Notice2026-07591
Self-Regulatory Organizations; Nasdaq Texas, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Review of Professional Orders
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 20, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 75 (Monday, April 20, 2026)</title>
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[Federal Register Volume 91, Number 75 (Monday, April 20, 2026)]
[Notices]
[Pages 21019-21022]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07591]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105242; File No. SR-NasdaqTX-2026-013]
Self-Regulatory Organizations; Nasdaq Texas, LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Review of Professional Orders
April 15, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 1, 2026, Nasdaq Texas, LLC (``Nasdaq Texas'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III, below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the quarterly review of Professional
\3\ orders.
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\3\ The term ``Professional'' means any person or entity that
(i) is not a broker or dealer in securities, and (ii) places more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). All Professional
orders shall be appropriately marked by Participants. The manner in
which a Professional order is calculated is specified in Options 1,
Section 1(a)(48)(i).
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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/nasdaqtx/rulefilings">https://listingcenter.nasdaq.com/rulebook/nasdaqtx/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 Exchange proposes to amend the quarterly review of Professional
orders. Today, orders for any Public Customer \4\ that average more
than 390 orders per day during any month of a calendar quarter must be
represented as Professional orders for the next calendar quarter.\5\ In
order to properly represent orders entered on the Exchange,
Participants \6\ are required currently to review their Public
Customers' activity and, on at least a quarterly basis, designate
orders as Public Customer orders or Professional orders.\7\
[[Page 21020]]
Specifically, Participants are required to conduct a quarterly review
and make any appropriate changes to the way in which they are
representing orders within five days after the end of each calendar
quarter.\8\ While Participants are required to designate accounts on a
quarterly basis, if during a quarter the Exchange identifies a customer
for which orders are being represented as Public Customer Orders but
that has averaged more than 390 orders per day during a month, the
Exchange must notify the Participant and the Participant is required to
change the manner in which it is representing the customer's orders
within five days.\9\
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\4\ The term ``Public Customer'' means a person or entity that
is not a broker or dealer in securities and is not a Professional as
defined within Options 1, Section 1(a)(49). See Options 1, Section
1(a)(48).
\5\ The requirement to review Public Customers' activity on at
least a quarterly basis to determine whether orders that are not for
the account of a broker-dealer should be represented as Public
Customer Orders or Professional Orders is not in the current rule
text, however it was described in the adopting proposal. See
Securities Exchange Act Release No. 78199 (June 30, 2016), 81 FR
44373 (July 7, 2016) (July 7, 2016) (SR-BX-2016-035) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to the
Professional Designation) (``SR-BX-2016-035''). Nasdaq Texas was
formerly Nasdaq BX, Inc. The instant proposal seeks to codify the
timing for review of Public Customers' activity.
\6\ The term ``Options Participant'' or ``Participant'' mean a
firm, or organization that is registered with the Exchange pursuant
to Options 2A of these Rules for purposes of participating in
options trading on NTX Options as a ``NTX Options Order Entry Firm''
or ``NTX Options Market Maker.'' See Options 1, Section 1(a)(40).
\7\ See 81 FR 44373 at 44374.
\8\ See id.
\9\ See id.
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Proposal
At this time, the Exchange proposes to shorten the quarterly review
and designation to a monthly review. The Exchange proposes to state at
Options 1, Section 1(a)(48)(ii) that orders for any customer that had
an average of more than 390 orders per day during any calendar month
must be represented as Professional orders for the next calendar month.
As noted, currently, each Participant is required to monitor Public
Customer orders to determine if the Public Customer has averaged more
than 390 orders per day during a month. Determining whether a Public
Customer has executed more than 390 orders per day during a month
requires computing a daily average. As such, Participants should be
performing the workflow necessary to designate orders on a daily basis.
Therefore, the proposal does not amend the current workflow, rather,
the proposal amends the timeframe to change the manner in which the
customer's order is being represented from five days after the end of
each calendar quarter to five days after the end of each calendar
month.
The Exchange does not believe that this amendment is a significant
departure from the current rule, nor does it impose any burden on any
Participant because each broker-dealer is required currently to perform
the necessary calculation daily to arrive at the requisite average.
Further, in addition to the calculation, broker-dealers are subject to
know-your-customer and suitability requirements under FINRA Rules 2090
(Know Your Customer) and 2111 (Suitability) and would need to consider
whether a customer meets the Professional designation for purposes of
determining best execution and making appropriate recommendations. The
Exchange notes that the trading behavior of a Public Customer can be
distinguished from that of a Professional which is the purpose of the
separate designations. Finally, some Participants currently designate a
Public Customer that has averaged more than 390 orders per day during a
month as a Professional on a more expedited basis, not waiting until
five days after the quarter.
The Exchange believes that a calendar month is a sufficient time
period to determine whether the activity of a customer meets the
criteria for a Professional order. The Exchange believes that the
shortened time period will ensure that the spirit of the designation of
Professional order is met in that Participants will make any
appropriate changes to the way in which they are representing orders in
a 30-day timeframe as opposed to a 90-day timeframe, thereby ensuring
the designation is applied in a more expeditious manner.
The Exchange continues to believe that identifying Professional
orders based upon the average number of orders entered in qualified
accounts is an appropriate and objective approach to reasonably
distinguish such persons and entities from retail investors or market
participants.
Technical Amendment
The Exchange proposes to reserve Options 3B, Options 3C and Options
4D and add a reserved section to Options 9, Section 26. Other Nasdaq
affiliated exchanges have a rule or proposed rules in those
corresponding sections of the Rulebook. The reserved sections are
intended to harmonize the structure of the Exchange's rules to those of
other Nasdaq affiliated exchanges. Further, the Exchange proposes a
non-substantive amendment to Options 2, Section 5(d)(1)(D) to correct a
citation.
Implementation
The Exchange proposes implementing this rule change on July 1,
2026, except for the technical amendments which should become operative
30 days after the date of the filing. The Exchange will issue an
Options Trader Alert to provide notice to Participants of the proposed
change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\10\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\11\ 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.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange's proposal to shorten the quarterly look-back to a
monthly look-back is consistent with the Act because it will ensure
that the spirit of the designation of Professional order continues to
be met, only on a more expedited basis--removing a potential delay of
two months before affecting a change in the designation. The Exchange
believes that this amendment will remove impediments to and perfect the
mechanism of a free and open market and a national market system by
promoting the consistent application of its rules and shortening the
timeframe to change the designation for all Participants while
continuing to provide a sufficient time period to determine whether the
activity of a customer meets the criteria for a Professional order.
Further, the Exchange believes that the shortened time period will
continue to promote consistency in the treatment of orders as
Professional orders while also preventing members with high volume from
receiving benefits reserved for Public Customer orders.
As noted, currently, each Participant is required to monitor Public
Customer orders to determine if the Public Customer has averaged more
than 390 orders per day during a month. Determining whether a Public
Customer has executed more than 390 orders per day during a month
requires computing a daily average. As such, Participants should be
performing the workflow necessary to designate orders on a daily basis.
Therefore, the proposal does not amend the current workflow, rather,
the proposal amends the timeframe to change the manner in which the
customer's order is being represented from five days after the end of
each calendar quarter to five days after the end of each calendar
month.
The Exchange does not believe that this amendment is a significant
departure from the current rule, nor does it impose any burden on any
Participant because each broker-dealer is required currently to perform
the necessary calculation daily to arrive at the requisite average.
Further, in addition to the calculation, broker-dealers are subject to
know-your-customer and suitability requirements under FINRA Rules 2090
(Know Your Customer) and 2111 (Suitability) and would need to consider
whether a customer meets the Professional designation for purposes of
determining best execution and making appropriate
[[Page 21021]]
recommendations. Finally, some Participants currently designate a
Public Customer that has averaged more than 390 orders per day during a
month as a Professional on a more expedited basis, not waiting until
five days after the quarter.
The Exchange notes that the trading behavior of a Public Customer
can be distinguished from that of a Professional which is the purpose
of the separate designations. The Exchange continues to believe that
identifying Professional orders based upon the average number of orders
entered in qualified accounts is an appropriately objective approach to
reasonably distinguish such persons and entities from retail investors
or market participants. Priority is one of the marketplace advantages
provided to Public Customer orders on the Exchange. Public Customer
orders are given execution priority over non-Customer orders and
quotations of market makers at the same price. Another marketplace
advantage afforded to Public Customer orders on the Exchange is that
members are generally not assessed transaction fees or are assessed
lower fees for the execution of Public Customer orders. The purpose of
these marketplace advantages is to attract retail order flow to the
Exchange by leveling the playing field for retail investors over market
Professionals. This proposal will continue to provide Public Customer
accounts with marketplace advantages and distinguish those accounts
non-Professional retail investors from the Professionals accounts. The
Exchange notes that some non-broker-dealer individuals and entities
have access to information and technology that enables them to
Professionally trade listed options in the same manner as a broker or
dealer in securities.
Technical Amendment
Reserving Options 3B, Options 3C, Options 4D, Options 9, Section 26
and correcting a citation at Options 2, Section 5(d)(1)(D) are non-
substantive amendments.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
Specifically, the Exchange does not believe that the proposed rule
change will impose any burden on intra-market competition because,
today, each Participant is required to monitor Public Customer orders
to determine if the Public Customer has averaged more than 390 orders
per day during a month. Determining whether a Public Customer has
executed more than 390 orders per day during a month requires computing
a daily average. As such, Participants should be performing the
workflow necessary to designate orders on a daily basis. Therefore, the
proposal does not amend the current workflow, rather, the proposal
amends the timeframe to change the manner in which the customer's order
is being represented from five days after the end of each calendar
quarter to five days after the end of each calendar month.
The Exchange does not believe that this amendment is a significant
departure from the current rule, nor does it impose any burden on any
Participant because each broker-dealer is required currently to perform
the necessary calculation daily to arrive at the requisite average.
Further, in addition to the calculation, broker-dealers are subject to
know-your-customer and suitability requirements under FINRA Rules 2090
(Know Your Customer) and 2111 (Suitability) and would need to consider
whether a customer meets the Professional designation for purposes of
determining best execution and making appropriate recommendations.
Finally, some Participants currently designate a Public Customer that
has averaged more than 390 orders per day during a month as a
Professional on a more expedited basis, not waiting until five days
after the quarter.
The Exchange notes that the trading behavior of a Public Customer
can be distinguished from that of a Professional which is the purpose
of the separate designations.
Further, the designation of Professional orders would not result in
any different treatment of such orders for purposes of compliance with
the Exchange's Rules. Public Customers have been granted certain
priority over other non-broker-dealer individuals and entities that
have access to information and technology that enables them to
Professionally trade listed options in the same manner as a broker or
dealer in securities. Further, the Public Customer designation allows
the Exchange to attract order flow or create more competitive markets.
Also, the Exchange does not believe that the proposed rule change
will impose any burden on inter-market competition because other
exchanges are expected to adopt similar rules.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#641611080149070b0909010a1017241701074a030b12"><span class="__cf_email__" data-cfemail="9ae8eff6ffb7f9f5f7f7fff4eee9dae9fff9b4fdf5ec">[email protected]</span></a>. Please include
file number SR-NasdaqTX-2026-013 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.
[[Page 21022]]
All submissions should refer to file number SR-NasdaqTX-2026-013. 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-NasdaqTX-2026-013 and should be
submitted on or before May 11, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07591 Filed 4-17-26; 8:45 am]
BILLING CODE 8011-01-P
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