given trading day. As discussed above, these MQMs each include a
minimum notional size
[[Page 2819]]
requirement as a component of the applicable quoting obligation. When
the DLP or MQS does not meet the notional threshold on a given day, the
resulting quote does not reflect the same level of liquidity provision
as a quote that satisfies the full requirement. Excluding such days
from the monthly average calculation would ensure that these Market
Quality Metrics are based on comparable and meaningful performance data
of the DLP and MQS. At the same time, the Exchange believes that
requiring the DLP and MQS to meet the applicable notional threshold at
least 50% of the days in a given month is a reasonable participation
standard that is designed to ensure consistent and appropriate
liquidity provision. Further, the Exchange recently adopted the
foregoing MQMs with dual requirements as part of SR-NASDAQ-2025-
102.\24\ As discussed in that rule filing, the Exchange did not require
DLPs and MQSs to meet the MQMs in the amended DLP program and new MQS
program for the month of December 2025 in order to provide them with
adequate time to transition to the MQMs, including the new ones with
dual requirements like the Time at the NBBO and Auction Spread (opening
and closing) metrics. January 2026 is therefore the first month that
these new MQMs go into effect for DLPs and MQSs. Accordingly, the
proposed 50% threshold discussed above is not a reduction of existing
obligations, but rather a clarification of how the new dual
requirements will be evaluated each month.
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\24\ See supra note 12.
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The Exchange also believes that the proposed changes to the DLP and
MQS program MQMs described above are equitable and not unfairly
discriminatory because the changes will apply uniformly to all DLPs and
MQSs. The Exchange believes the proposal will improve the
administration of the DLP and MQS programs while continuing to
encourage meaningful liquidity that benefits all market participants.
MQS Program Eligibility
The Exchange believes that the proposed changes to the MQS program
discussed above are reasonable because they establish a clear and
transparent framework for determining MQS eligibility while recognizing
that ETP volume may fluctuate over time. Measuring volume at the time
of MQS assignment provides market participants with certainty regarding
program eligibility, while the proposed annual review ensures that ETPs
that experience sustained increases in trading volume no longer receive
incentives intended for lower-volume products. The Exchange believes
that an annual review strikes an appropriate balance between accuracy
and predictability by avoiding frequent month-to-month changes that
could create confusion for ETP issuers and MQSs, while still ensuring
that the MQS incentives are aligned with the program's objectives to
provide market quality in lower volume ETPs.
The Exchange further believes that its proposal is equitable and
not unfairly discriminatory because it would apply uniformly to all
members that choose to participate as MQSs. The proposal is intended to
provide transparency and predictability regarding MQS eligibility,
which may in turn fortify participation in the MQS program and promote
market quality in Low Volume ETPs, to the benefit of all market
participants.
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. Specifically, the Exchange does
not believe that the proposed changes discussed above will impose an
undue burden on intra-market competition because the changes will apply
uniformly to all similarly situated market participants. As it relates
to the proposed changes to the DLP and MQS programs, to the extent
these changes result in greater participation in these incentive
programs, the Exchange believes that the resulting improvement in
market quality in Nasdaq-listed ETPs would benefit all market
participants through additional trading opportunities, tighter spreads,
and enhanced price discovery.
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
exchanges and with alternative trading systems that have been exempted
from compliance with the statutory standards applicable to exchanges.
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. 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 order
execution venues 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.\25\
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\25\ 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#d8aaadb4bdf5bbb7b5b5bdb6acab98abbdbbf6bfb7ae"><span class="__cf_email__" data-cfemail="99ebecf5fcb4faf6f4f4fcf7edead9eafcfab7fef6ef">[email protected]</span></a>. Please include
file number SR-NASDAQ-2026-003 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-2026-003. 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
[[Page 2820]]
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-2026-003 and
should be submitted on or before February 12, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2026-01120 Filed 1-21-26; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on January 22, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.