Notice2026-19129
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options 2, Section 3, Appointment of Market Makers
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
September 18, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 180 (Friday, September 18, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 180 (Friday, September 18, 2026)]
[Notices]
[Pages 59234-59236]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-19129]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106386; File No. SR-GEMX-2026-32]
Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options 2,
Section 3, Appointment of Market Makers
September 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 September 2, 2026, Nasdaq GEMX, LLC (``GEMX'' 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Options 2, Section 3, Appointment of
Market Makers.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/gemx/rulefilings">https://listingcenter.nasdaq.com/rulebook/gemx/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 Options 2, Section 3, Appointment of
Market Makers, at paragraph (b) to change the current requirement that
a Primary Market Maker (``PMM'') \3\ shall be appointed to each options
class traded on the Exchange. The Exchange proposes instead to state
that a PMM may be appointed to each options class traded on the
Exchange. The proposed amendment would replace a mandatory requirement
to appoint a PMM to every options class with a permissive standard,
affording the Exchange the flexibility to determine, based on
prevailing market conditions and the availability of qualified
applicants, whether a PMM appointment is appropriate for a particular
options class.
---------------------------------------------------------------------------
\3\ The term ``Primary Market Maker'' means a Member that is
approved to exercise trading privileges associated with PMM Rights.
See Options 1, Section 1(b)(35).
---------------------------------------------------------------------------
Today, there are a number of Competitive Market Makers (``CMMs'')
\4\ on GEMX that would continue to provide liquidity in the absence of
a PMM appointment under this proposal. CMMs are subject to continuous
quoting and other market making obligations set forth in Options 2,
Section 4 (Obligations of Market Makers), and are required to provide
two-sided quotations in 60% of the series in each of the option classes
to which they are appointed pursuant to the quoting requirements of
Options 2, Section 5 (Market Maker Quotations). CMMs are also not
capped in number and may actively quote in a broad range of option
classes.
---------------------------------------------------------------------------
\4\ The term ``Competitive Market Maker'' means a Member that is
approved to exercise trading privileges associated with CMM Rights.
See Options 1, Section 1(b)(12).
---------------------------------------------------------------------------
The proposed amendment aligns GEMX's rule with Nasdaq Phlx LLC
(``Phlx'') Options 2, Section 12(a) \5\ which expressly permits, but
does not require, Phlx to designate a Lead Market Maker for a
particular options series. In addition, until July 2026, The Nasdaq
Options Market LLC (``NOM'') did not adopt rules for a class of market
maker similar to a PMM. NOM operated its markets for nearly twenty
years without such a category of market maker. The Exchange believes
that the current mandatory standard is not necessary to protect
investors or to ensure a fair and orderly market on GEMX. Options
classes traded on the Exchange vary widely in their liquidity profiles,
order flow, and level of market maker interest. Circumstances may arise
in which no eligible Member seeks or is well-suited for a PMM
appointment in a particular options class, or in which appointing a PMM
is not economically viable for any prospective applicant. The Exchange
will monitor instances in which a PMM is not fulfilling its obligations
or is not in good standing and will seek to replace it with another
qualified PMM. In those cases, the mandatory standard in the current
rule provides no operable path forward. A permissive standard would
enable the Exchange to determine, on a class-by-class basis, whether a
PMM appointment serves the interests of the market and the investing
public.
---------------------------------------------------------------------------
\5\ Phlx Options 2, Section 12(a) provides that a Lead Market
Maker is not required to be assigned to an options series. A Lead
Market Maker on Phlx is analogous to a Primary Market Maker on GEMX.
---------------------------------------------------------------------------
The proposed change is not intended to, and would not, alter the
substantive obligations or privileges of a PMM once appointed. A PMM
appointed to an options class would remain subject to the full set of
obligations set forth in GEMX Options 2, Sections 3, 4, and 5,
including the Valid Width Quote requirement during the Options Opening
Process in Options 3, Section 8, and the 90% two-sided quoting
obligation on an intra-day basis. The Exchange further notes that CMMs
are available to provide liquidity in options classes traded on the
Exchange, and the appointment of a PMM is not a prerequisite for
maintaining a fair and orderly market in any given class. In options
classes for which no PMM is appointed, quoting and liquidity provision
would proceed pursuant to the CMM framework in Options 2, Sections 4
(Obligations of Market Makers) and 5 (Market Maker Quotations).
[[Page 59235]]
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\7\ 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.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The proposed amendment to Options 2, Section 3(b) protects
investors and the public interest and promotes just and equitable
principles of trade because CMMs will continue to provide liquidity on
the Exchange. There are a number of CMMs on GEMX that would continue to
provide liquidity in the absence of a PMM appointment under this
proposal. CMMs are subject to continuous quoting and other market
making obligations set forth in Options 2, Section 4 (Obligations of
Market Makers), and are required to provide two-sided quotations in 60%
of the series in each of the option classes to which they are appointed
pursuant to the quoting requirements of Options 2, Section 5 (Market
Maker Quotations). CMMs are also not capped in number and may actively
quote in a broad range of option classes. Further, the amendment
affords the Exchange the flexibility to determine whether the
appointment of a PMM is appropriate in a given options class, rather
than requiring the Exchange to appoint a PMM in every class
irrespective of market conditions or applicant availability.\8\
---------------------------------------------------------------------------
\8\ The Exchange notes that not every Market Maker is eligible
to be a PMM. A Market Maker may not be in good standing or may not
have superior technology to handle the demands of additional quoting
obligations (90% versus 60%) as described in Options 2, Section 5.
---------------------------------------------------------------------------
The proposed permissive standard is substantively identical to the
framework already in place on Phlx, which provides at Options 2,
Section 12(a) that a Lead Market Maker ``is not required to be assigned
to an options series.'' Finally, the proposed change does not reduce or
otherwise modify the obligations of a PMM. As a result, the proposal
enhances the Exchange's administrative flexibility with respect to PMM
appointments while preserving all of the substantive market-quality
protections that flow from a PMM's obligations. For the foregoing
reasons, the Exchange believes that the proposal is consistent with the
Act.
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.
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
change would apply uniformly to all Members that seek or hold PMM
appointments on GEMX. Further, the Exchange notes that there is
competition among CMMs who are required to provide two-sided quotations
in 60% of the series in each of the option classes to which they are
appointed pursuant to the quoting requirements of Options 2, Section 5
(Market Maker Quotations).
Members currently appointed as PMMs will retain their appointments
and will continue to be subject to the same obligations and eligible
for the same entitlements. Members seeking new PMM appointments will
continue to be evaluated under the same standards set forth in Options
2, Section 3. The proposal does not favor any Member or class of
Members over another, and it does not modify the rights or obligations
of CMMs.
The Exchange does not believe the proposed rule change will impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
change would harmonize GEMX Options 2, Section 3(b) with the analogous
framework on Phlx.\9\ In addition, affording the Exchange greater
flexibility to administer its PMM program may allow the Exchange to
compete more effectively for order flow with other options markets.
---------------------------------------------------------------------------
\9\ See Phlx Options 2, Section 12(a).
---------------------------------------------------------------------------
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 \10\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 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.
---------------------------------------------------------------------------
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#cfbdbaa3aae2aca0a2a2aaa1bbbc8fbcaaace1a8a0b9"><span class="__cf_email__" data-cfemail="483a3d242d652b2725252d263c3b083b2d2b662f273e">[email protected]</span></a>. Please include
file number SR-GEMX-2026-32 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-GEMX-2026-32. 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.
[[Page 59236]]
All submissions should refer to file number SR-GEMX-2026-32 and should
be submitted on or before October 9, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-19129 Filed 9-17-26; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on September 18, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.