Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Exchange Rule Equity 2, Section 9 Regarding Clearing and Settlement in Connection With 23-5 Trading

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<title>Federal Register, Volume 91 Issue 191 (Monday, October 5, 2026)</title>
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[Federal Register Volume 91, Number 191 (Monday, October 5, 2026)]
[Notices]
[Pages 63333-63335]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20297]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106548; File No. SR-NASDAQ-2026-084]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Exchange Rule Equity 2, Section 9 Regarding Clearing and 
Settlement in Connection With 23-5 Trading

September 30, 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 28, 2026, The Nasdaq Stock Market LLC (``Nasdaq'' 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 Exchange Rule Equity 2, Section 9 to 
provide that, if a Member that trades in the Night Session \3\ clears 
transactions in the Night Session through another Member that is a 
member of a registered clearing agency, the designated Clearing Member 
\4\ must affirm to the Exchange in writing, through a letter of 
authorization, letter of guarantee, letter of consent, or any other 
agreement acceptable to the Exchange, its agreement to assume 
responsibility for clearing and settling any and all trades executed 
during the Night Session by the Member designating it as its clearing 
firm.\5\
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    \3\ See Exchange 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 and 
further providing (1) that the Exchange shall not commence operation 
of the Night Session unless the Equity Data Plans 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 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 also Securities Exchange 
Act Release No. 34-105199 (April 10, 2026), 91 FR 20222 (April 15, 
2026) (``23-5 Approval Order'').
    \4\ As proposed, the term ``Clearing Member'' would be defined 
as a member that is a member of a registered clearing agency. See 
proposed Exchange Rule Equity 2, Section 9.
    \5\ See proposed Exchange Rule Equity 2, Section 9. On September 
18, 2026, the Exchange filed a proposal to amend Exchange Rule 
Equity 2, Section 9 to provide that, if a Member that trades in the 
Night Session clears transactions in the Night Session through 
another Member that is a member of a registered clearing agency, the 
designated Clearing Member must affirm to the Exchange in writing, 
through a letter of authorization, letter of guarantee, letter of 
consent, or any other agreement acceptable to the Exchange, its 
agreement to assume responsibility for clearing and settling any and 
all trades executed during the Night Session by the Member 
designating it as its clearing firm (``SR-NASDAQ-2026-079''). On 
September 28, 2026, the Exchange withdrew SR-NASDAQ-2026-079 and 
replaced it with the present filing to make a clarifying change to 
the proposed rule text in Exhibit 5 by correcting the first 
reference to ``Night'' to read ``Night Session.'' Specifically, the 
corrected sentence reads: ``If a Member who seeks to trade in the 
Night Session clears transactions through another Member that is a 
member of a registered clearing agency (the `Clearing Member'), the 
Clearing Member shall affirm to the Exchange in writing, through 
letter of authorization, letter of guarantee, letter of consent, or 
any other agreement acceptable to the Exchange, the Clearing 
Member's agreement to assume responsibility for clearing and 
settling any and all trades executed during the Night Session by the 
Member designating the Clearing Member as its clearing firm.'' Other 
than for this clarifying correction, the proposed rule text and 
substance of the filing remain unchanged.
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    The text of the proposed rule change is set forth below; proposed 
new language is italicized; deleted text is in brackets.
    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 Exchange proposes to amend Exchange Rule Equity 2, Section 9 to 
require that if a Member that trades in the Night Session clears 
transactions in the Night Session through another Member that is a 
member of a registered clearing agency, the Clearing Member must affirm 
to the Exchange in writing its agreement to assume responsibility for 
clearing and settling any and all trades executed during the Night

[[Page 63334]]

Session by the Member designating it as its clearing firm. As proposed, 
the written affirmation may be provided through a letter of 
authorization, letter of guarantee, letter of consent, or any other 
agreement acceptable to the Exchange. Any such written affirmation 
would confirm the Clearing Member's agreement to assume clearing and 
settlement responsibility for Night Session trades executed by the 
designating Member.\6\
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    \6\ As discussed above, the Exchange previously filed SR-NASDAQ-
2026-079 on September 18, 2026. The Exchange is withdrawing that 
proposed rule change and replacing it with the present proposal to 
make a clarifying change to Exhibit 5 by correcting one reference to 
``Night'' to read ``Night Session.'' Other than for this clarifying 
correction, the proposed rule text and substance of the filing 
remain unchanged. See supra note 5 and accompanying text.
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    In connection with preparations for the commencement of 23-5 
trading, and trading in the Night Session in particular,\7\ the 
Exchange has engaged with member organizations, including clearing 
member firms, regarding the operational processes necessary to support 
overnight trading during the Night Session. Through those discussions, 
clearing member firms have indicated a desire to maintain greater 
control over which correspondent firms may use their clearing services 
during the Night Session. In particular, clearing member firms have 
explained that participation in overnight trading may involve 
operational, risk-management, and supervisory considerations that 
differ from those applicable during existing trading sessions and have 
requested a mechanism through which they may affirmatively identify the 
correspondents for whose Night Session trades they have agreed to 
assume clearing and settlement responsibility.
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    \7\ See supra note 3 and accompanying text.
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    Unlike certain other trading venues, Nasdaq historically has relied 
upon existing National Securities Clearing Corporation (``NSCC'') 
relationship information and generally has not required separate 
clearing guarantees as a condition of trading. Because the Night 
Session represents a novel trading environment and clearing member 
firms have requested a mechanism to confirm the correspondents for 
whose Night Session trades they will assume clearing and settlement 
responsibility, the Exchange believes it is appropriate to require an 
affirmative written confirmation from the applicable Clearing Member 
before a Member may trade in the Night Session using that clearing 
relationship.
    The proposed requirement is intended solely to provide clearing 
member firms with a means to manage and communicate confirmations 
regarding the correspondents for whose Night Session trades they have 
agreed to assume clearing and settlement responsibility. The proposal 
would not alter existing clearing relationships for trading conducted 
during other Exchange trading sessions and would not otherwise modify 
the rights or obligations of Members under Exchange rules. As discussed 
above, any such written affirmation would confirm only that the 
Clearing Member has agreed to assume responsibility for clearing and 
settling Night Session trades executed by the designating Member. 
Actual trading during the Night Session would remain subject to the 
conditions set forth in Exchange Rule Equity 1, Section 1(a)(19).\8\
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    \8\ See supra note 3 and accompanying text.
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    While actual trading pursuant to the proposed rule change will be 
subject to Exchange Rule Equity 1, Section 1(a)(19), the Exchange 
proposes to implement the proposed rule change as soon as practicable 
during the month of September 2026 to provide sufficient time for 
member onboarding and operational preparation in advance of the planned 
commencement of 23-5 trading in or about December 2026.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\10\ 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    In particular, the Exchange believes that the proposal furthers 
these objectives by fostering cooperation and coordination among the 
Exchange, Members, and clearing member firms in connection with the 
launch and operation of the Night Session. The proposal would require a 
Member that seeks to trade in the Night Session using a clearing 
relationship with another Member that is a member of a registered 
clearing agency to provide documentation affirming that the designated 
Clearing Member has agreed to assume responsibility for clearing and 
settling any and all trades executed during the Night Session by the 
designating Member. By requiring such documentation before a Member may 
use that clearing relationship for Night Session trading, the proposal 
is designed to reduce uncertainty regarding clearing responsibility, 
support appropriate risk management by clearing member firms, and help 
ensure that Night Session activity occurs through clearing arrangements 
for which the applicable Clearing Member has affirmatively agreed to 
assume clearing and settlement responsibility. The proposed requirement 
would not itself permit a Member to commence trading during the Night 
Session; actual trading during the Night Session would remain subject 
to the conditions set forth in Exchange Rule Equity 1, Section 
1(a)(19).
    The Exchange further believes that the proposal promotes just and 
equitable principles of trade and protects investors and the public 
interest by supporting fair and orderly markets during the Night 
Session. As discussed above, clearing member firms have indicated that 
overnight trading may involve operational, risk-management, and 
supervisory considerations that differ from those applicable during 
existing trading sessions and have requested a mechanism through which 
they may identify the correspondents for whose Night Session trades 
they have agreed to assume clearing and settlement responsibility. The 
proposed requirement responds to those concerns by establishing a 
clear, limited process for confirming the applicable Clearing Member's 
agreement to assume clearing and settlement responsibility for Night 
Session trades executed by the designating Member.
    The Exchange also believes that requiring an affirmative written 
confirmation of the Clearing Member's agreement to assume clearing and 
settlement responsibility for Night Session trades will enhance 
transparency with respect to clearing relationships, thereby supporting 
the Act's objectives of preventing fraudulent and manipulative acts and 
practices and promoting just and equitable principles of trade. The 
proposal is not designed to alter existing clearing relationships 
generally, modify the substantive operation of the Exchange's trading 
system, or change the execution rules applicable to orders. Rather, it 
is a targeted operational safeguard designed to provide certainty 
regarding clearing responsibility for a trading session that presents 
operational considerations distinct from regular trading hours.
    The Exchange also believes that the proposal is consistent with the 
Commission's approval of the Exchange's 23-5 trading framework.\11\ In 
approving that framework, the

[[Page 63335]]

Commission recognized that overnight trading presents operational and 
market-structure considerations that differ from those applicable 
during traditional trading hours and approved measures designed to 
address risks associated with Night Session trading.\12\ The proposed 
requirement similarly is designed to facilitate the orderly 
commencement and operation of the Night Session by helping to ensure 
that trading activity conducted through another Member's clearing 
relationship occurs only where the applicable Clearing Member has 
affirmatively agreed to assume clearing and settlement responsibility 
for Night Session trades executed by the designating Member. Any such 
written affirmation would confirm only that the Clearing Member has 
agreed to assume responsibility for clearing and settling Night Session 
trades. Actual commencement of trading during the Night Session would 
remain subject to the conditions set forth in Exchange Rule Equity 1, 
Section 1(a)(19).
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    \11\ See 23-5 Approval Order, supra note 3.
    \12\ See 23-5 Approval Order, supra note 3, 91 FR at 20228, 
20232 (noting that ``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''; that ``[t]hese proposed disclosures will enhance 
transparency by warning customers that trading during these extended 
hours involves material trading risks, as outlined in the proposed 
rules''; and finding that ``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'').
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    Finally, the Exchange believes the proposal removes impediments to 
and perfects the mechanism of a free and open market and a national 
market system because it would promote an orderly implementation 
process for the Night Session. By providing clearing member firms with 
a mechanism to identify and confirm the correspondents for whose Night 
Session trades they will assume clearing and settlement responsibility 
in advance of launch, the proposal would reduce potential operational 
uncertainty and facilitate coordinated readiness among the Exchange, 
Members, and clearing member firms.

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.
    The proposal applies uniformly to all Members seeking to trade in 
the Night Session through a clearing relationship with another Member. 
The proposal does not impose a categorical restriction on access to the 
Night Session. Rather, it requires only that a Member seeking to trade 
in the Night Session through another Member's clearing relationship 
provide documentation confirming that the designated Clearing Member 
has agreed to assume clearing and settlement responsibility for Night 
Session trades executed by the designating Member.
    To the extent the proposal imposes any burden on competition, the 
Exchange believes such burden is necessary and appropriate because it 
is designed to facilitate prudent risk management by clearing member 
firms and the orderly operation of the Night Session.

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 \13\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 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#c4b6b1a8a1e9a7aba9a9a1aab0b784b7a1a7eaa3abb2"><span class="__cf_email__" data-cfemail="9defe8f1f8b0fef2f0f0f8f3e9eeddeef8feb3faf2eb">[email&#160;protected]</span></a>. Please include 
file number SR-NASDAQ-2026-084 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-2026-084. 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-2026-084 and should be submitted 
on or before October 5, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-20297 Filed 10-2-26; 8:45 am]
BILLING CODE 8011-01-P


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