Notice2026-07259
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment Nos. 2 and 3 and Order Granting Accelerated Approval of a Proposed Rule Change, as Amended by Amendment Nos. 2 and 3, To Extend the Exchange's Trading Hours to 23 Hours a Day, Five Days a Week
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
April 15, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 72 (Wednesday, April 15, 2026)</title>
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[Federal Register Volume 91, Number 72 (Wednesday, April 15, 2026)]
[Notices]
[Pages 20222-20235]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07259]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105199; File No. SR-Nasdaq-2025-109]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Amendment Nos. 2 and 3 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Amended by Amendment
Nos. 2 and 3, To Extend the Exchange's Trading Hours to 23 Hours a Day,
Five Days a Week
April 10, 2026.
On December 29, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and
Rule 19b-4 thereunder,\2\ a proposed rule change to extend the Nasdaq
trading hours for NMS stocks to 23 hours a day, five days a week. The
proposed rule change was published for comment in the Federal Register
on January 13, 2026.\3\ The Commission received comments on the
proposed rule change \4\ and a letter responding to the comments from
Nasdaq.\5\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 104563 (Jan. 8,
2026), 91 FR 1350 (Jan. 13, 2026) (``Notice'').
\4\ Comment letters on the proposal are available at <a href="https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2025-109">https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2025-109</a>.
\5\ See letter from Brett Kitt, Vice President and Deputy
General Counsel, Nasdaq, dated March 12, 2026 (``Nasdaq Letter'')
available at <a href="https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2025-109">https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2025-109</a>.
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On February 25, 2026, pursuant to Section 19(b)(2) of the Act, the
Commission designated a longer period within which to take action on
the proposed rule change.\6\ On March 12, 2026, the Exchange filed
Amendment No. 1 to the proposed rule change, which superseded the
original proposed rule change in its entirety. On March 12,
[[Page 20223]]
2026, the Exchange withdrew Amendment No. 1 and filed Amendment No. 2
to the proposed rule change as described in Items I and II below, which
Items have been prepared by the Exchange.\7\ On March 20, 2026, the
Exchange filed Amendment No. 3 to the proposed rule change to state
that Amendment No. 2 replaced and superseded the original proposed rule
change in its entirety.\8\ The Commission is publishing this notice to
solicit comments on Amendment Nos. 2 and 3 (``Amended Proposal'') from
interested persons and is approving the Amended Proposal, on an
accelerated basis.
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\6\ See Securities Exchange Act Release No. 104886 (Feb. 25,
2026), 91 FR 10162 (Mar. 2, 2026).
\7\ Amendment No. 2 to the proposed rule change revises the
proposal by changing the definition of Business Day, adding
additional risk disclosure with respect to the Night Session and
clarifying that during the Night Session: (1) all NMS stocks may
trade; (2) unpriced orders, like pegged orders, will not be
permitted; (3) Equity 11, Rule 11890, clearly erroneous execution
rules (``CE Rules'') and Equity 4, Rule 4757(c), limit order
protection (``LOP'') rules will be applicable; (4) M-ELO orders as
defined in Equity 4, Rule 4702(b)(14), will be rejected; and (5) the
Night Session specific ports will use the OUCH 5 technology; in
addition to other non-substantive changes to conform and clarify the
proposed rule text. The full text of Amendment No. 2 can be found on
the Commission's website at: <a href="https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2025-109">https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2025-109</a>.
\8\ The full text of Amendment No. 3 can be found on the
Commission's website at: <a href="https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2025-109">https://www.sec.gov/rules-regulations/public-comments/sr-nasdaq-2025-109</a>.
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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 Rulebook to provide
for the Exchange to trade NMS stocks and exchange traded products 23
hours per day, five days per week. This Amendment No. 2 to SR-NASDAQ-
2025-109 supersedes and replaces Amendment No. 1 to SR-NASDAQ-2025-109
in its entirety, which superseded the original filing in its
entirety.\9\
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\9\ See Amendment No. 3, supra note 8. The Exchange filed and
subsequently withdrew Amendment No. 1 to SR-NASDAQ-2025-109 on March
12, 2026.
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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
Rulebook to provide for the Exchange to trade NMS stocks and exchange
traded products (``ETPs'') on a 23 hours per day, five days per week
basis (``23/5'').
Background and Overview
The history of the U.S. equities markets is one marked by
successive waves of change and technological innovation. Among other
things, these changes and innovations included the automation of
trading and the introductions of decimalization, algorithmic trading,
and colocation. When these innovations arose, they spurred equity
market structure to evolve to accommodate them. The latest change to
impact the markets is rising investor interest in trading U.S. equities
during overnight hours, especially among investors located outside of
the United States.\10\ To align Nasdaq with emerging investor interest
in trading outside of traditional U.S. market hours, Nasdaq now
proposes to extend its hours for trading NMS stocks and ETPs on the
Exchange from 16 hours per day, 5 days per week, to 23 hours per day, 5
days per week.
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\10\ Certain alternative trading systems (``ATS''), such as Blue
Ocean, already trade securities on an overnight basis. Meanwhile,
the Commission has approved several new and existing exchanges to
securities on an extended overnight basis, but none has begun to do
so. See Securities Exchange Act Release No. 34-102400 (Feb. 11,
2025); 90 FR 9794 (Feb. 18, 2025) (order approving NYSE Arca Inc.
proposal to lengthen its trading session to 22 hours per day, 5 days
per week) (``NYSE Arca Approval Order''); Securities Exchange Act.
Release No. 89-235 [sic] (Nov. 27, 2024); 89 FR 97092 (order
approving application of 24X National Exchange, LLC for registration
as a national securities exchange and to trade 23 hours per day, 5
days per week) (``24X Approval Order'').
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Nasdaq has designed its proposal for 23/5 trading carefully. We
have solicited and we continue to solicit feedback from those who stand
to be impacted most by the proposal, including Nasdaq's listed
companies and market participants. Nasdaq is also an active participant
in ongoing industry discussions about how to address, in a coordinated
manner, market protections, halts, and corporate actions.
By way of background, Nasdaq presently trades securities in three
daily sessions during each weekday from Monday through Friday. First,
Nasdaq operates a Pre-Market Hours session from 4:00 a.m. to 9:30 a.m.
ET.\11\ Second, commencing at 9:30 a.m. with the execution of the
Nasdaq Opening Cross, Nasdaq conducts its Regular Market Hours trading
session until 4:00 p.m.\12\ Third, commencing at 4:00 p.m. with the
execution of the Nasdaq Closing Cross, Nasdaq conducts a Post-Market
Hours \13\ trading session until 8:00 p.m.\14\ During weekdays, between
the hours of 8:00 p.m.-4:00 a.m. ET, the Exchange is closed to trading
as it is during all weekend hours.
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\11\ See Rule Equity 1, Section 1(a)(9) (defining the term
``Pre-Market Hours'' as ``the period of time beginning at 4:00 a.m.
ET and ending immediately prior to the commencement of Market
Hours.). As discussed below, the Exchange is proposing non-
substantive changes to this rule.
\12\ See Rule Equity 1, Section 1(a)(9) (defining the term
``Market Hours'' as the period of time beginning at 9:30 a.m. ET and
ending at 4:00 p.m. ET or such earlier time as may be designated by
Nasdaq on a day when Nasdaq closes early). As discussed below, the
Exchange proposes to rename this session ``Regular Market Hours''
and make other non-substantive conforming changes to this rule.
\13\ See Rule Equity 1, Section 1(a)(9) (defining the term
``Post-Market Hours'' as the period of time beginning immediately
after the end of Market Hours and ending at 8:00 p.m. ET). As
discussed below, the Exchange is proposing non-substantive changes
to this rule.
\14\ The Exchange uses different terms to describe each of its
trading sessions. For example, to refer to its pre-market hours
session, the Exchange uses varying terms, such as ``Pre-Market,''
``Early Market Hours,'' or ``Early Market.'' And to refer to its
post-market hours session, the Exchange uses varying terms, such as
``Post-Market,'' ``Extended Hours,'' and ``Extended Market Hours.''
As part of this filing, the Exchange proposes to harmonize disparate
and inconsistent references to these concepts to avoid confusion.
Throughout the Rulebook, as amended, the Exchange proposes to define
the terms ``Pre-Market Hours'' and ``Post-Market Hours'' exclusively
to refer to those specific trading periods. In addition, the
Exchange proposes to define the term ``Extended Hours'' to refer
more generally to trading that occurs outside of Regular Market
Hours. See proposed Rule 1, Equity 1, Sections 1(a)(20)-(21) and
(23) (defining the terms ``Pre-Market Hours,'' ``Post-Market
Hours,'' and ``Extended Hours,'' respectively).
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During its current Pre-Market and Post-Market trading sessions,
Nasdaq offers more limited trading functionality than it does during
the Regular Market Hours trading session and trading during that period
is subject to different regulation. For example, outside of ``regular
trading hours,'' \15\ only certain aspects of the SEC's Regulation
National Market System (``Reg. NMS'') \16\ apply. Meanwhile, the
Exchange does not offer certain order types during these trading
[[Page 20224]]
sessions, such as unpriced orders and pegged orders. Moreover, during
extended hours trading sessions, liquidity tends to be lower than it is
during regular trading hours. Additionally, stocks often experience
more volatile trading activity during these sessions. For reasons such
as those described above, Exchange members may not accept an order from
a customer for execution in these extended hours trading sessions
without disclosing to such customer that extended hours trading
involves material risks.\17\ Similarly, to the extent that markets like
Nasdaq allow trading to occur in extended hours trading sessions, FINRA
requires brokers that participate in these sessions to affirmatively
disclose to investors that extended hours trading carries greater risks
than trading during regular market hours.\18\
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\15\ See 17 CFR 242.600(b)(88) (defining the term ``regular
trading hours'' to mean 9:30 a.m.-4 p.m. Eastern Time).
\16\ 17 CFR 242.600-614.
\17\ See Rule Equity 2, Section 20 (``Customer Disclosures'')
(providing, in part, that ``[n]o member may accept an order from a
customer for execution in the premarket session or post-market
session without disclosing to such customer that extended hours
trading involves material trading risks, including the possibility
of lower liquidity, high volatility, changing prices, unlinked
markets, an exaggerated effect from news announcements, wider
spreads and any other relevant risk. The absence of an updated
underlying index value or intraday indicative value is an additional
trading risk in extended hours for Derivative Securities
Products''). As discussed below and consistent with the approved
rules of other exchanges for operating an overnight session, the
Exchange is proposing to supplement these disclosures to address
additional risks associated with the proposed Night Session. See
infra note 72 and accompanying text.
\18\ See FINRA Rule 2265 (Extended Hours Trading Risk
Disclosure).
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Although trading volume in extended hours trading tends to be
considerably lower than it is during regular market hours, Nasdaq has
observed a growing interest in trading during overnight hours,
particular among investors located in Asia and other foreign
jurisdictions where business hours do not coincide, fully or otherwise,
with U.S. regular market hours. For these investors, extended market
hours trading sessions often provide some real-time access to Nasdaq
during their business hours, but for many, Nasdaq is closed during
hours when they are most apt to trade. Increasingly, these investors
are turning to ATSs that offer overnight trading, such as Blue Ocean,
Bruce, Interactive Brokers, and OTC Moon. They are also increasingly
utilizing trading platforms that provide access to markets for digital
assets, including cryptocurrencies, tokenized assets, and tokenized
securities, on a 24/7 basis. Nasdaq submits its proposal to extend its
trading hours to compete for order flow from these investors, as well
as to position itself favorably in the future to participate in markets
that trade digital assets.
Overview of Nasdaq's Proposal for 23/5 Trading
Going forward, Nasdaq proposes to conduct trading 23 hours per day,
5 days per week. It proposes doing so in two trading sessions rather
than three. First, it will conduct a ``Day'' trading session, which
will be the same and comprise its existing Pre-Market Hours, Regular
Market Hours, and Post-Market Hours trading sessions.\19\ The Day
Session will commence at 4:00 a.m. ET and end at 8:00 p.m. ET, and it
will continue to feature both the Nasdaq Opening Cross and the Nasdaq
Closing Cross. Second, Nasdaq will conduct a ``Night'' trading session,
which will commence at 9:00 p.m. ET and end at 4:00 a.m. ET the next
calendar day.\20\ All NMS Stocks would be eligible to trade during the
proposed Night Session. As we explain below, between 8:00 p.m. and 9:00
p.m. ET on each weekday, the Exchange will pause trading on its market
to conduct maintenance, testing, and to process those corporate
actions, such as mergers, stock splits, and dividends, that will become
effective the following trading day. The pause will also allow for
market participants to process and clear trades before proceeding to a
new trading day. Nasdaq proposes to keep its markets closed during all
weekend hours, except that the trading week will commence with a Night
Session on Sunday nights at 9:00 p.m. ET.\21\ The trading week will end
at the conclusion of the Day Session on Friday.\22\
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\19\ See Rule Equity 1, Section 1(a)(9).
\20\ See proposed Rule Equity 1, Section 1(a)(19) (defining the
term ``Night Session'' as ``the time between 9:00 p.m. on one
calendar day through 4:00 a.m. the next calendar day Sunday through
Thursday provided that each such next calendar day is a Business
Day.''). To enhance clarity and consistent with approved rules of
other national securities exchanges, and specifically 24X, the
Exchange proposes to define the term ``Business Day'' to means any
Monday, Tuesday, Wednesday, Thursday or Friday other than any of the
following U.S. holidays if they are celebrated on a Monday, Tuesday,
Wednesday, Thursday or Friday: New Year's Day, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Juneteenth
National Independence Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day ET, or such other U.S. holiday(s) as published
by the Exchange from time to time). See proposed Rule Equity 1,
Section 1(a)(17).
\21\ See proposed Rule Equity 1, Section 1(a)(19) (defining the
term ``Night Session'').
\22\ See proposed Rule Equity 1, Section 1(a)(18). The Exchange
proposes a non-substantive change to define the term ``Day Session''
in proposed Rule 1 Equity 1, Section 1(a)(18) as follows: ``[t]he
term `Day Session' means the time between 4:00 a.m. ET and 8:00 p.m.
ET on Business Days, during which period the Pre-Market Hours,
Regular Market Hours and Post-Market Hours are in operation.'' The
Exchange believes this non-substantive change is designed to
facilitate application of the rules by combining references to the
three current trading sessions into one broader day trading session
for referencing purposes only thereby simplifying the
conceptualization and application of the proposed rules. See id.
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On a holiday or another day when the Exchange is closed for
business, the closure will be effective as of 8:00 p.m. ET on the
calendar day prior to the closure date, and the market will reopen at
9:00 p.m. ET on the closure date, unless the closure date is a Friday,
in which case the market will reopen on Sunday evening at 9:00 p.m.
ET.\23\ On a day when Nasdaq closes the market early, it will resume
trading at 9:00 p.m. ET on the same calendar day, unless again, the
early closure date is a Friday, in which case the Exchange will resume
trading on Sunday evening at 9:00 p.m. ET.\24\
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\23\ See proposed Rule Equity 1, Section 1(a)(19).
\24\ See proposed Rule Equity 1, Section 1(a)(19).
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Consistent with the approved rules of other national securities
exchanges that are similarly proposing to extend their trading hours
overnight,\25\ Nasdaq proposes to launch the operation of its 23/5
market upon the availability of the Securities Information Processor
(``SIP'') to operate during the Night Session.\26\
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\25\ See 24X Approval Order, supra note 10, 89 FR at 97105-07
(approving application of 24X to trade overnight provided that it
may not begin doing so until the Equity Data Plans have announced
their preparedness to collect, consolidate, process, and disseminate
quotation and transaction information during the overnight hours;
the SEC would nullify approval of 24X rules governing overnight
trading if such readiness does not occur within 18 months of the
issuance of the approval order); NYSE Arca Approval Order, supra
note 1010. See also 24X Rule 1.5(c); NYSE Arca Rule 7.34-E.
\26\ See proposed Rule Equity 1, Section 1(19) (defining the
term ``Night Session'' and further providing that (1) the Exchange
shall not commence operation of the Night Session unless the Equity
Data Plans (1) have established a mechanism to collect, consolidate,
process and disseminate quotation and transaction information at all
times during the Night Session that is equivalent to the mechanism
established for Exchange trading hours during Regular Market Hours,
and (2) have provided the Exchange with notification that they are
prepared to collect, consolidate, process and disseminate quotation
and transaction information to accommodate the Night Session; (2)
that prior to commencing operation during the Night Session, the
Exchange will file a proposed rule change pursuant to Section 19(b)
of the Exchange Act and the rules thereunder to amend its rules
confirming that the Exchange is able to comply with its obligations
under the Exchange Act and the rules thereunder during the Night
Session and that such Equity Data Plans are prepared to collect,
consolidate, process and disseminate quotation and transaction
information at all times during the Night Session (``Night Session
Proposed Rule Change''); and (3) that if the Night Session Proposed
Rule Change is not filed within 18 months of the SEC's approval of
this proposed rule change, the Exchange will promptly file a
proposed rule change to remove the rules that apply to the Night
Session). See id.
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To facilitate this proposal to extend Nasdaq's trading hours,
Nasdaq
[[Page 20225]]
proposes to amend numerous rules in its Rulebook. Rather than catalogue
all such proposed changes, the majority of which are non-substantive
changes to reflect revised trading times, we focus below on describing
only those changes that will have a material impact on the operation of
the Nasdaq Stock Market.
Before we describe what Nasdaq proposes to change, we first want to
make clear what will remain the same. The following aspects of Nasdaq's
trading system and procedures will not change when trading equities and
ETPs on a 23/5 basis: \27\
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\27\ The Exchange will report the best bid and offer on the
Exchange to the appropriate network processor, as it currently does
today, using the same formats and delivery mechanisms. As is the
case today, trades executed and reported outside of Regular Market
Hours as proposed will be reported to the appropriate network
processor with the ``.T'' modifier or as otherwise required by the
Equity Data Plans. No fee changes are proposed in connection with
this proposal.
<bullet> Listing rules
<bullet> Membership rules
<bullet> Rules of conduct
<bullet> Market Maker obligations
<bullet> Ranking, display, priority and decrementation rules
<bullet> Disciplinary rules and enforcement
<bullet> Opening and Closing Crosses
<bullet> Clearly Erroneous protections
The ``Day'' Trading Session
The new Day trading session will combine and incorporate, without
substantive changes, all elements of what are now the Pre-Market
Hours,\28\ Regular Market Hours,\29\ and Post-Market Hours \30\ trading
sessions. Going forward, the Rules will delineate these sessions as
distinct sub-parts of the Day Session.\31\ During the Day Session, all
existing requirements, procedures, behaviors and processes, including
those governing the Opening and Closing Crosses, halts, routing, order
types, attributes, times-in-force, order entry protocols, connectivity,
market data, etc., all will persist in their current form, with only
minor conforming changes (described below). For example, Order Type
availability and behavior in the Pre-Market Hours of 4:00-9:30 a.m. ET
will remain the same going forward as it is now.\32\ As another
example, limits on Order Type availability in Post-Market trading will
continue to apply.\33\
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\28\ See Rule Equity 1, Section 1(a)(9) (defining the terms
``Market Hours,'' ``Pre-Market Hours,'' and ``Post-Market Hours'').
To effect this change, the Exchange proposes a non-substantive term
to define the term ``Pre-Market Hours'' as that subset of the Day
Session comprising the trading session that begins at 4:00 a.m. and
continues until 9:30 a.m. on Business Days. See proposed Rule Equity
1, Section 1(a)(20).
\29\ See Rule Equity 1, Section 1(a)(9). To effect this change,
the Exchange proposes a non-substantive change to the current
definition of ``market hours'' to provide that, except as otherwise
provided in Rule 4120, the term ``Regular Market Hours'' means that
subset of the Day Session comprising the trading session that begins
at 9:30 a.m. and continues until 4:00 p.m. on Business Days. See
proposed Rule Equity 1, Section 1(a)(22).
\30\ See Rule Equity 1, Section 1(a)(9). To effect this change,
the Exchange proposes a non-substantive term to define the term
``Post-Market Hours'' as that subset of the Day Session comprising
the trading session that begins at 4:00 p.m. and that continues
until 8:00 p.m. on Business Days except as otherwise provided in
Rule 4120. See proposed Rule Equity 1, Section 1(a)(21).
\31\ See proposed Rule Equity 1, Sections 1(a)(18), and (20)-
(21).
\32\ See proposed Rule 4702. In Amendment No. 2 to the proposed
rule change, the Exchange updates Exhibit 5 to the proposal to
reflect changes to Rule 4702 that were adopted after the date of the
initial filing. See, e.g., Notice, supra note 3; Exchange Rule 4702.
\33\ See proposed Rule 4702. Consistent with the behavior of
such order during extended hours, the Exchange proposes to amend
Rule 4702(b)(3)(A), that during the Night Session, as is the case
during Pre- and Post-Market Hours, a Non-Displayed Order will be
posted at its entered limit price without adjustment. See proposed
Rule 4702(b)(3)(A). The Exchange further proposes to amend Rule
4702(b)(4) to provide that, during the Night Session, as is the case
today with respect to the Pre- and Post-Market Hours, a Post-Only
Order will be processed in a manner identical to Regular Market
Hours with respect to locking or crossing Orders on the Nasdaq Book,
but will not be cancelled or have its price adjusted with respect to
locking or crossing the quotations of other market centers. See
proposed Rule 4702(b)(4). The Exchange believes this proposed change
is appropriate because the Night Session is effectively an extension
of the Exchange's current extended hours, and this proposed change
conforms the behavior of this order during the current extended
hours through the hours of operation of the Night Session, as
proposed.
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The ``Night'' Trading Session
By contrast to the Day trading session, the proposed Night trading
session will be an entirely new trading session that will cover a
period of the night in the Eastern Time Zone in the United States in
which trading on the Exchange does not now occur.\34\ As discussed
above, all NMS Stocks would be eligible to trade in the proposed Night
Session. In many ways, the Night Session will be like the existing
Post-Market Hours and Pre-Market Hours trading sessions in that it will
feature limited functionality to reflect that only certain rules of
Reg. NMS apply and the reduced trading activity. The Night Session will
also feature a limited number of Order Types and Attributes.\35\ Only
limit orders would be permitted during the Night Session.\36\ Unpriced
orders would not be permitted.\37\ Moreover, limit orders entered
during the Night Session would be subject to Limit Order Protection
(``LOP'') as provided under subparagraph (c) of Equity 4, Rule 4757.
LOP is a feature of the Nasdaq Market Center that prevents certain
Limit Orders at prices outside of pre-set standard limits (``LOP
Limit'') from being accepted by the System.\38\ The LOP Limit is the
greater of 10% of the
[[Page 20226]]
LOP Reference Price \39\ or $0.50 for all securities across all trading
sessions.\40\
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\34\ See proposed Rule 1 Equity, Section 1(a)(19).
\35\ As discussed below, all limit orders permitted to trade
during Pre-Market Hours will be eligible to trade in the Night
Session; provided, however, that order types designated for the
opening cross or post-opening trading that are permitted during the
Pre-Market Hours will not be accepted during the Night Session. As
further discussed below, the following orders will also not be
permitted during the Night Session: Company Direct Listing, Extended
Trading Close, Midpoint Peg Post-Only, M-ELO, and M-ELO+C. To effect
these changes, the Exchange proposes to modify Rule 4702 as follows.
The Exchange proposes to modify Rule 4702(b)(1)(A) (``Price to
Comply Order'') to add ``and during the Night Session'' to the
sentence currently providing that ``During Pre-Market Hours and
Post-Market Hours, a Price to Comply Order will be ranked and
displayed at its entered limit price without adjustment.'' As
proposed, during the Night Session, Price to Comply Orders would
thus be ranked and displayed in the same manner in which such orders
are ranked and displayed during the Pre-Market and Post-Market Hours
today. The Exchange further proposes a conforming change to delete
the word ``and'' and add commas in that sentence as appropriate. In
addition, the Exchange proposes a non-substantive, technical
amendment to the first paragraph of Rule 4702(b)(1)(A) to update the
cross-reference to Rule 610(d) of Regulation NMS, governing locking
and crossing quotations, to the correct cross-reference, Rule 610(e)
of Regulation NMS. With respect to Rule 4702(b)(2)(A) (``Price to
Display Order''), the Exchange proposes three changes. First, the
Exchange proposes to add ``and during the Night Session'' to the
sentence currently providing that ``During Pre-Market Hours and
Post-Market Hours, a Price to Display Order will be displayed and
ranked at its entered limit price without adjustment.'' As proposed,
during the Night Session, Price to Display Orders would thus be
ranked and displayed in the same manner in which such orders are
ranked and display during the Pre-Market and Post-Market Hours
today. Second, the Exchange further proposes a conforming change to
delete the word ``and'' and add commas in that sentence as
appropriate. Finally, the Exchange proposes to insert ``Regular''
before ``Market Hours'' to reflect the proposed renaming of the
regular market section under Rule Equity 1, Sectio 1(a)(22). See
proposed Rule 4702.
\36\ See Rule 4702 (``Order Types'') as proposed.
\37\ See proposed Rule 4702(a). To effect this change, the
Exchange proposes to insert, immediately following the proposed
entry addressing ``Night Session Ports, Protocols'' in Rule 4702(a)
the following text: ``Unpriced orders are not permitted during the
Night Session. Unpriced orders designated for the Night Session will
be rejected.'' See id.
\38\ See Rule 4757(c). LOP applies to all Quotes and Orders,
including Quotes and Orders that have been modified, where the
modification results in a new timestamp and priority. LOP does not
apply to Orders with Market and Primary Pegging, Market Maker Peg
Orders or Intermarket Sweep Orders. A Midpoint Pegging Order with a
discretion price would not be subject to LOP. LOP is operational
each trading day, except for orders designated for opening,
reopening and closing crosses and initial public offerings. LOP is
not operational during trading halts and pauses. LOP would not apply
in the event there is no established LOP Reference Price or the
National Best Bid, when used as the LOP Reference Price, is equal to
or less than $0. See Rule 4757(c)(i).
\39\ The ``LOP Reference Price'' is the current National Best
Bid or Best Offer, the bid for sell orders and the offer for buy
orders. See Rule 4757(c)(iii). LOP will reject incoming Limit Orders
that exceed the LOP Reference Threshold. Limit Orders will be
rejected if the price of the Limit Order is greater than the LOP
Reference Threshold for a buy Limit Order. Limit Orders will be
rejected if the price of the Limit Order is less than the LOP
Reference Threshold for a sell Limit Order. See Rule 4757(c)(v). As
provided under Rule 4757(c)(iv), the LOP Reference Threshold for buy
orders will be the LOP Reference Price (offer) plus the applicable
LOP Limit. The LOP Reference Threshold for sell orders will be the
LOP Reference Price (bid) minus the applicable LOP Limit.
\40\ See Rule 4757(c)(ii).
---------------------------------------------------------------------------
Specifically, the following Order Types will not be available
during the Night Session: Supplemental; \41\ Market Maker Peg; \42\
Market On Open (``MOO''); \43\ Limit on Open (``LOO''); \44\ Opening
Imbalance Only (``OIO Order''); \45\ Market on Close (``MOC Order'');
\46\ Limit on Close (``LOC Order''); \47\ Imbalance-Only (``IO
Order''); \48\ Company Direct Listing; \49\ Extended Trading Close;
\50\ Midpoint Peg Post-Only; \51\ Midpoint Extended Life Order (``M-
ELO''); \52\ and Midpoint Extended Life Order Plus Continuous Book
(``M-ELO+CB Order'').\53\
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\41\ A ``Supplemental Order'' is an Order Type with a Non-
Display Order Attribute that is held on the Nasdaq Book in order to
provide liquidity at the NBBO through a special execution process
described in Rule 4757(a)(1)(D). A Supplemental Order may be entered
at any time during Pre-Market Hours, or Regular Market Hours, but is
available for potential execution only during Market Hours. Any
Supplemental Orders still on the Nasdaq Book at the conclusion of
Market Hours will be cancelled. See Rule 4702(b)(6).
\42\ A ``Market Maker Peg Order'' is an Order Type designed to
allow a Market Maker to maintain a continuous two-sided quotation at
a displayed price that is compliant with the quotation requirements
for Market Makers set forth in Rule Equity 2, Section 5(a)(2). The
Exchange is proposing to provide that Market Maker Peg Orders are
not available during the Night Session, and, further, that Market
Maker Peg Orders designated for the Night Session will be cancelled.
See proposed Rule 4702(b)(7)(A).
\43\ A ``Market On Open Order'' or ``MOO Order'' is an Order
Type entered without a price that may be executed only during the
Nasdaq Opening Cross. Subject to the qualifications provided in Rule
4702(b)(8), MOO Orders may be entered between 4 a.m. ET and
immediately prior to 9:28 a.m. ET. An MOO Order will execute only at
the price determined by the Nasdaq Opening Cross. See Rule
4702(b)(8).
\44\ A ``Limit On Open Order'' or ``LOO Order'' is an Order Type
entered with a price that may be executed only in the Nasdaq Opening
Cross, and only if the price determined by the Nasdaq Opening Cross
is equal to or better than the price at which the LOO Order was
entered. Subject to the qualifications provided in Rule 4702(b)(9),
LOO Orders may be entered between 4 a.m. ET and immediately prior to
9:28 a.m. See Rule 4702(b)(9).
\45\ An ``Opening Imbalance Only Order'' or ``OIO Order'' is an
Order Type entered with a price that may be executed only in the
Nasdaq Opening Cross and only against MOO Orders, LOO Orders, or
Early Market Hours Orders (as defined in Rule 4752). OIO Orders may
be entered between 4:00 a.m. ET until the time of execution of the
Nasdaq Opening Cross, but may not be cancelled or modified at or
after 9:25 a.m. ET. See Rule 4702(b)(10)(A).
\46\ A ``Market On Close Order'' or ``MOC Order'' is an Order
Type entered without a price that may be executed only during the
Nasdaq Closing Cross. Subject to the qualifications provided in Rule
4702(b)(11)), MOC Orders may be entered between 4 a.m. ET and
immediately prior to 3:55 p.m. See Rule 4702(b)(11).
\47\ A ``Limit On Close Order'' or ``LOC Order'' is an Order
Type entered with a price that may be executed only in the Nasdaq
Closing Cross and only if the price determined by the Nasdaq Closing
Cross is equal to or better than the price at which the LOC Order
was entered, subject to qualifications set out in Rule 4702(b)(12).
Subject to qualifications set out in the Rule, LOC Orders may be
entered, cancelled, and/or modified between 4 a.m. ET and
immediately prior to 3:50 p.m. ET. . See Rule 4702(b)(12).
\48\ An ``Imbalance Only Order'' or ``IO Order'' is an Order
entered with a price that may be executed only in the Nasdaq Closing
Cross and only against MOC Orders or LOC Orders. IO Orders may be
entered between 4:00 a.m. ET until the time of execution of the
Nasdaq Closing Cross. See Rule 4702(b)(13).
\49\ A ``Company Direct Listing Order'' or ``CDL Order'' is a
``market order'' entered without a price that may be executed only
in the Nasdaq Halt Cross for a Direct Listing with a Capital Raise
(as defined in Listing Rule IM-5315-2). See Rule 4702(b)(16). The
Exchange proposes to amend Rule 4702(b)(16)(A) to provide that CDL
Orders are not eligible to participate in the Night Session, and,
further, that CDL Orders designated for the Night Session will be
rejected. See proposed Rule 4702(b)(16)(A).
\50\ An ``Extended Trading Close'' or ``ETC'' Order is an Order
Type applicable to Nasdaq-listed securities that may be executed
only during the Extended Trading Close and only at the Nasdaq
Official Closing Price, as determined by the Nasdaq Closing Cross.
See Rule 4702(b)(17). The Exchange proposes to amend Rule
4702(b)(17) to provide that ETC Orders are not eligible to
participate in the Night Session, and that ETC Orders designated for
the Night Session will be rejected. See proposed Rule
4702(b)(17)(A).
\51\ A ``Midpoint Peg Post-Only Order'' (``MPPO'') is an Order
Type with a Non-Display Order Attribute that is priced at the
midpoint between the NBBO and that will execute upon entry only in
circumstances where economically beneficial to the party entering
the Order. The Midpoint Peg Post-Only Order is available during
Market Hours only. See Rule 4702(b)(5).
\52\ A ``Midpoint Extended Life Order'' is an Order Type with a
Non-Display Order Attribute that is priced at the midpoint between
the NBBO and that will not be eligible to execute until a minimum
time period has passed after acceptance of the order by the System.
Eligible Midpoint Extended Life Orders may only execute against
other eligible Midpoint Extended Life Orders and M-ELO+CB Orders.
See Rule 4702(b)(14). The Exchange proposes to amend subparagraph
(A) of Rule 4702(b)(14) to provide that Midpoint Extended Life
Orders are not eligible to participate in the Night Session, and
that Midpoint Extended Life Orders designated for the Night Session
will be rejected. The Exchange also proposes to modify subparagraph
(B) of Rule 4702(b)(14) (addressing Order Attributes that may be
assigned to a Midpoint Extended Life Order) to provide, consistent
with the foregoing proposed changes, that ``Midpoint Extended Life
Orders designated for the Night Session will be rejected.'' See
proposed Rule 4702(b)(14)(A)-(B).
\53\ A ``Midpoint Extended Life Order Plus Continuous Book'' or
``M-ELO+CB'' is an Order Type that has all of the characteristics
and attributes of a Midpoint Extended Life Order, except that a M-
ELO+CB that satisfies a specified holding period is eligible to
execute (at the midpoint of the NBBO) against other eligible M-
ELO+CBs, eligible Midpoint Extended Life Orders, and as described in
the rule, Non-Displayed Orders with Midpoint Pegging resting on the
Exchange's Continuous Book. See Rule 4702(b)(15). The Exchange
proposes to amend subparagraph (A) of Rule 4702(b)(15) to provide
that M-ELO+CB orders are not eligible to participate in the Night
Session, and that M-ELO+CB orders designated for the Night Session
will be rejected. See proposed Rule 4702(b)(15)(A).
---------------------------------------------------------------------------
As proposed, orders for the Night Session may be entered into the
System (or previously entered orders cancelled or modified) from 9:00
p.m. ET until 4:00 a.m. ET in accordance with the hours of operation
for the Night Session.\54\
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\54\ To effect this change, the Exchange proposes to provide in
Rule 4756(a)(3) that orders for the Night Session may be entered
into the System (or previously entered Orders cancelled or modified)
from 9 p.m. until 4:00 a.m. ET in accordance with the hours of
operation for the Night Session. See proposed Rule 4756(b). The
Exchange further proposes to provide in Rule 4120(a)(10)(C) that the
Exchange will begin accepting orders for the Night Session at 9:00
p.m. ET in accordance with Rule 4756 and will trade thereafter
through the Night Session. Similarly, and with respect to entry of
quotes by Nasdaq Market Makers, the Exchange proposes to provide
that during the Night Session, Nasdaq Market Makers and Nasdaq ECNs
can enter quotes into the System from 9:00 p.m. ET to 4:00 a.m. ET.
See proposed Rules 4756(a))(10)(C), 4756(b).
---------------------------------------------------------------------------
Similarly, the following Order Attributes \55\ will not be
available during the Night Session: Primary Pegging; \56\Market
Pegging; \57\ Midpoint Pegging; \58\ and Discretion (Pegging).\59\
[[Page 20227]]
With respect to Time-in-Force \60\ order attributes, orders entered
during the Night Session that are designated to deactivate after 4:00
a.m. ET will deactivate at the conclusion of the Night Session at 4:00
a.m. ET.\61\
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\55\ In Amendment No. 2 to the proposed rule change, the
Exchange updates Exhibit 5 to the proposal to reflect changes to
Rule 4703 that were adopted after the date of the initial filing.
See, e.g., Notice, supra note 3; Exchange Rule 4703.
\56\ See Rule 4703(d). Pegging is an Order Attribute that allows
an Order to have its price automatically set with reference to the
National Best Bid and Offer; provided, however, that if Nasdaq is
the sole market center at the Best Bid or Best Offer (as
applicable), then the price of any Displayed Order with Primary
Pegging will be set with reference to the highest bid or lowest
offer disseminated by a market center other than Nasdaq. Pegging is
available only during Market Hours. Nasdaq offers three varieties of
Pegging: Primary Pegging, Market Pegging, and Midpoint Pegging.
Primary Pegging means Pegging with reference to the Inside Quotation
on the same side of the market. See id.
\57\ Market Pegging means Pegging with reference to the Inside
Quotation on the opposite side of the market. Pegging is available
only during Regular Market Hours. See Rule 4703(d).
\58\ See Rule 4703(d). Midpoint Pegging means Pegging with
reference to the midpoint between the Inside Bid and the Inside
Offer. Pegging is available only during Regular Market Hours. See
id.
\59\ Discretion is an Order Attribute under which an Order has a
non-displayed discretionary price range within which the entering
Participant is willing to trade; such an Order may be referred to as
a ``Discretionary Order.'' The Discretion Order Attribute may be
combined with the Pegging Order Attribute, in which case either the
price of the Order or the discretionary price range or both may be
pegged in the ways described in Rule 4702(d) with respect to the
Pegging Order Attribute. As discussed above, however, and consistent
with its proposal with respect to the Pegging order attribute during
the Night Session, the Exchange proposes to provide that during the
Night Session, the Discretion attribute may not be combined with the
Pegging Order attribute. See proposed Rule 4703(g) (providing that
the Discretion order attribute is available during the Night
Session, provided however, that during the Night Session, the
Discretion order attribute may not be combined with the Pegging
Order attribute, and further, that orders designated for the Night
Session that combine the Discretion attribute with a Pegging
attribute will be rejected).
\60\ The ``Time-in-Force'' assigned to an Order means the period
of time that the Nasdaq Market Center will hold the Order for
potential execution. Participants specify an Order's Time-in-Force
by designating a time at which the Order will become active and a
time at which the Order will cease to be active. See Rule 4702.
\61\ To effect this change, the Exchange proposes to amend Rule
4703(a) as follows. Rule 4703(a) currently provides that available
times for deactivating orders include ``a specific time identified
by the Participant; provided, however, that an Order specifying an
expire time beyond the current trading day will be cancelled at the
end of the current trading day.'' The Exchange proposes to amend
that provision to enhance clarity with respect to available times
for deactivating orders as well as to address available times for
deactivating orders during the proposed Night Session. Specifically,
the Exchange proposes to amend this provision to provide that
available times for deactivating orders include ``a specific time
identified by the Participant; provided, however, that an Order
specifying an expire time beyond 8:00 p.m. ET will be cancelled at
the conclusion of the Day Sesson at 8:00 p.m. and that an Order
entered during the Night Session specifying an expire time beyond
4:00 a.m. ET will expire at the conclusion of the Night Session at
4:00 a.m. ET.'' The Exchange also proposes certain conforming
changes to delete from that same provision obsolete terms including
``the current trading day'' and ``end of current trading day.'' See
proposed Rule 4703(a). The Exchange further proposes to amend
subparagraph (2) of Rule 4703 to delete the sentence that reads
``[a]n Order that is designated to deactivate at 8:00 p.m. may be
referred to as having a Time in Force of `System Hours Day' or
`SDAY' '' and replace it with the following: ``[a]n Order with a
Time in Force of `System Hours Day' or `SDAY' will deactivate at
8:00 p.m., however, an Order with a Time in Force of `System Hours
Day' or `SDAY' designated for participation in the Night Session
will deactivate at 4:00 a.m.'' See proposed Rule 4703(a)(2). The
Exchange believes these proposed changes are appropriate to provide
greater clarity with respect to the operation of SDAY orders during
the proposed Day Session as well as address how the SDAY TIF would
operate during the Night Session as proposed.
---------------------------------------------------------------------------
However, the Night Session will differ from Post-Market Hours and
Pre-Market Hours trading in several respects. Below is a summary of the
key functionality of the Night Session as it will be available at its
launch date.
<bullet> Connectivity: The Exchange will require market
participants to use ports specifically designated for use during the
Night Session.\62\ Market participants that have already purchased
ports from the Exchange may continue using them to trade during the Day
Session, but if participants wish to trade during the Night Session,
then they will need to use a separate Night Session port to do so.\63\
The Exchange proposes this requirement to use Night Session ports
because the Exchange will run a distinct instance of its Trading System
during the Night Session, and ports used for Day Session will only be
capable of connecting to the instance of the Trading System used to
operate the Day Session. Day ports will be operational from 4:00 a.m.
ET through 8:00 p.m. ET, and Night Session ports will be operational
from 9:00 p.m. ET through the following day at 4:00 a.m. ET.\64\
---------------------------------------------------------------------------
\62\ See proposed Rule 4702(a) (providing that, to trade in the
Night Session, market participants will be required to use ports
specifically designated for use during the Night Session, and that
ports used for the Day Session will not connect market participants
to trading systems for the Night Session). The Exchange further
proposes to provide that the following protocols will be available
during the Night Session: OUCH 5, Core FIX, and FIX. The Exchange
proposes to offer OUCH 5, the latest version of the OUCH protocol,
during the Night Session. For sessions other than the Night Session,
the Exchange also offers legacy OUCH versions. The OUCH Order entry
protocol is a proprietary protocol that allows subscribers to
quickly enter orders into the System and receive executions. See
Securities Exchange Act Release No. 95768 (September 14, 2022), 87
FR 57534 (September 20, 2022).
\63\ See proposed Rule 4702(a).
\64\ To effect this change, the Exchange proposes to provide
that Night Session ports will be operational from 9:00 p.m. ET
through the following day at 4:00 a.m. ET in accordance with the
definition of Night Session and that Day ports will be operational
from 4:00 a.m. ET through 8:00 p.m. ET on Business Days. See
proposed Rule 4702(a).
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<bullet> Times-in-Force: As noted above, the Exchange will employ
the Time-in-Force Order Attribute during the Night Session as it does
now during the Day Session, with two changes designed to reflect the
Exchange's proposed hours of operations. First, the Exchange proposes
to (1) amend Rule Equity 1, Section 1(a)(9) to update the definition of
the term ``System Hours''--which is currently defined as the hours of
4:00 a.m. ET through 8:00 p.m. ET--to reflect the Exchange's proposed
hours of operation,\65\ and (2) amend Rule 4703(a) to provide that when
an Order may be deactivated at the end of ``System Hours,'' the term
``System Hours'' refers to the period from 9:00 p.m. ET to the
following calendar day at 8:00 p.m. ET, in accordance with the
definition of ``System Hours'' in Rule Equity 1, Section 1(a)(9).\66\
---------------------------------------------------------------------------
\65\ See proposed Rule 1, Equity 1, Section 1(a)(9). As
proposed, the term ``System Hours'' would mean the 23-hour time
period beginning at 9:00 p.m. ET on one calendar day and ending at
8:00 p.m. ET (or such earlier time as may be designated by Nasdaq on
a day when Nasdaq closes early) on the next calendar day for the
period from Sunday at 9:00 p.m. ET through Friday at 8:00 p.m. ET in
accordance with definitions of Day Session (including the Pre-Market
Hours, Regular Market Hours, Post-Market Hours) and Night Session.
The Exchange further proposes to modify Equity 1, Section 1(a)(9) to
delete the definitions of ``Market Hours,'' ``Pre-Market Hours'' and
``Post-Market Hours,'' as the Exchange is proposing to define each
such term separately elsewhere in Rule Equity 1, Section 1.
\66\ See proposed Rule 4703(a). As proposed, the Exchange would
provide that the available times for deactivating an order include,
among others, at the end of System Hours, in accordance with the
definition of ``System Hours'' in Rule Equity 1, Section 1(a)(9).
See proposed Rule 4703(a).
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<bullet> Trading Halts: Consistent with the approved rules of
another national securities exchange,\67\ the Exchange proposes to
provide in Rule 4120(a)(10)(D) that during the Night Session, if the
primary listing market, including Nasdaq when Nasdaq is the primary
listing market, determines to halt trading, or delay commencement of
trading, in one of its listed securities in accordance with such
primary listing market's rules (e.g., with regard to material corporate
actions with respect to a particular security (i.e., corporate actions
that may affect a stock price, stock additions and subtractions, and
similar actions) or material news announcements), the Exchange will
halt trading, or delay the commencement of, trading (as applicable), in
such security until trading resumes on the primary listing market for
the security. Further, the Exchange proposes to provide that if trading
in a security is halted by the primary listing market, including Nasdaq
when Nasdaq is the primary listing market, before the commencement of
the Night Session and continuing into the Night Session, or during the
Night Session, the Exchange will halt trading in the security until
trading resumes on the primary listing market for the security.\68\
---------------------------------------------------------------------------
\67\ 24X Rule 11.15(c)(5).
\68\ See proposed Rule 4120(a)(10)(D). Generally, regardless of
trading session, when a halt has been declared on the primary
listing market, the Exchange will also halt trading automatically in
the subject security on the Exchange. Exchange staff will be
available during the proposed Night Session in order to maintain a
fair and orderly market, make any necessary rulings or take any
action that may be necessary. Similarly, Exchange staff will be
available if any action such as declaration of a halt in a Nasdaq
primary symbol were necessary. Moreover, to the extent material
corporate news is released during the Night Session and the primary
listing market does not impose a halt, the requirements of proposed
Rule Equity 2, Section 20 and proposed Rule Equity 2, Section 20(8)
that disclosures be provided to customers relating to the risks
associated with the exaggerated effect of news announcements and the
additional risks of trading during the Night Session, respectively,
will help ensure that market participants, including investors, are
informed about the potential risks associated with trading during
the Night Session. The Exchange also proposes a technical, non-
substantive conforming change to renumber subparagraphs (10)-(15) of
current Rule 4120(a) as subparagraphs (11)-(16).
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[[Page 20228]]
<bullet> Clearly Erroneous Transactions: Consistent with the
regulatory framework applied to national securities exchanges \69\ with
respect to the use of clearly erroneous rules in extended hours
sessions, the Exchange proposes to rely on its clearly erroneous rules
\70\ during the Night Session. The Exchange believes this proposed
change is appropriate because the use of clearly erroneous executions
rules during the Night Session will help ensure that there is a
consistent, market-wide approach across the extended hours trading
sessions of all national securities exchanges.
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\69\ See, e.g., CboeBZX Rule 11.17; Nasdaq Equity 11, Rule
11890; NYSE Arca Rule 7.10-E; 24X Rule 11.14.
\70\ See proposed Rule 11890. To effect this change, the
Exchange proposes to amend Equity 1, Rule 11890 (``Clearly Erroneous
Transactions'') to incorporate the Night Session as appropriate
throughout the various provisions in the rule. Specifically, the
Exchange proposes to insert references to the Night Session in the
following provisions: romanette (iii) of Rule 11890(a)(2)(A) (with
respect to filing time periods); subparagraph (2) of Rule 11890(C),
including the table under romanette (i) (with respect to eligibility
for review) and romanettes (ii) and (iii) thereunder; subparagraph
(3) of Rule 11890(a)(3)(D)(3) (with respect to trades on the Nasdaq
Bond Exchange); and romanette (i) of Rule 11890(b) (with respect to
procedures for reviewing transactions on Nasdaq's own motion).
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<bullet> Surveillance: During the Night Session, the Exchange will
have a dedicated team to conduct real-time surveillance, process
Clearly Erroneous filings, and as needed, implement trading halts.
Real-time surveillance for the Night Session will be similar to real-
time surveillance in other sessions today. Real-time surveillance
includes monitoring for unusual activity, the detection of potential
manipulation and other market abuse, as well as coordination with
Nasdaq departments and member firm representatives as necessary to
monitor and or resolve unexpected matters. The Exchange will utilize
the Nasdaq Market Surveillance system to electronically monitor and
alert trading anomalies. The Clearly Erroneous process and trading
halts for listed securities will be handled by the Exchange
surveillance staff, similar to all other sessions, and in accordance
with the rules applicable to Clearly Erroneous filings and Trading
Halts.
<bullet> Market Data: The Exchange proposes to disseminate the same
market data information during the Night Session as are available
during the Day Session.
<bullet> Risk Disclosures: In accordance with Equity 2, Section 20,
the Exchange proposes to supplement its current customer disclosures
concerning risks associated with trading during Pre-Market Hours and
Post-Market Hours to add six additional potential risks associated with
trading during the Night Session based on the approved rules of 24X and
NYSE Arca.\71\ As proposed, the Exchange would require that its members
make certain disclosures to investors concerning risks associated with
trading during Pre-Market Hours, Post-Market and the Night Session.\72\
These proposed disclosures will enhance transparency by warning
customers that trading during these extended hours involves material
trading risks, as outlined in the proposed rules.\73\
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\71\ See, e.g., 24X Approval Order, supra note 10; 24X Rule 3.21
(``Customer Disclosures''); NYSE Arca Approval Order, supra note 10;
NYSE Arca Rule 7.34-E(T) (``Trading Sessions'').
\72\ See proposed Rule Equity 2, Section 20 (8)(A)-(F)
(providing, in part, that trading during the Night Session may
present risks, including (1) the risk of trading during hours in
which the primary listing market may not be open, (2) the risk of
trading during hours in which there may be limited or different
regulatory protections, (3) the risk of having limited trading
alternatives, (4) risks related to continuous trading, (5) the risk
of trading during hours in which financial market infrastructure
companies may be closed, (6) the risk of trading because the Night
Session is novel and may presents additional unforeseen risks beyond
those enumerated in the proposed rules, and (7) additional
unforeseen risks in addition to those discussed above).
\73\ See proposed Rule Equity 2, Section 20.
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<bullet> Equity Data Plans: Consistent with the approved rules of
24X and NYSE Arca,\74\ the Exchange proposes to provide that the
Exchange would not commence operation of the Night Session unless the
Equity Data Plans (as proposed to be defined in Rule Equity 1, Section
1(a)(16)) \75\ have established a mechanism to collect, consolidate,
process and disseminate quotation and transaction information at all
times during Extended Trading Hours that is equivalent to the mechanism
established for Regular Market Hours, and (2) have provided the
Exchange with notification that they are prepared to collect,
consolidate, process and disseminate quotation and transaction
information to accommodate the Night Session.\76\
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\74\ See 24X Rule 1.5(c); NYSE Arca Rule 7.34-E.
\75\ As proposed, the term The term ``Equity Data Plans'' means
the effective national market system plans that govern the
collection, consolidation, processing and dissemination of equity
market data for NMS stocks and oversee the exclusive securities
information processors (``SIPs''), including (1) the Consolidated
Tape Association Plan (``CTA Plan''), (2) the Consolidated Quotation
Plan (``CQ Plan''), (3) the Joint Self-Regulatory Organization Plan
Governing the Collection, Consolidation and Dissemination of
Quotation and Transaction Information for Nasdaq- Listed Securities
Traded on Exchanges on an Unlisted Trading Privileges Basis (``UTP
Plan''), (4) the CT Plan established by the Limited Liability
Company Agreement of CT Plan LLC, and (5) any successor thereto to
the named Plans. See proposed Rule Equity 1, Section 1(a)(16).
\76\ Also consistent with the approved rules of 24X and NYSE
Arca, the Exchange further proposes to provide that, prior to
commencing operation during the Night Session, the Exchange will
file a proposed rule change pursuant to Section 19(b) of the
Exchange Act and the rules thereunder to amend its rules confirming
that the Exchange is able to comply with its obligations under the
Exchange Act and the rules thereunder during the Night Session and
that such Equity Data Plans are prepared to collect, consolidate,
process and disseminate quotation and transaction information at all
times during the Night Session (``Night Session Proposed Rule
Change''). If the Night Session Proposed Rule Change is not filed
within 18 months of the Commission's approval of this proposed rule
change, the Exchange will promptly file a proposed rule change to
remove the rules that apply to the Night Session. The Exchange will
submit all quotes and trades that are generated in the Night Session
to the consolidated quote and trade systems maintained by the SIPs
for public dissemination. Accordingly, once the proposed Night
Session is operative, quotes and trades will be made available to
the investing public in the same manner that quotes and trades are
currently made available. See, e.g., proposed Rule Equity 1, Section
1(a)(19); 24X Rule 1.5(c); NYSE Arca Rule 7.34-E.
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Transition From Night to Day Session
The following describes proposed procedures for the Exchange to
transition from a Night Session to a Day Session at 4:00 a.m. ET each
weekday. At the conclusion of the Night Session at 4:00 a.m. ET, all
orders outstanding on the Nasdaq Book as of 4:00 a.m. ET will be
canceled.\77\ The Exchange currently begins accepting new orders for
the Pre-Market Session at 4:00 a.m. ET,\78\ and, as proposed, this
would remain unchanged.
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\77\ To effect this change, the Exchange proposes to provide in
proposed Rule 4120(a)(10)(C) that at the conclusion of the Night
Session at 4:00 a.m. ET, all orders outstanding in the Nasdaq Book
as of 4:00 a.m. ET shall be cancelled. See proposed Rule
4120(a)(10)(C).
\78\ See Rule 4752(b).
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Weekday 8:00-9:00 p.m. ET Trading Pause
As proposed, upon conclusion of the Day Session on each weekday, at
8:00 p.m. ET, trading on the Exchange will pause for one hour.\79\ It
will resume with commencement of the Night Session at 9:00 p.m. ET.\80\
All orders
[[Page 20229]]
outstanding on the Nasdaq Book as of 8:00 p.m. ET will be canceled.\81\
The Exchange will begin accepting new orders at 9:00 p.m., Sunday
through Thursday and will trade thereafter throughout the Night
Session.\82\ At the conclusion of the Night Session at 4:00 a.m. ET,
all orders outstanding in the Nasdaq Book as of 4:00 a.m. ET will be
cancelled.\83\
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\79\ See proposed Rule 4120(a)(10). To effect this change, the
Exchange proposes to provide in proposed Rule 4120(a)(10) that the
Exchange shall halt trading at the conclusion of the Day Session at
8:00 p.m. ET and resume trading with the commencement of the Night
Session at 9:00 p.m. ET, on Monday, Tuesday, Wednesday and Thursday,
in accordance with Rule Equity 1, Sections 1(a)(18)-(19) of these
rules. As further proposed, weekday trading would commence with a
Night Session beginning at 9:00 p.m. ET, on Sunday. See proposed
Rule 4120(a)(10).
\80\ See proposed Rule 4120(a)10. Consistent with the approved
rules of another national security exchange, and specifically 24X
Rule 11.15(c)(4), the Exchange proposes to provide that the Exchange
may pause trading during the Night Session at such other times as
the Exchange in the exercise of its regulatory functions may
determine is appropriate, and that the Exchange will announce in
advance when such trading will pause and when it will resume
pursuant to this paragraph. See, e.g., proposed Rule 4120(a)(10)(A);
24X Rule 11.15(c)(4).
\81\ See proposed Rule 4120(a)(10)(B). To effect this change,
the Exchange proposes to provide in proposed Rule 4120(a)(10)(B)
that orders outstanding on the Nasdaq Book as of 8:00 p.m. ET shall
be cancelled. See id.
\82\ See proposed Rule 4120(a)(10)(C). To effect this change,
the Exchange proposes to provide that the Exchange will begin
accepting orders for the Night Session at 9:00 p.m. ET in accordance
with Rule 4756 and will trade thereafter throughout the Night
Session. As discussed above, the Exchange is also proposing to
provide in Rule 4756(a)(3) that Orders for the Night Session may be
entered into the System (or previously entered Orders cancelled or
modified) from 9 p.m. until 4:00 a.m. ET in accordance with the
hours of operation for the Night Session. See proposed Rule
4756(a)(3).
\83\ See proposed Rule 4120(a)(10)(C) (proposing to provide, in
part, that at the conclusion of the Night Session at 4:00 a.m. ET,
all orders outstanding in the Nasdaq Book as of 4:00 a.m. ET shall
be cancelled).
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The trading pause will mitigate systemic risk to the markets and
promote resiliency by providing time for both the Exchange and market
participants to conduct maintenance and testing. During the pause, for
example, the Exchange will shift its operations to a second instance of
its System that will run the Night Session.
Finally, the trading pause will allow the Exchange to process, or
to begin processing any corporate actions that may be pending for the
next trading day, including stock splits, dividends, name changes, and
distributions. The Exchange notes that certain corporate actions will
likely require halts beyond the trading pause. For example, dividends
must be paid on particular calendar days, which will not, going
forward, always coincide with the commencement of new trading days on
Nasdaq at 9:00p.m. ET. Accordingly, Nasdaq will likely need to halt
trading in such securities until sometime during the next calendar
date.
Related Proposed Rule Changes
As discussed above, the Exchange proposes to trade NMS stocks and
ETPs on a 23/5 basis. To effect this change with respect to certain
ETPs, the Exchange proposes to amend certain rules under the Nasdaq
5700 Series as follows. The Exchange proposes to provide that, in
addition to the Regular Market Hours and the Pre-and Post-Market Hours,
as it does today, Nasdaq may designate the following for trading during
the Night Session: Exchange Traded Fund Shares,\84\ Portfolio
Depositary Receipts listed pursuant to Rules 5705(a)(4) and (5),\85\
and Index Fund Shares.\86\ The Exchange believes this proposed change
would remove impediments to and perfect the mechanism of a free and
open market, and in general, protect investors and the public interest
because the Exchange has rules in place to facilitate the trading of
such ETPs during all trading sessions and may designate such ETPs for
trading during all extended hours sessions, of which the proposed Night
Session would constitute part.
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\84\ See proposed Rule 5704(b)(1)(C). To effect this change, the
Exchange proposes to insert the words ``or Night Session, as such
terms are defined in Rule 4120'' immediately following the
description of the Pre- and Post-Market Hours sessions in Rule
5704(b)(1)(C). The Exchange also proposes to make related conforming
changes to remove obsolete language describing the current trading
sessions and substitute therefor for the proposed terms for each
such trading session. See proposed Rule 5704(b)(1)(C).
\85\ See proposed Rule 5705(a)(7). To effect this change, the
Exchange proposes to insert the words ``or Night Session, as such
terms are defined in Rule 4120'' immediately following the
description of the Pre- and Post-Market Hours sessions in Rule
5705(a)(7) and make related conforming changes to remove obsolete
language describing the current trading sessions and substitute
therefor for the proposed terms for each such trading session. See
proposed Rule 5705(a)(7).
\86\ See proposed Rule 5705(b)(7). To effect this change, the
Exchange proposes to insert the words ``or Night Session, as such
terms are defined in Rule 4120'' immediately following the
description of the Pre- and Post-Market Hours sessions in Rule
5705(b)(7) and make related conforming changes to remove obsolete
language describing the current trading sessions and substitute
therefor for the proposed terms for each such trading session. See
proposed Rule 5705(b)(7).
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Impact on Exchange Fees
The Exchange will address any impact of the rule proposal on its
schedule of credits and fees, and its incentive programs, in a
subsequent rule filing.
Clarifying, Conforming and Other Non-Substantive Changes
The Exchange proposes to amend current Equity 1, Section 1 to add
three clarifying definitions. First, the Exchange proposes to define
``Equity Data Plans'' to mean the effective national market system
plans that govern the collection, consolidation, processing and
dissemination of equity market data for NMS stocks and oversee the
exclusive securities information processors (``SIPs''), including (1)
the Consolidated Tape Association Plan (``CTA Plan''), (2) the
Consolidated Quotation Plan (``CQ Plan''), (3) the Joint Self-
Regulatory Organization Plan Governing the Collection, Consolidation
and Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading Privileges
Basis (``UTP Plan''), (4) the CT Plan established by the Limited
Liability Company Agreement of CT Plan LLC, and (5) any successor
thereto to the named Plans.\87\ Second, the Exchange proposes to define
``Business Day'' to mean any Monday, Tuesday, Wednesday, Thursday or
Friday other than any of the following U.S. holidays if they are
celebrated on a Monday, Tuesday, Wednesday, Thursday or Friday: New
Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Juneteenth National Independence Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day ET, or such other U.S.
holiday(s) as published by the Exchange from time to time.\88\ Finally,
the Exchange proposes to define ``Extended Hours'' to mean that, unless
otherwise specified in Exchange rules, the term means the hours outside
of Regular Market Hours and specifically comprising the hours during
which Pre-Market Hours, Post-Market Hours, and Night Session are in
operation.\89\
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\87\ See proposed Rule Equity 1, Section 1(a)(16).
\88\ See proposed Rule Equity 1, Section 1(a)(17).
\89\ See proposed Equity 1, Section 1(a)(23).
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The Exchange also proposes the following conforming, non-
substantive changes.
<bullet> The Exchange proposes to amend the following rules to
replace references to ``Market Hours,'' ``regular market hours,'' and
similar references used to designate the trading session operating from
9:30 a.m. ET through 4:00 p.m. ET with the proposed term ``Regular
Market Hours,'' and make related conforming changes: Rule Equity 1,
Section 1(a)(9); Rule Equity 2, Section 20; and Rules 4120, 4702,
4703,\90\ 4752, 4753, 4754,\91\
[[Page 20230]]
IM-5250-1,\92\ 5704, 5705, 5710, 5711, 5713, 5745, 5760, 5810(b), 5840,
and 11890.
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\90\ The Exchange proposes one additional non-substantive change
to Rule 4703(l) to correct a typographical error. Rule 4703(l)
incorrectly refers to Opening Imbalance Only Orders as ``OI Orders''
in one instance and ``IO Orders'' in another. The Exchange proposes
to amend that subparagraph of Rule 4703 to revise such references as
necessary to correctly reflect the defined term for such orders:
``OIO Orders.'' See Rule 4702(a)(10)(A) (defining the term ``Opening
Imbalance Only Order'' or ``OIO Order''). The Exchange believes this
administrative non-substantive change is appropriate to enhance
clarity and thus facilitate the use of and compliance with the
Exchange's rules.
\91\ The Exchange proposes an additional non-substantive change
to Rule 4754(b) to delete the ``S'' from ``EST'' and thus use the
acronym ``ET'' as defined in Rule Equity 1, Section 1(a)(8). See
Rule Equity 1, Section 1(a)(8) (providing that the term ``ET'' means
Eastern Standard Time or Eastern Daylight Time, as applicable).
\92\ The Exchange further proposes a non-substantive, clarifying
change to Rule IM-5250-1. Specifically, the Exchange proposes to
delete the term ``market hours'' from the second paragraph of the
section titled ``Notification to Nasdaq MarketWatch Department and
replace it with the more precise time range ``7:00 a.m. to 8:00
p.m.'' The Exchange believes this clarifying change is appropriate
to align this paragraph with the preceding one which requires that
material news reported outside the hours of 7:00 a.m. to 8:00 p.m.
be disclosed prior to 6:50 a.m. under the rule.
---------------------------------------------------------------------------
<bullet> The Exchange proposes to amend the following rules to
replace references to terms such as ``Pre-Market Session,'' ``Early
Market Hours,'' and similar terms used to designate the pre-market
trading session operating from 4:00 a.m. ET through 9:30 a.m. ET with
the defined term ``Pre-Market Hours'' and make related conforming
changes: Rule Equity 2, Section 20, and Rules 4120, 4702, 4703, 4753,
5704, 5705, and 11890.
<bullet> The Exchange proposes to amend the following rules to
replace references to terms such as ``Post-Market Session,'' ``Extended
Market Hours,'' and similar terms used to designate the trading session
operating from 4:00 p.m. ET through 8:00 p.m. ET, with the term ``Post-
Market Hours'' and make related conforming changes: Rule Equity 2,
Section 20, and Rules 4120, 4702, 4703, 4753, 4755,\93\ 5704, 5705, and
11890.
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\93\ In this Amendment No.2 to the proposal, the Exchange is
proposing one non-substantive technical change to Rule 4755 to
update the cross reference to the definition of ``Post-Market
Hours.'' Specifically, the Exchange proposes to delete the reference
to Rule Equity 1, Section 1(a)(9) and replace it with a reference to
proposed Rule Equity 1, Section 1(a)(21) (proposing to define the
term ``Post-Market Hours''). The Exchange believes this proposed
non-substantive change is appropriate to accurately cross reference
the definition of ``Post-Market Hours'' as proposed and thus
facilitate the understanding and use of the Exchange's rules. The
Exchange is proposing no other changes to Rule 4755.
---------------------------------------------------------------------------
<bullet> The Exchange proposes to amend the following rules to
replace references to ``extended hours'' with the term ``Extended
Hours,'' as defined in Rule 1, Equity Section 1(a)(23): Rule Equity 2,
Section 20, and Rule 4703.
<bullet> The Exchange would also make certain conforming changes as
follows. First, the Exchange proposes to delete the obsolete reference
to ``4:00 a.m. to 8 p.m. Eastern Time on each business day'' in Rule
Equity 2, Section 8, and substitute therefor the term ``System Hours,''
\94\ so as to update and align this rule with the proposed hours of
operation for the Exchange. The Exchange proposes to make non-
substantive changes to Rule 4120 \95\ as follows. The Exchange proposes
to amend subparagraph (B) of Rule 4120(b)(4) to (1) to conform the
current terms ``Pre-Market Session,'' ``Post-Market Session,'' and
``Market Hours'' to the proposed terms ``Pre-Market Hours,'' ``Post-
Market Hours,'' and ``Regular Market Hours,'' as proposed Rule Equity
1, Sections 1(a)(20)-(22), respectively.\96\ The Exchange further
proposes to add in new subparagraphs (F)-(G) of Rule 4120(b)(4) that
the terms ``Day Session'' and ``Night Session'' shall have the same
meaning as defined in Rule Equity 1, Sections 1(a)(18) and (19),
respectively. Consistent with how the Exchange operates during the
Post-Market Hours, the Exchange also proposes to provide in Rule
4120(a)(3)(A), that if an applicable Required Value \97\ continues not
to be calculated or widely disseminated after the close of the Regular
Market Hours, Nasdaq may trade a Derivative Securities Product \98\
during the Night Session only if the listing market traded the
Derivative Securities Product until the close of its regular trading
session without a halt.\99\
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\94\ See, e.g., proposed Rule Equity 2, Section 8; proposed Rule
Equity 1, Section 1(a)(9) (defining the term ``System Hours''). To
effect this change, the Exchange proposes to delete, from Rule
Equity 2, Section 8, the words ``from 4:00 a.m. to 8:00 p.m.
Eastern. Time on each business day'' and substitute therefor the
words ``during System Hours.'' See proposed Rule Equity 2, Section
8.
\95\ In Amendment No. 2 to the proposed rule change, the
Exchange updates Exhibit 5 to the proposal to reflect changes to
Rule 4120 that were adopted after the date of the initial filing.
See, e.g., Notice, supra note 3; Exchange Rule 4120.
\96\ See proposed Rule 4120(b)(4)(B)-(D). The Exchange notes
that for purposes of Rule 4120 and in connection with the trading of
certain derivative securities products as provided thereunder, the
definitions of ``Post-Market Hours'' and ``Regular Market Hours''
differ from those proposed in Equity 1, Section 1 only in that (1)
``Regular Market Hours,'' as defined in Rule 4120, run until ``4:00
p.m. or 4:15 p.m.'' on Business Days (rather than until 4:00 p.m. on
Business Days as provided in proposed Rule Equity 1 Section
1(a)(22)) and (2) ``Post-Market Hours,'' as defined in Rule 4120
begin at ``4:00 p.m. or 4:15 p.m.'' on Business Days (rather than at
4:00 p.m. on Business Days, as proposed in Rule Equity 1, Section
1(a)(21)). The Exchange is not proposing to modify such definitions
under Rule 4120(b).
\97\ ``Required Value'' means (i) the value of any index or any
commodity-related value underlying a Derivative Securities Product,
(ii) the indicative optimized portfolio value, intraday indicative
value, or other comparable estimate of the value of a share of a
Derivative Securities Product updated regularly during the trading
day, (iii) a net asset value in the case of a Derivative Securities
Product for which a net asset value is disseminated, and (iv) a
Disclosed Portfolio in the case of a Derivative Securities Product
that is a series of Managed Fund Shares, as defined in Rule 5735, or
Managed Trust Securities, as defined in Rule 5711(j), and a
Composition File in the case of a Derivative Securities Product that
is a series of NextShares, as defined in Rule 5745. See Rule
4120(b)(4)(E).
\98\ See proposed Rule 4120(b)(3)(A). ``Derivative Securities
Product'' means a series of Exchange Traded Fund Shares, Portfolio
Depository Receipts, Index Fund Shares, Managed Fund Shares,
NextShares, Trust Issued Receipts, or Proxy Portfolio Shares (as
defined in Rules 5704, 5705, 5735, 5745, 5720, and 5750
respectively), a series of Commodity-Related Securities (as defined
in Equity 10, Section 8), securities representing interests in unit
investment trusts or investment companies, Index- Linked
Exchangeable Notes, Equity Gold Shares, Trust Certificates,
Commodity-Based Trust Shares, Currency Trust Shares, Commodity Index
Trust Shares, Commodity Futures Trust Shares, Partnership Units,
Trust Units, Managed Trust Securities, or Currency Warrants (as
defined in Rule 5711(a)--(k)), or any other UTP Derivative Security
(as defined in Rule 5740). See Rule 4120(b)(4)(A).
\99\ To effect this change, the Exchange proposes to amend Rule
4120(b)(3)(A) to insert, immediately after ``Post-Market Session,''
the words ``and during the Night Session.'' The Exchange also
proposes a non-substantive to conform the term ``Post Market
Session'' to the proposed term ``Post-Market Hours'' by deleting the
word ``Session'' and substituting therefor the word ``Hours.'' As
described below, the Exchange is proposing non-substantive changes
to conform terms ``Pre-Market Session,'' Post-Market Session, and
``Market Hours'' in each instance such terms are used within Rule
4120 with the proposed terms ``Pre-Market Hours,'' ``Post-Market
Hours,'' and ``Regular Market Hours,'' respectively. The Exchange
believes that establishing uniform names for its trading sessions,
as proposed, is appropriate because consolidating the varying terms
for each such session into one defined and uniform term for each
such session would facilitate the understanding of and compliance
with the Exchange's rules. See, e.g., proposed Rule 4120; proposed
Rule Equity 1, Section 1(a)(20)-(22).
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Finally, the Exchange proposes a technical, non-substantive
conforming change to renumber subparagraphs (10)-(15) of Rule 4120(a)
as subparagraphs (11)-(16).
II. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\100\ in general, and furthers the objectives of
Section 6(b)(5) of the Act,\101\ in particular, in that it is 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, in general to protect investors and the
public interest.
---------------------------------------------------------------------------
\100\ 15 U.S.C. 78f(b).
\101\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
It is consistent with the Act to permit members of the Exchange to
trade securities on an extended basis, for 23 hours per day, 5 days per
week. As explained above, investors increasingly trade securities,
along with digital assets, on a global basis. Investors located outside
of the United States in places like Asia presently cannot trade on
Nasdaq during what constitutes their regular trading hours, as the
Exchange is closed during that period. Even among U.S.-based investors,
demand is growing for exchanges to expand their market hours to
accommodate overnight trading. Accordingly, investors seeking
[[Page 20231]]
access to U.S. equities and ETP markets during overnight and weekend
hours must resort to trading on a handful of ATSs that offer round-the-
clock trading. Nasdaq's proposal will enable Nasdaq to serve these
investors and to compete with ATSs, foreign securities markets. and
other markets for their order flow. It will also enable the Exchange to
compete with new and incumbent exchanges which the SEC has approved to
trade overnight in a similar manner.
The Exchange's proposal to operate on an extended hours basis is
largely based on Nasdaq's longstanding rules for extended hours
trading, as well as the approved rules of other national securities
exchanges also seeking to operate on a 23/5 basis. As proposed, these
rules are designed to address potential differences in trading compared
to regular trading hours, as well as to enhance transparency and
investor protections. For example, the Exchange is proposing to
supplement the existing required customer disclosures to require the
disclosure of six additional potential risks associated with trading
during extended hours, including the proposed Night Session. Such
disclosures notify investors of potential risks and allow them to
evaluate whether to trade during extended hours. The Exchange would
also implement measures to safeguard against trade executions that are
clearly erroneous while it works to build industry-wide consensus on
proposals for establishing uniform after-hours volatility moderators.
The Exchange believes that requiring the use of ports specifically
designated for use during the Night Session is appropriate because the
Night Session operates on a technically distinct trading system from
the Day Session. As a result, Day Session ports cannot connect to, or
interact with, the Night Session trading system. This approach reflects
the technical and functional separation of the two systems and ensures
that Night Session activity occurs in a manner consistent with the
Act's goals of ensuring market integrity, investor protection, and fair
and orderly trading. Nasdaq would also address corporate actions,
conduct real-time surveillance, and implement trading halts consistent
with its proposed rules. Finally, trading overnight will be transparent
because Nasdaq will not commence operations of the proposed extended
hours until the Equity Data Plans are prepared to collect, consolidate,
process, and disseminate quotation and transaction information at all
times during the Night Session. The proposed rules will also foster
competition by introducing another trading venue during the overnight
hours, as at least two other exchanges have obtained Commission
approval for operating on an extended hours basis.
In addition to increasing investor access to the Exchange, the
proposal also stands to promote capital formation and facilitate
portfolio management.
Finally, the Exchange believes that the proposed conforming and
other non-substantive changes would remove impediments to and perfect
the mechanism of a free and open market by reducing potential investor
and market participant confusion thereby ensuring that investors and
market participants can more easily navigate, understand and comply
with the Exchange's rules.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange's proposal to
expand its trading hours to 23 hours a day, 5 days per week are neither
intended to nor will they adversely impact competition. If anything,
the Exchange expects that the proposed changes will promote competition
by providing for the Nasdaq Stock Market to accommodate the growing
demand to trade equity securities during overnight hours when the
market is presently closed. Unaffiliated exchanges remain free to
compete by offering extended hours trading of similar duration. The
Exchange believes that requiring the use of designated ports for the
Night Session will not impose a burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act. The
requirement for separate ports merely reflects the technical and
functional separation of the two systems and ensures that Night Session
activity occurs in a manner consistent with the Act's goals of ensuring
market integrity, investor protection, and fair and orderly trading.
The Exchange operates in a highly competitive market in which
market Participants can readily choose between competing venues if they
deem participation in the Exchange's market to no longer be desirable
or if they do not wish to trade during the new Night Session. In such
an environment, the Exchange must carefully consider the impact that
any change it proposes may have on market participants, understanding
that it will likely lose participants to the extent a change is viewed
as unfavorable by them. Because competitors are free to modify the
functionality and structure of their markets, including by availing
themselves of the same capabilities that are being developed to trade
securities and ETPs on a 23/5 basis, the Exchange believes that the
degree to which its proposal imposes any burden on competition is
limited. Last, to the extent the proposed change is successful in
attracting additional market participants or additional activity by
existing participants, the Exchange also believes that the proposed
change will promote competition among trading venues by making the
Exchange a more attractive trading venue.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change. The Exchange has, however, responded to
comments received in response to the Notice.
III. Discussion and Commission Findings
The Commission finds that the Amended Proposal is consistent with
the requirements of the Exchange Act and the rules and regulations
thereunder applicable to a national securities exchange.\102\ In
particular, the Commission finds that the Amended Proposal is
consistent with Section 6(b)(5) of the Exchange Act,\103\ which
requires, among other things, that the rules of a national securities
exchange be designed to prevent fraudulent and manipulative acts and
practices, 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, in general, to protect investors and the
public interest; and are not designed to permit unfair discrimination
between customers, issuers, brokers, or dealers.
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\102\ 15 U.S.C. 78f(b). In approving this proposed rule change,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\103\ 15 U.S.C. 78f(b)(5).
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Specifically, Nasdaq proposes to extend its hours of operation to
include a Night Session, which is modeled on the Exchange's existing
rules that govern Pre-Market Hours and Post-Market Hours sessions, as
well as rules approved by the Commission for similar sessions on other
national securities exchanges.\104\ As proposed, Nasdaq will
[[Page 20232]]
have two sessions--a Day Session and a Night Session--for trading on
Business Days. The Day Session will consist of three individual trading
sessions: Pre-Market Hours beginning at 4:00 a.m. and continuing until
9:30 a.m.; Regular Market Hours beginning at 9:30 a.m. and continuing
until 4:00 p.m. and Post-Market Hours beginning at 4:00 p.m. and
continuing until 8:00 p.m. The Night Session will begin at 9:00 p.m. on
one calendar day and continue until 4:00 a.m. on the next calendar day,
so long as the next calendar day is a Business Day. The Night Session
will begin on Sunday evenings at 9:00 p.m. and a Night Session will be
held Monday through Thursday. As described by the Exchange, the Night
Session will operate in a manner that is consistent with the Pre-Market
Hours and Post-Market Hours sessions but will require additional
customer disclosures about the potential risks of trading during the
Night Session and the use of a dedicated port.
---------------------------------------------------------------------------
\104\ See 24X Approval Order and NYSE Arca Approval Order, supra
note 10.
---------------------------------------------------------------------------
Further, as discussed below, the Exchange will not commence
operation of the Night Session prior to a filing of a proposed rule
change to confirm its and the Equity Data Plans' readiness.
Specifically, Nasdaq Equity 1, Section 1(a)(19) requires the Exchange
to file a proposed rule change, pursuant to Section 19(b) of the
Exchange Act and the rules thereunder, to amend its rules confirming
that the Exchange is able to comply with its obligations under the
Exchange Act during the Night Session and that the Equity Data Plans
are prepared to collect, consolidate, process and disseminate quotation
and transaction information during that time period.
Accordingly, the Amended Proposal is designed to prevent fraudulent
and manipulative acts and practices, promote just and equitable
principles of trade, foster cooperation and coordination with persons
engaged in regulating, clearing, settling, processing information with
respect to and facilitating transactions in NMS stocks, and perfect the
mechanism of a free and open market and a national market system.
Moreover, the Amended Proposal will foster competition by introducing
another trading venue during the overnight hours. As amended, the
Exchange's rules for the Night Session are designed to increase
transparency and enhance customer risk disclosures such that the
Exchange will operate the Night Session in a manner that is consistent
with the regulatory framework of the extended hours sessions of other
national securities exchanges.
A. General Comments on Extended Hours Trading
The Commission received comment letters on the proposal and a
response from the Exchange.\105\ Several commenters supported the
proposal.\106\ One commenter expressed support for the proposal with
recommendations, including that Nasdaq submit specific ``implementation
dates for updated trading halts and volatility mechanism rules.'' \107\
Nasdaq responded that its proposed rules governing trading halts and
volatility mechanisms during the Night Session are substantively
identical to the approved rules of another national securities exchange
operating extended hours sessions citing rules of 24X and NYSE
Arca.\108\ This commenter also stated that Nasdaq should provide
investor education on 23-hour trading.\109\ Another commenter that
supported the Amended Proposal stated that the Commission should
approve the Amended Proposal.\110\
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\105\ See supra note 4.
\106\ See, e.g., Letter from Alexander Kralev, dated Feb. 12,
2026 (``Kralev Letter''); Letter from Katie Kolchin, CFA Managing
Director, Head of Equity & options Market Structure, and Gerald
O'Hara, Vice President, Assistant General Counsel, SIFMA, dated Mar.
19, 2026 (``SIFMA Letter''). One commenter that supported the
proposal also suggested that Nasdaq change its hours of the Day
Session and the Closing Cross to occur earlier in time. See Kralev
Letter. Nasdaq responded that it had not proposed to modify the time
for the Closing Cross and that the time would remain unchanged at
4:00 p.m. ET. See Nasdaq Letter at 4.
\107\ See Letter from Kara Maniscalco, dated Jan. 29, 2026
(``Maniscalco Letter'') at 6.
\108\ See Nasdaq Letter at 2.
\109\ See Maniscalco Letter at 6.
\110\ See SIFMA Letter at 1. This commenter also raised
``additional questions and issues for broader consideration outside
of the context of a single exchange rule filing,'' including SIP
availability, harmonization of trade date, adoption of a one-hour
trading pause, and coordination of corporate actions. See SIFMA
Letter. As stated below, the Commission is monitoring the
developments of extended trading hours.
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Several other commenters opposed the proposal to extend the
Exchange's trading hours.\111\ One commenter stated that the Commission
had not given sufficient consideration to the issues because the
Commission had not issued requests for information, published concept
releases or held roundtables before setting forth its views on
overnight trading.\112\ Nasdaq stated that the issues related to
extended hour trading generally, including those raised by commenters,
have been considered and addressed by the Commission.\113\ The
Commission has previously sought public comment on the proposed rules
of a national securities exchange related to overnight trading,
received substantive input from a variety of commenters, and considered
the relevant issues prior to taking action.\114\ Further, as the
Commission has stated, the overnight trading of NMS stocks is not novel
as it currently occurs on the over-the-counter market on ATSs (i.e.,
during the time period proposed by Nasdaq).\115\
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\111\ See Letter from Kevin Bell, dated Dec. 18, 2025 (``Bell
Letter''); Letter from Anonymous, dated Jan. 14, 2026 (``Anonymous
Letter''); Letter from Francesco Terranova, dated Jan. 27, 2026
(``Terranova Letter''); Letter from Benjamin L. Schiffrin, Director
of Securities Policy, Better Markets, Inc., dated Feb. 3, 2026
(``Better Markets Letter''); and Letter from Jonathon Patterson,
dated Feb. 7, 2026 (``Patterson Letter'').
\112\ See Better Markets Letter at 1.
\113\ See Nasdaq Letter at 2.
\114\ See e.g., Notice; 24X Approval Order; and NYSE Arca
Approval Order.
\115\ See 24X Approval Order and NYSE Arca Approval Order.
---------------------------------------------------------------------------
One commenter pointed out that some market participants remain
critical of the expansion of trading hours for national securities
exchanges and warned of the potential systemic risks (thin liquidity,
volatility, gamification, and harm to retail investors) related to
around-the-clock trading.\116\ Other commenters questioned the benefits
of 24-hour trading,\117\ warned of fragmented liquidity and
volatility,\118\ warned of structural risks and concentration of power
in low volume periods,\119\ and recommended disapproval.\120\ Another
commenter stated that retail investors are in early stages of
developing disciplined risk management practices and that introducing
continuous trading could undermine gains.\121\ One commenter also
stated that the times when trading does not occur provides a ``vital
cooling-off period'' that allows the market to digest news, earnings
and global events.\122\
---------------------------------------------------------------------------
\116\ See Better Markets Letter.
\117\ See Bell Letter; Terranova Letter; and Patterson Letter.
\118\ See Terranova Letter.
\119\ See Patterson Letter.
\120\ See Anonymous Letter. See also Terranova Letter.
\121\ See Patterson Letter.
\122\ See Terranova Letter.
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The Exchange responded that the concerns raised by the comments
with respect to extended hours trading, such as risks to investors,
market stability, and lack of liquidity, have been considered and
addressed by the Commission in approving similar proposals from other
exchanges.\123\ The Exchange stated that the proposal is based on
established and Commission -approved rules of other exchanges that
offer comparable extended hours trading.\124\ The Exchange further
stated that the Commission has allowed retail
[[Page 20233]]
participation in extended hours trading with appropriate disclosures,
and that the Exchange's proposed mandatory customer disclosures are
substantively identical to the approved rules of another exchange.\125\
---------------------------------------------------------------------------
\123\ See Nasdaq Letter at 4.
\124\ See id.
\125\ See id. at 2-3.
---------------------------------------------------------------------------
One commenter stated that the Commission could consider more
limited and structured extensions of existing trading hours with full
regulatory protections, circuit breakers and reporting requirements or
the Commission could consider limiting the securities available during
extended trading hours, such as highly liquid large-cap stocks.\126\
The Exchange stated that it will operate within a regulatory framework
consistent with that applied to extended hours sessions of other
national securities exchanges, and that ``the existing safeguards
applicable to premarket and postmarket sessions, including operational
safeguards, consolidated last sale and quotation information, enhanced
customer risk disclosures for afterhours trading, and market
surveillance capabilities'' would also apply to the Night Session.\127\
As discussed, Nasdaq's proposal is substantively identical to the
approved rules of another national securities exchange and to Nasdaq
rules for the Pre-Market Hours and Post-Market Hours.
---------------------------------------------------------------------------
\126\ See Patterson Letter.
\127\ See Nasdaq Letter at 4.
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As the Commission stated in previous orders approving the extension
of the trading hours of a national securities exchange to include
overnight time periods, the Commission continually monitors the
national market system and the operation of Federal securities laws,
and the Commission, consistent with its oversight of the national
market system, will continue to monitor the developments of extended
trading hours.\128\ In addition, consistent with previous orders, the
monitoring of new market developments does not foreclose Commission
action on this proposal.\129\ The Commission finds that Nasdaq's rules,
as amended, for the Night Session are consistent with the Exchange Act.
Specifically, Nasdaq rules that will govern the Night Session are
largely based on its rules for the Pre-Market Hours and Post-Market
Hours sessions with differences, discussed below, as well as the
additional customer disclosures, to accommodate further expansion of
trading hours.
---------------------------------------------------------------------------
\128\ See 24X Approval Order, 89 FR at 97106, NYSE Arca Approval
Order, 90 FR at 9797.
\129\ See 24X Approval Order, 89 FR at 97106, and NYSE Arca
Approval Order, 90 FR at 9797.
---------------------------------------------------------------------------
B. Equity Data Plans and Securities Information Processor Readiness
With respect to quotation and transaction information, Exchange
Rule Equity 1, Section 1(a)(19) requires that the Exchange will not
commence operation of the Night Session prior to the Equity Data Plans'
readiness to collect, consolidate, process, and disseminate quotation
and transaction information at all times during the Night Session.\130\
Further, Nasdaq Rule Equity 1, Section 1(a)(19) requires the Exchange
to file a proposed rule change pursuant to Section 19(b) of the
Exchange Act to amend the Exchange's rules confirming that the Exchange
is able to comply with its obligations under the Exchange Act and the
Equity Data Plans are prepared to collect, consolidate, process, and
disseminate quotation and transaction information at all times during
the Night Session. The proposed rule change must be filed with the
Commission and approved, or otherwise become effective pursuant to
Section 19(b) of the Exchange Act, before Nasdaq can commence trading
in the Night Session.
---------------------------------------------------------------------------
\130\ The Exchange has represented that it will submit ``. . .
all quotes and trades that are generated in the Night Session to the
consolidated quote and trade systems maintained by the SIPs for
public dissemination.'' See Footnote 70 of Amendment No. 2. See also
supra note 76.
---------------------------------------------------------------------------
The Nasdaq rule requiring the operation of the Equity Data Plans
during the Night Session is designed to ensure that consolidated
quotation and transaction information are provided in a manner that is
consistent with the existing extended hours sessions on exchanges,
including Nasdaq. The Nasdaq rules for the Night Session are designed
to perfect the mechanism of a free and open market and a national
market system, protect investors and the public interest. Further, the
Amended Proposal will foster competition by introducing another trading
venue during these trading hours. The Commission has approved other
national securities exchanges' rules to introduce overnight trading
hours with substantively identical provisions.\131\
---------------------------------------------------------------------------
\131\ See 24X Rule 1.5(c) and NYSE Arca Rule 7.34-E.
---------------------------------------------------------------------------
C. Designated Ports
For the Night Session, the Exchange will require market
participants to use ports that are specifically designated for the
Night Session. The following ports will be available for the night
session: OUCH5, Core FIX, and FIX. The Exchange explained that the
Night Session will have a distinct instance of the Trading System so
the Day Session ports will only be capable of connecting to the Day
Session of the Trading System. The Exchange will cancel all orders on
the Nasdaq Book at the end of the Day Session and at end of the Night
Session.
The use of dedicated ports for the Night Session is consistent with
the requirements of the Act. The Exchange's proposed use of designated
ports will allow the Exchange to use different Trading Systems for the
Day and Night Sessions and will allow the Exchange to manage and
monitor each session independently.
D. Effect on Retail Investors and Customer Disclosures
One commenter stated that retail investors do not have the
resources to monitor their portfolios 23 hours a day and stated that
the proposal would put retail investors at a disadvantage compared to
institutional trading firms.\132\ Another commenter stated that
extended hours trading may have a detrimental impact on investor
behavior and that retail traders are unlikely to understand the risks
of overnight trading.\133\ The Exchange responded that its proposal
adopts mandatory customer disclosures that are substantively identical
to the corresponding approved rules of 24X.\134\
---------------------------------------------------------------------------
\132\ See Terranova Letter. See also Better Markets Letter.
\133\ See Better Markets Letter.
\134\ See Nasdaq Letter at 3.
---------------------------------------------------------------------------
Nasdaq's proposed rules are largely based on the previously
approved overnight trading rules of other national securities
exchanges.\135\ In addition, while overnight trading is not yet
operational on any national securities exchanges, it does currently
occur in the over-the-counter market on multiple ATSs.\136\
Accordingly, while Nasdaq's proposal would extend its trading hours
with the Night Session (9:00 p.m. ET to 4:00 a.m. ET on Sunday, Monday,
Tuesday, Wednesday and Thursday), market participants, including retail
investors, are already able to trade during that time.
---------------------------------------------------------------------------
\135\ See 24X Approval Order and NYSE Arca Approval Order, supra
note 10.
\136\ See, e.g., Blue Ocean ATS, LLC (``BOATS''). The operating
hours for BOATS occur from 8:00 p.m. to 4:00 a.m. E.T. on days when
the NYSE Trade Reporting Facility is open for trade reporting. See
Form ATS-N, available at <a href="http://sec.gov/Archives/edgar/data/1795131/000153949723000091/xslATS-N_X01/primary_doc.xml">sec.gov/Archives/edgar/data/1795131/000153949723000091/xslATS-N_X01/primary_doc.xml</a>.
---------------------------------------------------------------------------
The Exchange has proposed several rules that will help to provide
investor protections during the Night Session. For example, as
discussed above, the Exchange proposed to update Equity 2, Section 20,
which requires customer disclosures concerning the risks associated
with trading in Extended
[[Page 20234]]
Hours \137\ to include additional risks specifically related to the
Night Session. These additional risk factors include: (1) trading
during hours that the primary listing market may not be open to conduct
surveillance and other regulatory obligations; (2) trading during hours
in which there may be different or limited regulatory protections such
as single stock volatility mechanisms; (3) more limited trading
alternatives may lead to losses if orders cannot be executed due to
systems failures or other issues on the Exchange; (4) systems
maintenance and testing may introduce more risks to trading due to less
breaks in trading to conduct those events; (5) other key financial
market infrastructure companies may be closed and could cause delays in
settlement; (6) trading on an exchange during the Night Session is
novel and may present unforeseen risks; and (7) trading during the
Night Session may present additional unforeseen risks. These additional
risk disclosures are substantially similar to the risk disclosures
already approved by the Commission with respect to other national
securities exchanges.\138\ Accordingly, Nasdaq's Amended Proposal,
which adds additional risk disclosures is consistent with the
requirements of Section 6(b)(5) of the Exchange Act because it is
designed to protect investors and the public interest.
---------------------------------------------------------------------------
\137\ See supra note 14.
\138\ See 24X Approval Order and NYSE Arca Approval Order, supra
note 10.
---------------------------------------------------------------------------
Further, the Exchange proposed to limit the types of orders that
would be allowed in the Night Session and will not accept unpriced
orders. The Exchange stated that all limit orders permitted to trade in
the Pre-Market Hours would be eligible for the Night Session, except
for certain order types that are designated for the opening cross or
post-open trading. As discussed above, the Exchange would not allow the
following Order Types during the Night Session: Supplemental; Market
Maker Peg; Market On Open; Limit on Open; Opening Imbalance Only;
Market on Close; Limit on Close; Imbalance-Only; Company Direct
Listing; Extended Trading Close; Midpoint Peg Post-Only; Midpoint
Extended Life Order; and Midpoint Extended Life Order Plus Continuous
Book. Moreover, the Exchange would not allow the following Order
Attributes during the Night Session: Primary Pegging; Market Pegging;
Midpoint Pegging; and Discretion (Pegging). With respect to Time-in-
Force order attributes, orders entered during the Night Session that
are designated to deactivate after 4:00 a.m. ET will deactivate at the
conclusion of the Night Session at 4:00 a.m. ET. Moreover, the Exchange
stated that limit orders entered during the Night Session will be
subject to Limit Order Protection, a feature of the Exchange to prevent
limit order acceptance at prices outside of pre-set limits. Consistent
with other exchanges that are approved to operate overnight trading
sessions, Nasdaq will not allow pegged orders or unpriced or market
orders to be entered during the Night Session. Accordingly, Nasdaq's
Amended Proposal, which restricts certain order types and order
attributes, is consistent with the requirements of Section 6(b)(5) of
the Exchange Act because it is designed to protect investors and the
public interest.
E. Trading Pause/Transition Between Day and Night Sessions
To transition into the Night Session, the Exchange will institute a
trading pause from 8:00 p.m. to 9:00 p.m. on Monday through Thursday
for testing, system maintenance, and processing corporate actions. The
Exchange will cancel all outstanding orders at the end of the Day
Session at 8:00 p.m. and at the end of the Night Session at 4:00 a.m.
the next calendar day. Nasdaq's proposed daily one-hour pause between
the operation of the Day Session and the Night Session should be
sufficient to permit Nasdaq to address the technical implications of a
23-hour trading day and will facilitate internal market testing and
systems updates and improvements.
F. Other Proposed Rules
As described above, the Exchange also proposes various conforming,
clarifying, and non-substantive changes. These changes, which generally
delete obsolete references and replace them with the updated and
relevant defined terms, should help to promote the transparency and
clarity of the Exchange's rules related to the addition of the Night
Session. These changes are consistent with the requirements under
Section 6(b)(5) of the Exchange Act that the rules of an exchange are
designed to remove impediments to and perfect the mechanism of a
national market system, and protect investors and the public interest
because they are designed to provide transparency and clarity to the
Exchange's rules.
IV. Solicitation of Comments on Amendment Nos. 2 and 3 to the Proposed
Rule Change
Interested persons are invited to submit written data, views and
arguments concerning whether the proposed rule change, as amended by
Amendment Nos. 2 and 3, 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-regulations/self-regulatory-organization-rulemaking">https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking</a>);
or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#dba9aeb7bef6b8b4b6b6beb5afa89ba8beb8f5bcb4ad"><span class="__cf_email__" data-cfemail="6b191e070e46080406060e051f182b180e08450c041d">[email protected]</span></a>. Please include
file number SR-SR-Nasdaq-2025-109 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-2025-109. 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-2025-109 and should be submitted
on or before May 6, 2026.
V. Accelerated Approval of Proposed Rule Change, as Amended by
Amendment Nos. 2 and 3
The Commission finds good cause to approve the Amended Proposal
prior to the thirtieth day after the date of publication of the notice
of filing of Amendment Nos. 2 and 3 in the Federal Register. The
Amended Proposal is substantially similar to the approved rules of
other national securities exchanges.\139\ Amendment No. 2 revises the
proposal to change the definition of Business Day and add an additional
risk disclosure with respect to the Night Session. Amendment No. 2 also
clarifies that during the Night Session: (1) all NMS Stocks will be
available for trading; (2) unpriced orders, like pegged orders, will
not be permitted; \140\ (3) CE
[[Page 20235]]
Rules and LOP will be applicable; \141\ (4) M-ELO orders will be
rejected; \142\ and (5) the Night Session specific ports will use the
OUCH 5 technology; \143\ in addition to other non-substantive changes
to conform and clarify the proposed rule text. Amendment No. 3
clarifies that Amendment No. 2 replaced and superseded and replaced the
original proposal in its entirety.
---------------------------------------------------------------------------
\139\ See 24X Approval Order and NYSE Arca Approval Order, supra
note 10.
\140\ See proposed Nasdaq Rule 4702.
\141\ See proposed Nasdaq Rule 11890 (CE Rules) and Nasdaq Rule
4757(c) (Limit Order Protection).
\142\ See proposed Nasdaq Rule 4702(b)(14).
\143\ See proposed Nasdaq Rule 4702(a).
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In light of the previous Commission orders approving other national
securities exchanges' rules to allow trading during the times that
coincide with the Night Session, and the substantive similarity of
Nasdaq's Amended Proposal to those existing exchange rules, Amendment
Nos. 2 and 3 do not raise any new or novel regulatory issues.
Accordingly, the Commission finds good cause, pursuant to Section
19(b)(2) of the Act,\144\ to approve the Amended Proposal, prior to the
thirtieth day after the date of publication of the notice of Amendment
Nos. 2 and 3 thereof in the Federal Register.
---------------------------------------------------------------------------
\144\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
VI. Conclusion
For the reasons set forth above, the Commission finds that the
proposed rule change, as amended by Amendment Nos. 2 and 3, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange
and, in particular, the requirements of Section 6(b)(5) of the
Act.\145\
---------------------------------------------------------------------------
\145\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\146\ that the proposed rule change (SR-Nasdaq-2025-109), as
amended by Amendment Nos. 2 and 3, be, and is hereby, approved on an
accelerated basis.
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\146\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\147\
---------------------------------------------------------------------------
\147\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07259 Filed 4-14-26; 8:45 am]
BILLING CODE 8011-01-P
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