Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Transaction Fees at Nasdaq Equity 7, Section 118, To Establish a Tier of Credit for Non-Displayed Orders (Other Than Supplemental Orders) That Provide Liquidity

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<title>Federal Register, Volume 91 Issue 195 (Friday, October 9, 2026)</title>
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[Federal Register Volume 91, Number 195 (Friday, October 9, 2026)]
[Notices]
[Pages 64704-64706]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20711]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106607; File No. SR-NASDAQ-2026-086]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Amend the Exchange's Transaction Fees at Nasdaq Equity 7, Section 
118, To Establish a Tier of Credit for Non-Displayed Orders (Other Than 
Supplemental Orders) That Provide Liquidity

October 6, 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 30, 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 the Exchange's transaction fees at 
Nasdaq Equity 7, Section 118, to establish a tier of credit for non-
displayed orders (other than Supplemental Orders) that provide 
liquidity.
    While these amendments are effective upon filing, the Exchange has 
designated the proposed amendments to be operative on October 1, 2026.
    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 purpose of the proposed rule change is to amend the Exchange's 
schedule of credits, at Equity 7, Section 118(a)(1), which applies to 
the use of the order execution and routing services of the Nasdaq 
Market Center for all securities priced at $1 or more. Until the end of 
August 2026, the Exchange provided a credit to members for non-
displayed orders (other than Supplemental Orders) that provide 
liquidity. Specifically, the Exchange provided a credit tier (``Old 
Credit Tier'') of $0.0015 per share executed in Tape A or Tape B, and 
$0.0010 per share executed in Tape C. The Old Credit Tier was available 
to a member that (i) provided 0.10% or more of Consolidated Volume \3\ 
though non-displayed orders (other than midpoint orders) and (ii) 
increased providing non-displayed liquidity (other than midpoint 
orders) by 30% or more relative to the member's February 2026 
Consolidated Volume provided through non-displayed orders (other than 
midpoint orders). The Old Credit Tier expired at the end of August 
2026.\4\
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    \3\ Equity 7, Section 118(a) defines Consolidated Volume as the 
total consolidated volume reported to all consolidated transaction 
reporting plans by all exchanges and trade reporting facilities 
during a month in equity securities, excluding executed orders with 
a size of less than one round lot.
    \4\ See Securities Exchange Act Release No. 105149 (Apr. 3, 
2026), 91 FR 17821 (Apr. 8, 2026) (File No. SR-NASDAQ-2026-024) 
(``Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Amend the Exchange's Transaction Fees at Nasdaq Equity 7, 
Section 118, To Update and Extend a Tier of Credit for Non-Displayed 
Orders (Other Than Supplemental Orders) That Provide Liquidity'').
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    The Exchange proposes to institute a new version of this credit 
tier (``New Credit Tier''). The amounts of the New Credit Tier will 
remain as they were under the expired Old Credit Tier (i.e.: $0.0015 
per share executed in Tape A or Tape B, and $0.0010 per share executed 
in Tape C). However, the criteria to qualify for the New Credit Tier 
will change in three ways when compared to the criteria to qualify for 
the Old Credit Tier: (1) setting the reference month to qualify for the 
credit tier to August 2026, (2) setting at 5% the level of increased 
non-displayed liquidity provided (other than midpoint orders) to 
qualify for the credit tier, and (3) setting a new expiration date of 
February 2027.
    The Exchange believes that the New Credit Tier will incentivize 
members to increase their non-displayed liquidity (other than midpoint 
orders) providing activity on the Exchange, which will improve overall 
market quality.
    The Exchange has designated these amendments to Equity 7, Section 
118, to be operative on October 1, 2026. Therefore, in accordance with 
the Rule of Interpretation \5\ in Equity 7, Section 118, the Exchange 
will begin to apply the New Credit Tier on October 1, 2026, based on a 
member's qualifying transaction volume during the month of September 
2026.
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    \5\ ``Rule of Interpretation: In compliance with Reg NMS Rule 
610(d), effective February 2, 2026, for purposes of determining 
quoting or transaction volumes for fees and incentives 
qualifications under Section 118(a), (d), (j), and (k), all volume 
figures will be derived from quoting or trading activity in the 
prior month. Consequently, new members will receive the base rates 
in their first month of trading.''
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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 Sections 
6(b)(4) and 6(b)(5) of the Act,\7\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees and other charges 
among members and issuers and other persons using any facility, and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange's proposed change to its schedule of credits is 
reasonable in several respects. As a threshold matter, the Exchange is 
subject to significant competitive forces in the market for equity 
securities transaction services that constrain its pricing 
determinations in that market. The fact that this market is competitive 
has long been recognized by the courts. In NetCoalition v. Securities 
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one 
disputes that competition for order flow is `fierce.' . . . As the SEC 
explained, `[i]n the U.S. national market system, buyers and sellers of 
securities, and the broker-dealers that act as their order-routing 
agents, have a wide range of choices of where to route orders for 
execution'; [and] `no exchange can afford to take its market share 
percentages for granted' because `no exchange possesses a monopoly, 
regulatory or otherwise, in the execution of order flow from broker 
dealers'. . . .'' \8\
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    \8\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (Dec. 2, 2008), 
73 FR 74770, 74782-83 (Dec. 9, 2008) (SR-NYSEArca-2006-21)).

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    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, while adopting a series of steps to improve the current market 
model, the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \9\
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    \9\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37499 (June 29, 2005).
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    Numerous indicia demonstrate the competitive nature of this market. 
For example, clear substitutes to the Exchange exist in the market for 
equity security transaction services. The Exchange is only one of 
several equity venues to which market participants may direct their 
order flow. Competing equity exchanges offer similar tiered pricing 
structures to that of the Exchange, including schedules of rebates and 
fees that apply based upon members achieving certain volume thresholds.
    Within this environment, market participants can freely and often 
do shift their order flow among the Exchange and competing venues in 
response to changes in their respective pricing schedules. As such, the 
proposal represents a reasonable attempt by the Exchange to increase 
its liquidity and market share relative to its competitors.
    The Exchange believes that it is reasonable, equitable, and not 
unfairly discriminatory to establish the New Credit Tier. This New 
Credit Tier will encourage members to increase their non-displayed 
liquidity (other than midpoint orders) providing activity on the 
Exchange, which will improve overall market quality, to the benefit of 
all market participants. Instituting a 6-month sunset for the 
comparative baseline ensures that the baseline being used for the 
credit tier does not become outdated. To the extent that the Exchange 
succeeds in increasing the levels of liquidity and activity on the 
Exchange, then the Exchange will experience improvements in its market 
quality, which stands to benefit all market participants. The Exchange 
notes that the New Credit Tier is voluntary. The Exchange further 
believes that the New Credit Tier is not unfairly discriminatory 
because it will be applied uniformly to all members that meet the 
specified criteria.
    The Exchange notes that if there are market participants who are 
dissatisfied with the proposal, they are free to shift their order flow 
to competing venues that may offer them more generous pricing or less 
stringent qualifying criteria.

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.
    In terms of intermarket competition, the Exchange notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive, or rebate or credit opportunities 
available at other venues to be more favorable. As one can observe by 
looking at any market share chart, price competition between exchanges 
is fierce, with liquidity and market share moving freely between 
exchanges in reaction to fee and credit changes. In such an 
environment, the Exchange must continually adjust its fees and credits 
to remain competitive with other exchanges and with alternative trading 
systems that have been exempted from compliance with the statutory and 
regulatory standards applicable to national securities exchanges. 
Because competitors are free to modify their own fees and credits in 
response, and because market participants may readily adjust their 
order routing practices, the Exchange believes that the degree to which 
the New Credit Tier in this market may impose any burden on competition 
is extremely limited.
    In terms of intramarket competition, the Exchange does not believe 
that its proposal will place any category of Exchange participant at a 
competitive disadvantage. In this instance, the New Credit Tier is 
intended to incentivize liquidity-adding activity on the Exchange, and 
it does not impose a burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. By offering the 
New Credit Tier to market participants that meet certain criteria, the 
Exchange is enhancing its appeal as a trading venue and encouraging 
increased participation in its order execution and routing processes, 
while maintaining a competitive pricing structure. An increase in the 
activity of these market participants--particularly in response to 
pricing--facilitates tighter spreads. This may cause an additional 
corresponding increase in order flow from other market participants, 
which would be to the benefit of all market participants.
    In sum, if the change proposed herein is unattractive to market 
participants, it is likely that the Exchange will lose market share as 
a result. Accordingly, the Exchange does not believe that the proposed 
change will impair the ability of members or competing order execution 
venues to maintain their competitive standing in the financial markets.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\10\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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: (i) 
necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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#1b696e777e36787476767e756f685b687e78357c746d"><span class="__cf_email__" data-cfemail="5f2d2a333a723c3032323a312b2c1f2c3a3c71383029">[email&#160;protected]</span></a>. Please include 
file number SR-NASDAQ-2026-086 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-2026-086. This

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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-2026-086 and should be submitted 
on or before October 30, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-20711 Filed 10-8-26; 8:45 am]
BILLING CODE 8011-01-P


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