Notice2026-09863
Self-Regulatory Organizations; 24X National Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Allow Sponsored Participants To Be Joint Participants in the Warrant Performance Incentive Program
Primary source
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Published
May 18, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 95 (Monday, May 18, 2026)</title>
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[Federal Register Volume 91, Number 95 (Monday, May 18, 2026)]
[Notices]
[Pages 28695-28698]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-09863]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105481; File No. SR-24X-2026-16]
Self-Regulatory Organizations; 24X National Exchange LLC; Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To Allow
Sponsored Participants To Be Joint Participants in the Warrant
Performance Incentive Program
May 13, 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 30, 2026, 24X National Exchange LLC (``24X'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its warrant performance incentive
program to allow Sponsored Participants \3\ to be joint Participants in
the warrant performance incentive program together with a Sponsoring
Member of the Exchange.\4\ The proposed rule change is available on the
Exchange's website at <a href="https://equities.24exchange.com/regulation">https://equities.24exchange.com/regulation</a> and at
the principal office of the Exchange.
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\3\ See 24X Rules 1.5(ee) and 11.3(b).
\4\ See 24X Rule 1.5(ff).
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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 self-regulatory organization
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 those 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 parts 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 Exchange adopted a warrant performance incentive program
(``Program'') to allow Members of the Exchange who participate in the
Program (``Member Participants'') to earn the right to purchase Non-
Voting Common Units \5\ of 24X US Holdings LLC (``24X US Holdco''), the
Exchange's parent company.\6\ As described in the Warrant Program
Release, each Member of the Exchange may become a Member Participant in
the Program by prepaying $500,000 in Exchange fees (``Prepayment Fee'')
and satisfying the Program eligibility requirements. Upon joining the
Program, each Member Participant will receive a warrant that vests
based on the Member Participant's achievement of certain minimum
[[Page 28696]]
trading volumes (``Target Volume'') \7\ on the Exchange during each
designated pre-determined period in which the Program is in effect
(``Measurement Period'') \8\ and the Exchange's achievement of a
minimum market share during such Measurement Periods (``24X Minimum
Overall Market Share'').\9\ When the warrants vest, Member Participants
will have the right to exercise the warrants to purchase a certain
number of 24X US Holdco Non-Voting Common Units.
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\5\ 24X filed a proposed rule change for immediate effectiveness
to amend the Limited Liability Company Agreement of 24X US Holdings
LLC, as amended (``24X US Holdco LLC Agreement'') to accommodate
aspects of the proposal that affect the 24X US Holdco LLC Agreement.
The changes to the 24X Holdco LLC Agreement include amendments to
authorize the issuance of Non-Voting Common Units as well as the
implementation of the liquidity program related to the Program.
Securities Exchange Act Release No. 104098 (Sept. 26, 2025), 90 FR
47029 (Sept. 30, 2025) (SR-24X-2025-11).
\6\ Securities Exchange Act Release No. 104018 (Sept. 23, 2025),
90 FR 46437 (Sept 26, 2025) (SR-24X-2025-04) (``Warrant Program
Release'').
\7\ As discussed in more detail in the Warrant Program Release,
the ``Target Volume'' is 5% of the average daily trading volume on
the Exchange, where the daily trading volume is calculated based on
total aggregated average daily volume traded over each Measurement
Period. See Warrant Program Release at 46439-46440.
\8\ The Warrant Program Release set forth certain Measurement
Periods. However, 24X filed a proposed rule change for immediate
effectiveness to revise certain dates for the Program. Securities
Exchange Act Release No. 104257 (Nov. 25, 2025), 90 FR 55207 (Dec.
1, 2025), (``Revised Program Dates Release''). As discussed in more
detail in the Warrant Program Release and the Revised Program Dates
Release, the Measurement Period for Year 1 (2025) is October 14,
2025 through December 31, 2025; the Measurement Periods for Year 2
(2026) are (1) January 1-March 31, 2026, (2) April 1-June 30, 2026,
(3) July 1-September 30, 2026, and (4) October 1-December 31, 2026;
and the Measurement Periods for Year 3 (2027) are (1) January 1-
March 31, 2027, (2) April 1-June 30, 2027, (3) July 1-September 30,
2027, and (4) October 1-December 31, 2027. See Warrant Program
Release at 46437; Revised Program Dates Release at 55207.
\9\ As discussed in more detail in the Warrant Program Release,
24X Minimum Overall Market Share is defined as follows: (1) for each
Measurement Period of Year 2, the 24X Minimum Overall Market Share
is 0.50% of the Consolidated Average Daily Volume (``CADV'') for all
NMS Stocks eligible for trading on 24X; and (2) for each Measurement
Period of Year 3, the 24X Minimum Overall Market Share is 1.00% of
the CADV for all NMS Stocks eligible for trading on 24X. See Warrant
Program Release at 46439.
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As described in the Warrant Program Release, to be eligible to be a
Member Participant, an applicant must (i) be a Member \10\ in good
standing \11\ of 24X; (ii) be a registered broker-dealer pursuant to
Section 15 of the Exchange Act; \12\ (iii) qualify as an ``accredited
investor'' as such term is defined in Regulation D of the Securities
Act of 1933; \13\ (iv) have executed the required documentation for
participation in the Program (the subscription agreement and
confidentiality agreement, each between the Member and the Exchange);
and (v) tendered the Prepayment Fee no later than October 10, 2025 to
participate in the Program at its commencement, or by the first day of
each subsequent quarter of the Program Period to participate in the
Program as of such subsequent quarter until October 1, 2027.\14\ Once
an eligible applicant for the Program has executed all required
documentation for participation in the Program and has paid the
Prepayment Fee no later than October 10, 2025 (or by the first day of
subsequent quarters for the rolling application process as discussed
above), the applicant would be accepted into the Program as a Member
Participant and granted a warrant.
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\10\ See 24X Rule 1.5(u).
\11\ For these purposes with regard to the Program, the term
``good standing'' means that a Member is not delinquent with respect
to Exchange fees or other charges and is not suspended or barred
from being a Member.
\12\ 15 U.S.C. 78o.
\13\ The purpose of this criterion relates to the ability of 24X
US Holdco to sell securities (in this case, Non-Voting Common Units)
pursuant to an exemption from registration under the Securities Act
of 1933. The definition of ``accredited investor'' under Rule
501(a)(1) of the Securities Act of 1933 includes any broker or
dealer registered pursuant to Section 15 of the Act. As noted above,
a Member Participant will be required to be registered as a broker
or dealer pursuant to Section 15 of the Exchange Act. Therefore, all
Member Participants will satisfy this criterion.
\14\ See Warrant Program Release at 46437-46438.
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The Exchange proposes to amend the Program to allow Sponsored
Participants, as defined in Exchange Rules 1.5(ee) and 11.3(b), to
participate in the Program together with a Sponsoring Member \15\
(``Joint Participants''). All other aspects of the Program would remain
the same as described in the Warrant Program Release (as updated via
the Revised Program Dates Release). A Sponsoring Member of the Exchange
and a Sponsored Participant may together participate in the Program as
follows. A Sponsoring Member and the corresponding Sponsored
Participant will together be deemed a Joint Participant in the Program
for so long as the Sponsoring Member (i) is a Member \16\ in good
standing \17\ of 24X; (ii) is a registered broker-dealer pursuant to
Section 15 of the Exchange Act; \18\ and (iii) qualifies as an
``accredited investor'' as such term is defined in Regulation D of the
Securities Act of 1933; \19\ and so long as the Sponsored Participant:
(i) fulfills the provisions of Exchange Rule 11.3(b); (ii) qualifies as
an ``accredited investor'' as such term is defined in Regulation D of
the Securities Act of 1933; (iii) has executed the required
documentation for participation in the Program (the subscription
agreement, warrant agreement, and confidentiality agreement, each
between the Sponsored Participant and the Exchange); (iv) has caused to
be tendered (by the Sponsoring Member) the Prepayment Fee no later than
the first day of each calendar quarter of the Program Period to
participate in the Program as of such quarter; \20\ and (v) has
identifiable trading volume on the Exchange that is directly
attributable to the Sponsored Participant. Even though the Sponsoring
Member and the Sponsored Participant will together constitute a Joint
Participant in the Program, volume thresholds must exclusively be met
by the Sponsored Participant and the warrant granted in connection with
the Program will only be issued to the Sponsored Participant. In the
case that multiple Sponsored Participants desire to participate in the
Program together with the same Sponsoring Member, the above
requirements must be met by each particular Sponsored Participant. For
the avoidance of doubt, a Sponsoring Member that chooses to participate
in the Program together with a Sponsored Participant will not be
precluded from also participating in the Program on its own as long as
it meets the Member Participant requirements as described above,
including tendering of the Prepayment Fee on its own behalf.\21\
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\15\ See 24X Rule 1.5(ff).
\16\ See 24X Rule 1.5(u).
\17\ See supra note 12.
\18\ 15 U.S.C. 78o.
\19\ See supra note 14.
\20\ If a Sponsoring Member has already tendered the Prepayment
Fee on its own behalf in the process of becoming a Member
Participant, such Prepayment Fee will only be attributed to the
Sponsoring Member and not to any Sponsored Participants that wish to
jointly participate in the Program. In the case that a Sponsoring
Member that is already a Member Participant in the Program wishes to
additionally jointly participate in the Program together with a
Sponsored Participant, the Sponsoring Member must tender an
additional Prepayment Fee for each such Sponsored Participant.
\21\ See id.; see supra note 15.
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The proposal to allow Sponsored Participants to participate in the
Program has similarities with the operation of the equity rights
program of MIAX Pearl, LLC (``MIAX Pearl'') which has allowed the
participation of corporate affiliates of its members in order to
attract liquidity providers.\22\ In that program, corporate affiliates
of MIAX Pearl members may jointly participate together with members and
may combine trading volume in order to meet the program's volume
thresholds.\23\ The Exchange's proposal does not contemplate volume
sharing or the participation of corporate affiliates of Members, but
would permit Sponsored Participants to participate in the Program based
on their relationship with Sponsoring Members for the purpose of
increasing liquidity to the Exchange. MIAX Pearl also allows corporate
affiliates of members to
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independently participate in its program,\24\ which the Exchange does
not contemplate for Sponsored Participants at this time.
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\22\ See Securities Exchange Act Release No. 83012 (Apr. 9,
2018), 83 FR 16163 (Apr. 13, 2018) (SR-PEARL-2018-08).
\23\ Id.
\24\ Id.
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2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Exchange Act \25\ in general, and furthers the
objectives of Section 6(b)(5) of the Exchange Act \26\ in particular,
in that it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanisms of a free and open market and a national market system and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) of the Exchange Act \27\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange also believes the
proposed rule change is consistent with Section 6(b)(4) of the Exchange
Act,\28\ which requires that Exchange rules provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and other persons using its facilities.
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\25\ 15 U.S.C. 78f.
\26\ 15 U.S.C. 78f(b)(5).
\27\ See id.
\28\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that its proposal to allow Sponsored
Participants to participate in the Program together with a Sponsoring
Member of the Exchange is fair, reasonable and not unfairly
discriminatory because it is being offered to all Sponsoring Members of
the Exchange and corresponding Sponsored Participants on the same terms
and conditions. Also, the Exchange believes that allowing Sponsored
Participants to jointly participate in the Program expands access to
the Program to Sponsored Participants that could not otherwise
participate in the Program on their own, which will benefit all market
participants by providing greater liquidity on the Exchange, all of
which perfects the mechanism for a free and open market and national
market system.
In addition, the Program as amended by this proposed rule change
would promote the long-term interests of the Exchange by providing
incentives designed to encourage 24X market participants to contribute
to the growth and success of the Exchange via actively providing
liquidity on the 24X market, and to provide additional investment and
funding which could be used for the regulation and operation of the
Exchange. The Exchange believes that the additional funds provided by
participation of Sponsored Participants would enable the Exchange to
have greater capacity to carry out the purposes of the Act and to
comply with the provisions of the Act, the rules and regulations
thereunder, and the rules of the Exchange, and, in turn, would protect
investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the Program as amended by this proposed
rule change will not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Exchange
Act. The Exchange believes that the Program as amended by this proposed
rule change would further increase both intermarket and intramarket
competition by incentivizing both Member Participants and the new
category of Joint Participants to direct their orders to the Exchange,
which will enhance the quality of quoting and increase the volume of
securities traded on the Exchange. To the extent that this purpose is
achieved, the Exchange believes that all of the Exchange's market
participants would benefit from the improved market liquidity. Enhanced
market quality and increased transaction volume that results from the
anticipated increase in order flow directed to the Exchange would
benefit all market participants and improve competition on the
Exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) \29\ of the Act and subparagraph (f)(2) of Rule 19b-4
thereunder,\30\ because it establishes a due, fee, or other charge
imposed by the Exchange. 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 under Section 19(b)(2)(B) \31\ of the Act to
determine whether the proposed rule change should be approved or
disapproved.
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\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 17 CFR 240.19b-4(f)(2).
\31\ 15 U.S.C. 78s(b)(2)(B).
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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#087a7d646d256b6765656d667c7b487b6d6b266f677e"><span class="__cf_email__" data-cfemail="1d6f687178307e7270707873696e5d6e787e337a726b">[email protected]</span></a>. Please include
file number SR-24X-2026-16 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-24X-2026-16. 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-24X-2026-16 and should be submitted on
or before June 8, 2026.
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2026-09863 Filed 5-15-26; 8:45 am]
BILLING CODE 8011-01-P
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