Notice2026-07688
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add Class ETF Shares to the Definition of Exchange-Traded Product
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 21, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 76 (Tuesday, April 21, 2026)</title>
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[Federal Register Volume 91, Number 76 (Tuesday, April 21, 2026)]
[Notices]
[Pages 21355-21357]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07688]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105255; File No. SR-NASDAQ-2026-029]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Add Class ETF Shares to the Definition of Exchange-Traded Product
April 16, 2026.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on April 7, 2026, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II 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\ 15 U.S.C. 78a.
\3\ 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 Equity 1, Section 1(a)(15) by adding
Class ETF Shares (as defined below) to the definition of Exchange-
Traded Product (``ETP'') (as defined below).
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the definition
of ETP \4\ in Equity 1, Section 1(a)(15) by adding a reference to Rule
5703, which are the listing rules for Class ETF Shares.\5\ The proposed
changes would allow issuers of Nasdaq-listed Class ETF Shares to use an
optional halt (``Initial ETP Open'') on the launch day of the Class ETF
Shares and open trading using the Nasdaq Halt Cross.\6\ Today, the
Initial ETP Open is available only for equity securities that are
designated as ETPs, as defined under Equity 1, Section 1(a)(15).
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\4\ As currently defined in Equity 1, Section 1(a)(15), the term
``ETP'' means a security listed on Nasdaq pursuant to Nasdaq Rules
5704, 5705, 5710, 5711, 5713, 5715, 5720, 5735, 5745, 5750 or 5760.
\5\ The term ``Class ETF Shares'' means shares of the ETF Class
issued by a Multi-Class Fund. The term ``ETF Class'' means the class
of exchange-traded shares of a Multi-Class Fund that (i) operates as
an exchange-traded fund pursuant to exemptive relief granted by
order under the Investment Company Act of 1940 (``Multi-Class Fund
Exemptive Relief''), and (ii) is in compliance with the requirements
of Rules 5703(d)(ii) and 5703(d)(2)(A)(i)(2) on an initial and
continued listing basis. The term ``Multi-Class Fund'' means a
registered open-end management company that (i) pursuant to Multi-
Class Fund Exemptive Relief, issues Class ETF Shares and one or more
classes of shares that are not exchange traded, and (ii) is in
compliance with the conditions and requirements of the Multi-Class
Fund Exemptive Relief. See Rule 5703(c)(1)-(3).
\6\ The ``Nasdaq Halt Cross'' is the process for determining the
price at which Eligible Interest shall be executed at the open of
trading for a halted security and for executing that Eligible
Interest. See Rule 4753(a)(4). ``Eligible Interest'' shall mean any
quotation or any order that has been entered into the system and
designated with a time-in-force that would allow the order to be in
force at the time of the Halt Cross. See Equity 4, Rule 4753(a)(5).
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The Exchange received approval last year to generically list and
trade Class ETF Shares pursuant to Rule 5703.\7\ Class ETF Shares are
shares of the ETF Class issued by a Multi-Class Fund, a registered
open-end management company that, pursuant to Multi-Class Fund
Exemptive Relief, issues Class ETF Shares and one or more classes of
shares that are not exchange traded (i.e., mutual fund shares).
Further, the ETF Class is required to operate as an exchange-traded
fund pursuant to the terms of the Multi-Class Fund Exemptive Relief and
must comply with the conditions and requirements of Rule 6c-11 under
the Investment Company Act of 1940, except as noted in the Multi-Class
Fund Exemptive Relief.\8\
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\7\ See Securities Exchange Release No. 104252, 90 FR 54781
(November 28, 2025) (SR-NASDAQ-2025-037) (``Class ETF Share Approval
Order'').
\8\ See Rule 5703(d).
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In addition, the Exchange received approval last year to adopt the
Initial ETP Open for ETPs.\9\ The Initial ETP Open is designed to
operate similarly to Nasdaq's initial public offering opening process
for corporate securities, with specified differences to account for the
unique characteristics of ETPs. Under this functionality, an ETP issuer
launching an ETP on the first day of trading has the option to delay
the opening of the security pursuant to the Initial ETP Open process
until Market Hours,\10\ rather than opening at the start of Pre-Market
Hours \11\ at 4:00 a.m. ET. As discussed in the Initial ETP Approval
Order, this optional functionality is designed to support efficient
price discovery by enabling ETP issuers to enter a halt on launch day,
for a specified time period, after which the ETP can be opened using
the Nasdaq Halt Cross process under Rule 4753.\12\
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\9\ See Securities Exchange Act Release No. 103085, 90 FR 22424
(May 27, 2025) (SR-NASDAQ-2025-011) (``Initial ETP Open Approval
Order'').
\10\ The term ``Market Hours'' means the period of time
beginning at 9:30 a.m. Eastern Time (``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). See Equity 1, Section 1(a)(9).
\11\ The term ``Pre-Market Hours'' means the period of time
beginning at 4:00 a.m. ET and ending immediately prior to the
commencement of Market Hours. See Equity 1, Section 1(a)(9).
\12\ See Initial ETP Open Approval Order at 22425.
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The Exchange now proposes to add Rule 5703 in the ETP definition.
By including Rule 5703, Class ETF Shares would be able to use the
Initial ETP Open process on an optional basis, giving issuers of Class
ETF Shares the same flexibility currently available to
[[Page 21356]]
other ETP issuers. The Exchange believes that issuers of Class ETF
Shares, like issuers of other ETPs, may benefit from the ability to
delay the opening of their securities until Market Hours to take
advantage of increased trading activity and potentially less volatile
pricing conditions.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\13\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\14\ 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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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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The proposed rule change is designed to remove impediments to and
perfect the mechanism of a free and open market by including Class ETF
Shares listed under Rule 5703 in the definition of ETP, thereby
enabling such securities to utilize the Initial ETP Open process. The
Exchange believes that issuers of Class ETF Shares, like issuers of
other ETPs, may benefit from the ability to delay the opening of their
securities until Market Hours to take advantage of increased trading
activity and potentially less volatile pricing conditions.
The Exchange further believes that the proposed rule change
promotes just and equitable principles of trade by treating Class ETF
Shares consistently with other ETPs, including Exchange Traded Fund
Shares \15\ listed pursuant to Rule 5704, Index Fund Shares \16\ listed
pursuant to Rule 5705(b), and Managed Fund Shares \17\ listed pursuant
to Rule 5735. The Exchange believes these are non-controversial changes
meant only to subject Class ETF Shares to the same provisions currently
applicable to other ETPs like Exchange Traded Fund Shares, Index Fund
Shares, and Managed Fund Shares, so that the treatment of these open-
end management investment companies is consistent under the Exchange's
rules.
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\15\ The term ``Exchange Traded Fund Share'' has the same
meaning as it has in Rule 6c-11 under the Investment Company Act of
1940. See Rule 5704(a)(1)(B).
\16\ The term ``Index Fund Share'' means a security: (i) that is
issued by an open-end management investment company based on a
portfolio of stocks or fixed income securities or a combination
thereof, that seeks to provide investment results that correspond
generally to the price and yield performance or total return
performance of a specified foreign or domestic stock index, fixed
income securities index or combination thereof; (ii) that is issued
by such an open-end management investment company in a specified
aggregate minimum number in return for a deposit of specified
numbers of shares of stock and/or a cash amount, a specified
portfolio of fixed income securities and/or a cash amount and/or a
combination of the above, with a value equal to the next determined
net asset value; and (iii) that, when aggregated in the same
specified minimum number, may be redeemed at a holder's request by
such open-end investment company which will pay to the redeeming
holder the stock and/or cash, fixed income securities and/or cash
and/or a combination thereof, with a value equal to the next
determined net asset value. See Rule 5705(b)(1)(A).
\17\ The term ``Managed Fund Share'' means a security that (a)
represents an interest in a registered investment company
(``Investment Company'') organized as an open-end management
investment company or similar entity, that invests in a portfolio of
securities selected by the Investment Company's investment adviser
consistent with the Investment Company's investment objectives and
policies; (b) is issued in a specified aggregate minimum number in
return for a deposit of a specified portfolio of securities and/or a
cash amount with a value equal to the next determined net asset
value; and (c) when aggregated in the same specified minimum number,
may be redeemed at a holder's request, which holder will be paid a
specified portfolio of securities and/or cash with a value equal to
the next determined net asset value. See Rule 5735(c)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. As discussed above, the
proposed rule change would extend the same Initial ETP Open process to
cover Class ETF Shares, which would align the treatment of these
products with other open-end management investment companies listed on
the Exchange such as Exchange Traded Fund Shares, Index Fund Shares,
and Managed Fund Shares.
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
Pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-
4(f)(6) \19\ thereunder, the Exchange has designated this proposal as
one that effects a change that: (i) does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; and (iii) by its terms, does not
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest.\20\
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6).
\20\ 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. See id. The Exchange has satisfied
this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \21\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requested
that the Commission waive the 30-day operative delay so that the
proposal may become operative immediately upon filing. The Exchange
represents that the proposed rule change does not alter the terms or
conditions of the Initial ETP Open process or the listing standards
applicable to Class ETF Shares under Nasdaq Rule 5703. The proposal
seeks to extend the same existing functionality of Nasdaq's Initial ETP
Open process, which already applies to other similar categories of
ETPs, including Exchange Traded Fund Shares, Index Fund Shares, and
Managed Fund Shares, to Class ETF Shares. As such, the proposal raises
no novel legal or unique regulatory issues. Accordingly, waiver of the
30-day operative delay is consistent with the protection of investors
and the public interest because it will permit the Exchange to apply
its Initial ETP Open to issuers of Class ETF Shares without unnecessary
delay. The Commission hereby waives the 30-day operative delay and
designates the proposed rule change operative upon filing.\22\
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\21\ 17 CFR 240.19b-4(f)(6)(iii).
\22\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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.
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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#c9bbbca5ace4aaa6a4a4aca7bdba89baacaae7aea6bf"><span class="__cf_email__" data-cfemail="97e5e2fbf2baf4f8fafaf2f9e3e4d7e4f2f4b9f0f8e1">[email protected]</span></a>. Please include
file number SR-NASDAQ-2026-029 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NASDAQ-2026-029. 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-2026-029 and should be submitted
on or before May 12, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07688 Filed 4-20-26; 8:45 am]
BILLING CODE 8011-01-P
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