Notice2026-01982
Self-Regulatory Organizations: Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Fee Schedule To Modify the Liquidity Incentive Program
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Published
February 2, 2026
Issuing agencies
Securities and Exchange Commission
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<title>Federal Register, Volume 91 Issue 21 (Monday, February 2, 2026)</title>
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[Federal Register Volume 91, Number 21 (Monday, February 2, 2026)]
[Notices]
[Pages 4741-4744]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-01982]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104714; File No. SR-LTSE-2026-02]
Self-Regulatory Organizations: Long-Term Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Fee Schedule To Modify the Liquidity Incentive Program
January 28, 2026.
Pursuant to the provisions of Section 19(b)(1) under the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on January 22, 2026, Long-Term Stock Exchange,
Inc. (``LTSE'' or the ``Exchange'') filed with the Securities and
Exchange Commission (the ``Commission'') the proposed rule change as
described in Items I, II and III below, which Items have been prepared
by the self-regulatory organization. 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 is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend its Fee Schedule to
modify the Liquidity Incentive Program (``LTSE LIP'' or ``Program'').
The Exchange proposes to implement the changes to the Fee Schedule
pursuant to this proposal on January 22, 2026.
The text of the proposed rule change is available at the Exchange's
website at <a href="https://longtermstockexchange.com/">https://longtermstockexchange.com/</a>, and at the principal
office of the Exchange.
II. Self-Regulatory Organization's Statement on 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 self-regulatory organization 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
On July 1, 2025, the Exchange implemented the LTSE LIP to enhance
liquidity and improve market quality in LIP Enhanced Securities \3\
traded on the Exchange by incentivizing Members to quote at or better
than the National Best Bid and Offer (``NBBO'') and provide liquidity
in both select securities, the LIP Enhanced Securities and more
generally in all other securities traded on LTSE, the LIP Standard
Securities.<SUP>4 5</SUP> On August 11, 2025, the LIP was subsequently
amended to reduce the quoting threshold in a LIP Enhanced Security from
60% to 30% of the time at the NBBO of the Regular Market Session,\6\ in
order to share in SIP Quote Revenue,\7\ which is distributed
[[Page 4742]]
proportionally among eligible Members based on quoting activity.\8\
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\3\ LIP Enhanced Securities means a list of securities
designated as such, that are used for the purposes of qualifying for
the incentives within the LIP. The universe of these securities will
be determined by the Exchange and published on the Exchange's
website. See Definitions Section of the Fee Schedule.
\4\ LIP Standard Securities means a security not defined as a
``LIP Enhanced Security'' and traded on LTSE. See Definitions
Section of the Fee Schedule.
\5\ LTSE LIP was initially adopted in SR-LTSE-2025-13 on June
30, 2025, which was withdrawn and refiled on July 10, 2025, See
Securities Exchange Release No. 34-103517 (July 22, 2025), 90 FR
35325 (July 25, 2025) (SR-LTSE-2025-16). The Program includes three
key incentives: (1) a proportional share of 80% of LTSE's SIP Quote
Revenue for LIP Enhanced Securities, distributed among qualifying
Members based on quoting activity; (2) reduced taker fees for LIP
Enhanced Securities, available to all Members without quoting
obligations; and (3) for LIP Standard Securities, a choice between a
proportional share of 20% of LTSE's SIP Quote Revenue or a credit,
contingent on meeting specific quoting thresholds.
\6\ Regular Market Session or Regular Market Hours means the
time between 9:30 a.m. and 4:00 p.m. Eastern Time. See Exchange Rule
1.160(kk).
\7\ The Securities Information Processors (``SIPs''), which
include the Unlisted Trading Privileges and Consolidated Tape
Association, collect fees from subscribers for trade and quote tape
data received from trading centers and reporting facilities, such as
the Exchange (collectively, ``SIP Participants''). After deducting
the cost of operating each tape, the profits are allocated among the
SIP Participants on a quarterly basis, according to a complex set of
calculations that consider estimates of anticipated Market Data
Revenue (``MDR''), adjustments to comport to actual MDR from
previous quarters and a non-linear aggregation of total trading and
quoting activity in Tape A, B and C securities in attributing MDR to
each SIP Participant. Based on these calculations, the SIPs provide
MDR payments to each SIP Participant during the second month of each
quarter for trade and quote data from the previous calendar quarter,
which are subject to adjustment through subsequent quarterly
payments. These payments can be divided into six pools (i.e., trade
and quote activity in Tape A, B, and C securities). To determine a
monthly SIP Quote Revenue allocation the Exchange uses a
corresponding monthly SIP report in conjunction with the quarterly
MDR payments to calculate the correct allocation of the MDR payment
in each symbol for each month of the quarter.
\8\ See Securities Exchange Release No. 34-103700 (August 13,
2025), 90 FR 40090 (August 18, 2025) (SR-LTSE-2025-18) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Amend
the Liquidity Incentive Program).
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The Exchange then filed to amend the LTSE LIP for December 1, 2025,
with SR-LTSE-2025-24.\9\ The Exchange is now withdrawing SR-LTSE-2025-
24 and replacing it with this filing. Among other changes to the LTSE
LIP, SR-LTSE-2025-24 allowed the Exchange to update the Minimum Quoted
Size (``MQS''), which is used to determine eligibility for Incentive #1
for each LIP Enhanced Security, to more than quarterly, stating that if
the Exchange changed the MQS mid-quarter it would issue a notice to
Members at least one business day prior to the effective date of such
change. However, in a subsequent filing \10\ the Exchange made further
changes to how frequently the Exchange may adjust the MQS by removing
the language concerning updates to the MQS that it added in SR-LTSE-
2025-24 and replacing it with language that states that the MQS will be
updated monthly. As a result of this subsequent filing that superseded
the language regarding how frequently the Exchange may update the MQS,
the Exchange is no longer including the change in this replacement
filing.
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\9\ See Securities Exchange Release 34-104353 (December 9,
2025), 90 FR 57800 (December 12, 2025) (SR-LTSE-2025-24) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Amend
the Liquidity Incentive Program).
\10\ See SR-LTSE-2025-30, which was withdrawn and replaced by
SR-LTSE-2026-01.
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The Exchange is now proposing to file only certain changes to the
Fee Schedule included in SR-LTSE-2025-24 to modify the LTSE LIP. The
proposed amendments would (i) increase the revenue-sharing percentage
for LIP Standard Securities under Incentive 3 from 20% to 50%; (ii)
remove transitional language that applied to the initial roll-out of
the Program and the third quarter of 2025; (iii) remove the table which
calculates the MQS by Share Price, and (iv) make other clarifying edits
to the language within LIP section of the Fee Schedule.
Under the current Program, Incentive #3 provides Members quoting in
LIP Standard Securities the option to receive a proportional share of
20% of LTSE SIP Quote Revenue. The Exchange is now proposing to
increase that allocation to 50%, an increase designed to improve the
competitiveness of the Program and further reward firms that maintain
displayed quotes at the NBBO on LTSE, thereby improving consolidated
market quality. The proposed increase more closely aligns the economic
rewards distributed under the LTSE LIP with the value of displayed
liquidity that Members contribute to the Exchange's market data
revenue, fostering a fairer and more transparent incentive structure.
The Exchange expects that increasing the revenue-sharing percentage
will encourage Members to maintain high-quality, stable quotes
throughout the trading day, improving displayed liquidity and
contributing to the overall integrity of the market. This adjustment is
the result of the Exchange's ongoing evaluation of the Program's
effectiveness of increasing participation and quote quality.\11\
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\11\ As this change was initially made mid-quarter, the Exchange
added language to the Fee Schedule to specify how Incentive #3 would
be calculated for the fourth quarter of 2025 only. This language was
then removed in SR-LTSE-2025-30, which revised the Exchange's Fee
Schedule as of January 1, 2026, because the language concerning the
fourth quarter of 2025 had become obsolete. Specifically, to account
for the fact that the proportional share of the SIP Quote Revenue
would not apply uniformly across the fourth quarter of 2025 the
Exchange proposed that a Member that qualified for Incentive #3 in
October and November could share in 20% of the LTSE SIP Quote
Revenue for that LIP Standard Security, distributed proportionally
across all qualifying member firms within the calendar months. For
December, a Member that qualified for Incentive #3 could share in
50% of the LTSE SIP Quote Revenue for that LIP Standard Security,
distributed proportionally across all qualifying member firms within
the calendar month.
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By allowing Members to receive increased revenue the Exchange seeks
to encourage greater participation in LIP Standard Securities as soon
as possible and provide the opportunity to share in an increased
percentage of SIP Quote Revenue, which is distributed proportionally
among eligible Members based on quoting activity. The Exchange notes
that it is not proposing any changes to the SIP Quote Revenue
distribution, which will continue to occur at the end of each calendar
quarter.
The Exchange also proposes to reduce the MQS applicable to LIP
Enhanced Securities to one round lot and remove the language in the fee
schedule that establishes MQS levels based on share price. The Exchange
established these higher MQS levels, which ranged from 200 to 700
shares, when it launched the program in July 2025 and believed these
higher MQS levels were appropriate to encourage participants to display
meaningful size at the NBBO. However, for the first quarter following
launch the Exchange temporarily set the MQS to a round lot across all
LIP Enhanced Securities and it was not until the higher MQS levels went
into place in Q2 2025 that the Exchange realized such thresholds
created participation barriers for many potential quoting Members and
limited the overall volume of quoting activity on the Exchange. By
returning to one round lot MQS, the same level used at the Program's
initial launch, the Exchange seeks to lower barriers to entry, attract
additional quoting volume, and make LTSE LIP more accessible and
practical for Members to implement within their existing market-making
and risk systems. The Exchange believes that a lower MQS will promote
broader participation, enhance competition among liquidity providers
and contribute to tighter spreads and improved market quality.
With these proposed changes the Exchange will now have the ability
to modify MQS in the future without having to submit a separate rule
filing each time an adjustment is warranted. Specifically, the MQS will
be calculated for each LIP Enhanced Security and published monthly on
the Exchange's website in the same document that includes each LIP
Enhanced Security. Allowing the Exchange to update the MQS monthly
without a rule filing will allow the Exchange to respond more nimbly to
changes in market conditions, participation trends and liquidity
characteristics, while maintaining transparency and predictability for
Members.
The Exchange believes that this measured approach, lowering MQS now
to foster engagement while establishing the ability to recalibrate in
future quarters, strikes the appropriate balance between accessibility
and market impact. It supports the Exchange's broader objectives of
increasing on-Exchange activity, providing fair and non-discriminatory
access to participation in the Program, and maintaining a transparent,
competitive, and data-driven incentive framework.
The Exchange also proposes to delete language from the Fee Schedule
that is no longer operative. First, the Exchange is deleting language
that addressed the MQS at the initial launch of the Program and no
longer is applicable. Next, the Exchange is proposing to delete text
that applied only to the third quarter of 2025 and has since expired.
Those provisions, adopted in SR-LTSE-2025-
[[Page 4743]]
18,\12\ temporarily adjusted quoting thresholds and revenue-sharing
parameters that are no longer operative. These changes are
administrative in nature and are intended to maintain a clear and
accurate Fee Schedule by removing obsolete text. The deletion does not
alter any current incentives or modify the operation of the LTSE LIP.
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\12\ See note 8.
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The Exchange then proposes to add clarifying language to the
Percent Time at NBBO definition within Section B.2 (Liquidity Incentive
Program) of the Fee Schedule. Specifically, the Exchange proposes to
add the word ``displayed'' before quote so the sentence now reads: For
the avoidance of doubt, only displayed quotes that are at the NBB or
NBO during the Regular Market Session count towards the Percent Time at
NBBO calculation.\13\ The Exchange notes that this clarifying language
does not make a substantive or material change to the calculation.
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\13\ The Exchange believes adding the word ``displayed'' ensures
the term is consistent throughout the LTSE Fee Schedule. Further,
the Exchange notes that displayed quotes can include orders that
rest on the LTSE Order Book and are therefore treated as displayed
quotes within the System.
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Finally, while not included in the Fee Schedule, in the initial LIP
filing the Exchange detailed that Incentive #3 Members who choose the
quarterly credit can apply that credit in the calendar quarter in which
they earned it, or the subsequent calendar quarter.\14\ The Exchange is
proposing to add a bullet to the Notes to LIP section of the Fee
Schedule to both amend and clarify this statement and state that the
optional $25 monthly credit expires at the end of the calendar month a
year after it is earned, on a rolling basis. For example, a Member who
earns an Incentive #3 credit in January 2026 would have until the end
of January 2027 to apply the credit to any monthly invoice. In turn, a
Member who earns an Incentive #3 credit in December 2025 would have
until the end of December 2026 to apply the credit. The Exchange
believes this will allow Members to have more flexibility when choosing
to apply their Incentive #3 credit which may in turn increase Member
participation in the program, benefiting other investors by providing
improved trading conditions for all market participants.
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\14\ See note 5.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\15\ in general, and furthers the objectives of Section
6(b)(4) of the Act,\16\ in particular, in that it provides for the
equitable allocation of reasonable dues, fees and other charges among
all of its Members and issuers and other persons using its facilities;
Section 6(b)(5) of the Act,\17\ which requires, among other things,
that the rules of the Exchange be designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and
to protect investors and the public interest and are not designed to
permit unfair discrimination between customers, issuers, brokers or
dealers. The Exchange also believes that the proposed rule change is
reasonable, fair and equitable, and non-discriminatory.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4).
\17\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow or discontinue or reduce use of certain categories of
products, in response to new or different pricing structures being
introduced into the market. Accordingly, competitive forces constrain
the Exchange's transaction fees and rebates, and market participants
can readily trade on competing venues if they deem pricing levels at
those other venues to be more favorable.
The Exchange believes that increasing the revenue-sharing
percentage under Incentive #3 from 20% to 50% is reasonable and
equitable because it better reflects the value that displayed quotes
contribute to the national market system and provides a stronger
economic incentive for Members to supply liquidity on the Exchange. The
change is not unfairly discriminatory, as all Members that meet the
same quoting criteria are eligible to receive the increased revenue
share on identical terms and it will enhance, rather than burden,
intermarket competition by encouraging additional displayed liquidity
on LTSE.
The Exchange believes that reducing the MQS to one round lot and
permitting future adjustments without separate rule filings is
reasonable, equitable and not unfairly discriminatory. The change
lowers the barriers to entry, aligns quoting requirements with Members'
operational capabilities, and makes participation in the Program more
accessible to a wider range of Members, including smaller liquidity
providers that may not maintain large inventory positions in each
security.
Providing the Exchange with flexibility to adjust MQS monthly, with
advance public notice, allows it to respond promptly to evolving market
conditions, participation trends, and liquidity characteristics while
maintaining transparency. This adaptive approach supports the
maintenance of fair and orderly markets consistent with Section 6(b)(5)
of the Act and fosters competition among liquidity providers by
ensuring the quoting requirements remain balanced and attainable.
The Exchange believes that deleting text that is no longer
applicable and adding clarifying text is consistent with Section
6(b)(5) and 6(b)(1) of the Act because it enhances transparency and
clarity in the Fee Schedule. The removal is administrative, eliminates
obsolete provisions and ensures that the rule text accurately reflects
the Program currently in effect. It does not modify and incentives or
alter Member obligations and therefore imposes no burden on
competition.
Taken together, these amendments are designed to strengthen the
LTSE LIP by improving participation incentives, aligning Program
parameters with market realities, and maintaining clear and transparent
rule text. The Exchange believes the proposal supports the objectives
of Section 6(b)(5) of the Act by fostering fair competition,
encouraging displayed liquidity, and promoting a more efficient and
transparent market environment for investors.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed change will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act. Instead, as discussed above, the proposal
is intended to enhance market quality on the Exchange by encouraging
additional quoting activity on LTSE and promoting more competitive
displayed markets. The proposed amendments are designed to make the
LTSE LIP more accessible and attractive to a broader range of Members.
Lowering the MQS to one round lot reduces barriers to participation and
enables more Members, particularly smaller or mid-sized liquidity
providers, to qualify for LTSE LIP incentives. Increasing the revenue-
sharing percentage for LIP Standard Securities further strengthens the
economic incentives to post displayed liquidity, while the flexibility
to modify MQS with notice allows the Exchange to maintain requirements
that
[[Page 4744]]
are appropriately scaled to prevailing market conditions. As a result,
the Exchange believes the proposal would enhance its competitiveness as
a market that attracts actionable orders, thereby making it a more
desirable destination venue for its customers. For these reasons, the
Exchange believes that the proposal furthers the Commission's goal in
efficient pricing of individual stocks for all types of orders, large
and small.'' \18\
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\18\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 47396 (June 29, 2005).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
This proposed rule change establishes dues, fees or other charges
among its members and, as such, may take effect upon filing with the
Commission pursuant to Section 19(b)(3)(A)(ii) of the Act \19\ and
paragraph (f)(2) of Rule 19b-4 thereunder.\20\ Accordingly, the
proposed rule change would take effect upon filing with the Commission.
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\19\ 15 U.S.C. 78s(b)(3)(A)(ii).
\20\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend the rule
change if it appears to the Commission that the action is necessary or
appropriate in the public interest, for the protection of investors, or
would otherwise further 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#b0c2c5dcd59dd3dfddddd5dec4c3f0c3d5d39ed7dfc6"><span class="__cf_email__" data-cfemail="bdcfc8d1d890ded2d0d0d8d3c9cefdced8de93dad2cb">[email protected]</span></a>. Please include
file number SR-LTSE-2026-02 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-LTSE-2026-02. 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 LTSE and on its internet website at
<a href="https://longtermstockexchange.com/">https://longtermstockexchange.com/</a>. 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-LTSE-2026-02 and should be submitted on or
before February 23, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-01982 Filed 1-30-26; 8:45 am]
BILLING CODE 8011-01-P
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