Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Credits at Equity 7, Section 118(a), 92266-92269 [2024-27218]
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92266
Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
obtain information regarding trading in
the Shares of the Fund; the conditions
under which the Exchange would
implement trading halts and
suspensions; and the requirements of
registered market makers in the Shares
of the Fund. In addition, the Exchange
deems the Shares to be equity securities,
thus rendering trading in the Shares
subject to that Exchange’s rules
governing the trading of equity
securities. Further, the applicable listing
rule of the Exchange requires that all
statements and representations made in
its filing regarding, among others, the
description of the Fund’s holdings,
limitations on such holdings, and the
applicability of the Exchange’s listing
rules specified in the filing, will
constitute continued listing
requirements.58 Moreover, the proposed
rule change states that the Sponsor has
represented to the Exchange that it will
advise that Exchange of any failure to
comply with the applicable continued
listing requirements; pursuant to
obligations under Section 19(g)(1) of the
Exchange Act, the Exchange will
monitor for compliance with the
continued listing requirements; and if
the Fund is not in compliance with the
applicable listing requirements, that
Exchange will commence delisting
procedures.
The Commission therefore finds that
the proposed rule change, as modified
by Amendment No. 4, is reasonably
designed to promote fair disclosure of
information that may be necessary to
price the Shares appropriately, to
prevent trading when a reasonable
degree of transparency cannot be
assured, to safeguard material nonpublic information relating to the
Fund’s portfolio, and to ensure fair and
orderly markets for the Shares of the
Fund.
IV. Solicitation of Comments on
Amendment No. 4 to the Proposed Rule
Change
Interested persons are invited to
submit written data, views and
arguments concerning whether
Amendment No. 4 is consistent with the
Act. Comments may be submitted by
any of the following methods:
lotter on DSK11XQN23PROD with NOTICES1
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NYSEARCA–2024–27 on the subject
line.
58 See
NYSE Arca Rule 8.500–E(d)(2).
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18:02 Nov 20, 2024
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Paper Comments
• 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–NYSEARCA–2024–27. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
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–NYSEARCA–2024–27 and should be
submitted on or before December 12,
2024.
V. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 4
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 4, prior to
the thirtieth day after the date of
publication of notice of the filing of
Amendment No. 4 in the Federal
Register. Amendment No. 4 to the
proposed rule change clarified the
creation and redemptions procedures
for the Shares and provided additional
clarification relating to statements
concerning the holdings of the Fund
and the custody of cash and cash
equivalents. The changes and additional
information in Amendment No. 4 assist
the Commission in evaluating the
Exchange’s proposal and in determining
that it is consistent with the Act. The
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amended filing is now substantially
similar to other spot bitcoin ETPs that
the Commission has approved with
respect to the Fund’s spot bitcoin
holdings, and as discussed above in
Section III.A, the spot bitcoin market
and the CME bitcoin futures market
remain consistently highly correlated.
Accordingly, the Commission finds
good cause, pursuant to Section 19(b)(2)
of the Act,59 to approve the proposed
rule change, as modified by Amendment
No. 4, on an accelerated basis.
VI. Conclusion
This approval order is based on all of
the Exchange’s representations,
including those set forth above and in
Amendment No. 4. For the foregoing
reasons, the Commission finds that the
proposed rule change, as modified by
Amendment No. 4, is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange, and in particular, Section
6(b)(5) and Section 11A(a)(1)(C)(iii) of
the Act.60
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,61 that the
proposed rule change (SR–NYSEARCA–
2024–27), as modified by Amendment
No. 4, be, and it hereby is, approved on
an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.62
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024–27221 Filed 11–20–24; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101638; File No. SR–
NASDAQ–2024–066]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Its
Schedule of Credits at Equity 7,
Section 118(a)
November 15, 2024.
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 November
1, 2024, The Nasdaq Stock Market LLC
59 15
U.S.C. 78s(b)(2).
U.S.C. 78f(b)(5); 15 U.S.C. 78k–
1(a)(1)(C)(iii).
61 15 U.S.C. 78s(b)(2).
62 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
60 15
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Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
(‘‘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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Exchange’s schedule of credits at Equity
7, Section 118(a), as described further
below.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/nasdaq/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
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
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1. Purpose
The purpose of the proposed rule
change is to amend the Exchange’s
schedule of credits, at Equity 7, Section
118(a). Specifically, the Exchange
proposes to introduce a new credit
applicable to Tapes A, B, and C for
displayed quotes (other than
Supplemental Orders) that provide
liquidity. Under the proposed rule
change, members will be eligible for the
new credit of $0.0029 if they meet the
following criteria: (1) the member adds
at least 0.50% of the Consolidated
Volume, with at least 0.10% of such
volume being Tape B securities; and (2)
the member adds at least 0.15% of
Consolidated Volume of non-displayed
liquidity, which includes midpoint
orders and Midpoint Extended Life
Orders (‘‘M–ELO’’).
This proposed change will apply to
Tapes A, B, and C. The purpose of the
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new credit structure is to incentivize
members to increase their liquidity
adding activity on the Exchange. By
providing an additional incentive for
members to contribute displayed
liquidity, the Exchange aims to enhance
market quality and improve liquidity.
The new proposed credit of $0.0029 is
in addition to other credits the
Exchange already offers to member for
providing displayed liquidity. The
Exchange believes that if this incentive
successfully drives additional liquidity,
the resulting increase will enhance
overall market quality, benefiting all
participants.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,3 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,4 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.
The Proposal Is Reasonable
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’. . ..’’ 5
The Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
3 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
5 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir.
2010) (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782–83
(December 9, 2008) (SR–NYSEArca–2006–21)).
4 15
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92267
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.’’ 6
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 to establish a new credit of
$0.0029 for members that add displayed
liquidity when the member adds at least
0.50% of Consolidated Volume, of
which at least 0.10% are Tape B
securities, and the member adds at least
0.15% of Consolidated Volume of nondisplayed liquidity (including midpoint
orders) and Midpoint Extended Life
Orders. This proposal is reasonable
because it will incentivize liquidity
adding activity and provide an incentive
to members that provide additional
displayed liquidity to the Exchange. The
Exchange believes that if such incentive
is effective, then any ensuring increase
in liquidity to the Exchange will
improve market quality, to the benefit of
all participants.
The Exchange believes that
establishing a new credit for members
that add displayed liquidity is equitable.
To the extent that the Exchange
succeeds in increasing the levels of
liquidity and activity on the Exchange,
the Exchange will experience
improvements in its market quality,
which stands to benefit all market
participants. The Exchange further
believes that the proposed new credit of
6 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
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Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
$0.0029 for members providing
additional liquidity is equitable because
it will be applied uniformly to all
members that meet the specified
criteria.
Any participant that is dissatisfied
with the proposal is free to shift their
order flow to competing venues that
provide more generous pricing or less
stringent qualifying criteria.
The Proposal Is Not Unfairly
Discriminatory
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The Exchange believes that the
proposed $0.0029 new credit for
members adding additional liquidity is
not unfairly discriminatory. As an
initial matter, the Exchange believes
that nothing about its volume-based
tiered pricing model is inherently
unfair; instead, it is a rational pricing
model that is well-established and
ubiquitous in today’s economy among
firms in various industries—from cobranded credit cards to grocery stores to
cellular telephone data plans—that use
it to reward the loyalty of their best
customers that provide high levels of
business activity and incent other
customers to increase the extent of their
business activity. It is also a pricing
model that the Exchange and its
competitors have long employed with
the assent of the Commission. It is fair
because it enhances price discovery and
improves the overall quality of the
equity markets.
The Exchange believes that the
proposal to add a new credit for
members providing additional
displayed liquidity (other than
Supplemental Orders) as described
above, is not unfairly discriminatory.
The new credit is not intended to
advantage any particular member and
will be applied uniformly to all
members that meet the qualifying
criteria. Moreover, the proposal stands
to improve the overall market quality of
the Exchange, to the benefit of all
market participants, by incentivizing
members to increase the extent of their
liquidity adding activity.
Any participant that is dissatisfied
with the proposal is free to shift their
order flow to competing venues that
provide 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 not
necessary or appropriate in furtherance
of the purposes of the Act.
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18:02 Nov 20, 2024
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Intramarket Competition
The Exchange does not believe that its
proposal will place any category of
Exchange participant at a competitive
disadvantage.
As noted above, the Exchange’s
proposal to add a new credit for
members that add displayed liquidity is
intended to have market-improving
effects, to the benefit of all members.
Any member can satisfy the criteria to
qualify for the new credit.
The Exchange notes that its members
are free to trade on other venues to the
extent they believe that the Exchange’s
fee schedule is not attractive. 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.
Intermarket Competition
In terms of inter-market 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 opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
credits and fees to remain competitive
with other exchanges and with
alternative trading systems that have
been exempted from compliance with
the statutory standards applicable to
exchanges. Because competitors are free
to modify their credit and own fees in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which credit
or fee changes in this market may
impose any burden on competition is
extremely limited.
The proposed new credit is reflective
of this competition because, as a
threshold issue, even as one of the
largest U.S. equities exchanges by
volume, the Exchange has less than 20%
market share, which in most markets
could hardly be categorized as having
enough market power to burden
competition. Moreover, price
competition between exchanges is
fierce, with liquidity and market share
moving freely between exchanges in
reaction to credit and fee changes. This
is an addition to free flow of order flow
to and among off-exchange venues
which comprises more than 40% of
industry volume in recent months.
The Exchange’s proposal to add a new
credit is pro-competitive in that the
Exchange intends for the credit to
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increase liquidity addition activity on
the Exchange, thereby rendering the
Exchange more attractive and vibrant to
participants.
In sum, if the changes proposed
herein are 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.7
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
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NASDAQ–2024–066 on the subject line.
Paper Comments
• 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–2024–066. This
file number should be included on the
7 15
U.S.C. 78s(b)(3)(A)(ii).
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Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
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–2024–066 and should be
submitted on or before December 12,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Stephanie J. Fouse,
Assistant Secretary.
Incident Period: October 19, 2024
through October 20, 2024.
Physical Loan Application Deadline
Date: January 2, 2025.
Economic Injury (EIDL) Loan
Application Deadline Date: August 1,
2025.
SMALL BUSINESS ADMINISTRATION
ADDRESSES:
Visit the MySBA Loan
Portal at https://lending.sba.gov to
apply for a disaster assistance loan.
AGENCY:
FOR FURTHER INFORMATION CONTACT:
SUMMARY:
Vanessa Morgan, Office of Disaster
Recovery & Resilience, U.S. Small
Business Administration, 409 3rd Street
SW, Suite 6050, Washington, DC 20416,
(202) 205–6734.
The notice
of the President’s major disaster
declaration for the State of New Mexico
dated November 1, 2024 and published
in the Federal Register on November 8,
2024 at 89 FR 88849 in the third
column, is hereby corrected to change
the physical loan application deadline
date to January 2, 2025. Private NonProfit organizations that provide
essential services of a governmental
nature may file disaster loan
applications online using the MySBA
Loan Portal https://lending.sba.gov or
other locally announced locations.
Please contact the SBA disaster
assistance customer service center by
email at disastercustomerservice@
sba.gov or by phone at 1–800–659–2955
for further assistance.
The following areas have been
determined to be adversely affected by
the disaster:
SUPPLEMENTARY INFORMATION:
Primary County: Chaves.
BILLING CODE 8011–01–P
Percent
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20854 and #20855;
NEW MEXICO Disaster Number NM–20010]
Presidential Declaration of a Major
Disaster for Public Assistance Only for
the State of New Mexico; Correction
U.S. Small Business
Administration.
ACTION: Notice; correction.
AGENCY:
This is a correction of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of New Mexico (FEMA–4843–
DR), dated November 1, 2024.
Incident: Severe Storm and Flooding.
DATES: Issued on November 15, 2024.
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SUMMARY:
For Physical Damage:
Non-Profit Organizations with
Credit Available Elsewhere ...
Non-Profit Organizations without Credit Available Elsewhere .....................................
For Economic Injury:
Non-Profit Organizations without Credit Available Elsewhere .....................................
3.250
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
18:02 Nov 20, 2024
3.250
The number assigned to this disaster
for physical damage is 208546 and for
economic injury is 208550.
This is an amendment of the
Presidential declaration of a major
disaster for the State of TENNESSEE
(FEMA–4832–DR), dated October 2,
2024.
Incident: Tropical Storm Helene.
DATES: Issued on November 12, 2024.
Incident Period: September 26, 2024
through September 30, 2024.
Physical Loan Application Deadline
Date: January 7, 2025.
Economic Injury (EIDL) Loan
Application Deadline Date: July 2, 2025.
ADDRESSES: Visit the MySBA Loan
Portal at https://lending.sba.gov to
apply for a disaster assistance loan.
FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster
Recovery & Resilience, U.S. Small
Business Administration, 409 3rd Street
SW, Suite 6050, Washington, DC 20416,
(202) 205–6734.
SUPPLEMENTARY INFORMATION: The notice
of the President’s major disaster
declaration for the State of TENNESSEE,
dated October 2, 2024, is hereby
amended to extend the deadline for
filing applications for physical damages
as a result of this disaster to January 7,
2025.
All other information in the original
declaration remains unchanged.
(Catalog of Federal Domestic Assistance
Number 59008)
Alejandro Contreras,
Acting Deputy Associate Administrator,
Office of Disaster Recovery & Resilience.
BILLING CODE 8026–09–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20811 and #20812;
NEW MEXICO Disaster Number NM–20009]
Presidential Declaration of a Major
Disaster for the State of New Mexico
(Catalog of Federal Domestic Assistance
Number 59008)
AGENCY:
Alejandro Contreras,
Acting Deputy Associate Administrator Office
of Disaster Recovery & Resilience.
SUMMARY:
BILLING CODE 8026–09–P
Jkt 265001
Presidential Declaration Amendment of
a Major Disaster for the State of
Tennessee
[FR Doc. 2024–27285 Filed 11–20–24; 8:45 am]
3.250
[FR Doc. 2024–27171 Filed 11–20–24; 8:45 am]
8 17
[Disaster Declaration #20718 and #20719;
TENNESSEE Disaster Number TN–20017]
U.S. Small Business
Administration.
ACTION: Amendment 2.
The Interest Rates are:
[FR Doc. 2024–27218 Filed 11–20–24; 8:45 am]
92269
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U.S. Small Business
Administration.
ACTION: Correction.
This is a correction of the
Presidential declaration of a major
disaster for the State of New Mexico
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Agencies
[Federal Register Volume 89, Number 225 (Thursday, November 21, 2024)]
[Notices]
[Pages 92266-92269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27218]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101638; File No. SR-NASDAQ-2024-066]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Schedule of Credits at Equity 7, Section 118(a)
November 15, 2024.
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 November 1, 2024, The Nasdaq Stock Market LLC
[[Page 92267]]
(``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 schedule of credits
at Equity 7, Section 118(a), as described further below.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.
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). Specifically, the
Exchange proposes to introduce a new credit applicable to Tapes A, B,
and C for displayed quotes (other than Supplemental Orders) that
provide liquidity. Under the proposed rule change, members will be
eligible for the new credit of $0.0029 if they meet the following
criteria: (1) the member adds at least 0.50% of the Consolidated
Volume, with at least 0.10% of such volume being Tape B securities; and
(2) the member adds at least 0.15% of Consolidated Volume of non-
displayed liquidity, which includes midpoint orders and Midpoint
Extended Life Orders (``M-ELO'').
This proposed change will apply to Tapes A, B, and C. The purpose
of the new credit structure is to incentivize members to increase their
liquidity adding activity on the Exchange. By providing an additional
incentive for members to contribute displayed liquidity, the Exchange
aims to enhance market quality and improve liquidity.
The new proposed credit of $0.0029 is in addition to other credits
the Exchange already offers to member for providing displayed
liquidity. The Exchange believes that if this incentive successfully
drives additional liquidity, the resulting increase will enhance
overall market quality, benefiting all participants.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\3\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\4\ 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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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposal Is Reasonable
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'. . ..'' \5\
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\5\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 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.'' \6\
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\6\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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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 to establish a new
credit of $0.0029 for members that add displayed liquidity when the
member adds at least 0.50% of Consolidated Volume, of which at least
0.10% are Tape B securities, and the member adds at least 0.15% of
Consolidated Volume of non-displayed liquidity (including midpoint
orders) and Midpoint Extended Life Orders. This proposal is reasonable
because it will incentivize liquidity adding activity and provide an
incentive to members that provide additional displayed liquidity to the
Exchange. The Exchange believes that if such incentive is effective,
then any ensuring increase in liquidity to the Exchange will improve
market quality, to the benefit of all participants.
The Exchange believes that establishing a new credit for members
that add displayed liquidity is equitable. To the extent that the
Exchange succeeds in increasing the levels of liquidity and activity on
the Exchange, the Exchange will experience improvements in its market
quality, which stands to benefit all market participants. The Exchange
further believes that the proposed new credit of
[[Page 92268]]
$0.0029 for members providing additional liquidity is equitable because
it will be applied uniformly to all members that meet the specified
criteria.
Any participant that is dissatisfied with the proposal is free to
shift their order flow to competing venues that provide more generous
pricing or less stringent qualifying criteria.
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposed $0.0029 new credit for
members adding additional liquidity is not unfairly discriminatory. As
an initial matter, the Exchange believes that nothing about its volume-
based tiered pricing model is inherently unfair; instead, it is a
rational pricing model that is well-established and ubiquitous in
today's economy among firms in various industries--from co-branded
credit cards to grocery stores to cellular telephone data plans--that
use it to reward the loyalty of their best customers that provide high
levels of business activity and incent other customers to increase the
extent of their business activity. It is also a pricing model that the
Exchange and its competitors have long employed with the assent of the
Commission. It is fair because it enhances price discovery and improves
the overall quality of the equity markets.
The Exchange believes that the proposal to add a new credit for
members providing additional displayed liquidity (other than
Supplemental Orders) as described above, is not unfairly
discriminatory. The new credit is not intended to advantage any
particular member and will be applied uniformly to all members that
meet the qualifying criteria. Moreover, the proposal stands to improve
the overall market quality of the Exchange, to the benefit of all
market participants, by incentivizing members to increase the extent of
their liquidity adding activity.
Any participant that is dissatisfied with the proposal is free to
shift their order flow to competing venues that provide 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 not necessary or appropriate in
furtherance of the purposes of the Act.
Intramarket Competition
The Exchange does not believe that its proposal will place any
category of Exchange participant at a competitive disadvantage.
As noted above, the Exchange's proposal to add a new credit for
members that add displayed liquidity is intended to have market-
improving effects, to the benefit of all members. Any member can
satisfy the criteria to qualify for the new credit.
The Exchange notes that its members are free to trade on other
venues to the extent they believe that the Exchange's fee schedule is
not attractive. 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.
Intermarket Competition
In terms of inter-market 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 opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its credits and fees to remain competitive with
other exchanges and with alternative trading systems that have been
exempted from compliance with the statutory standards applicable to
exchanges. Because competitors are free to modify their credit and own
fees in response, and because market participants may readily adjust
their order routing practices, the Exchange believes that the degree to
which credit or fee changes in this market may impose any burden on
competition is extremely limited.
The proposed new credit is reflective of this competition because,
as a threshold issue, even as one of the largest U.S. equities
exchanges by volume, the Exchange has less than 20% market share, which
in most markets could hardly be categorized as having enough market
power to burden competition. Moreover, price competition between
exchanges is fierce, with liquidity and market share moving freely
between exchanges in reaction to credit and fee changes. This is an
addition to free flow of order flow to and among off-exchange venues
which comprises more than 40% of industry volume in recent months.
The Exchange's proposal to add a new credit is pro-competitive in
that the Exchange intends for the credit to increase liquidity addition
activity on the Exchange, thereby rendering the Exchange more
attractive and vibrant to participants.
In sum, if the changes proposed herein are 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.\7\
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\7\ 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
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NASDAQ-2024-066 on the subject line.
Paper Comments
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-2024-066. This
file number should be included on the
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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
(https://www.sec.gov/rules/sro.shtml). Copies of the submission, all
subsequent amendments, all written statements with respect to the
proposed rule change that are filed with the Commission, and all
written communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of the
filing also 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-2024-066 and should be submitted on or before December 12,
2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024-27218 Filed 11-20-24; 8:45 am]
BILLING CODE 8011-01-P