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Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Notices A. Self-Regulatory Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
SECURITIES AND EXCHANGE
COMMISSION
Release No. 3493111; File No. SR
NASDAQ2021072

1. Purpose
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 118 of the Fee Schedule September 23, 2021.

Pursuant to Section 19b1 of the Securities Exchange Act of 1934
Act,1 and Rule 19b4 thereunder,2
notice is hereby given that on September 14, 2021, 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.
I. Self-Regulatory Organizations Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchanges pricing schedule at Equity 7, Section 118a, as described further below.
The text of the proposed rule change is available on the Exchanges website at https listingcenter.nasdaq.com/
rulebook/nasdaq/rules, at the principal office of the Exchange, and at the Commissions Public Reference Room.

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II. Self-Regulatory Organizations 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.

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2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6b of the Act,4 in general, and furthers the objectives of Sections 6b4 and 6b5
of the Act,5 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, 3 Securities Exchange Act Release No. 91619
April 21, 2021, 79 FR 22291, April 27, 2021.
4 15 U.S.C. 78fb.
5 15 U.S.C. 78fb4 and 5.

U.S.C. 78sb1.
CFR 240.19b4.

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The purpose of the proposed rule change is to amend the Exchanges schedule of credits, at Equity 7, Section 118a. Specifically, the Exchange proposes to eliminate an existing credit of $0.0030 per share for members that meet specified volume requirements on both Nasdaq and the Nasdaq Options Market NOM when adding liquidity and that qualify for Tier 4 of the MARS
program on NOM.
The Exchange currently provides a $0.0030 per share executed credit for a member with displayed quotes/orders other than Supplemental Orders or Designated Retail Orders that provide more than 0.65% of Consolidated Volume on Nasdaq during the month, and the member must also qualify for Tier 4 of NOMs MARS program during the month. To qualify for the Tier 4
MARS program, a Participant must have an average daily volume ADV of at least 20,000 Eligible Contracts in a month that are executed and that added liquidity.
The Exchange proposes to eliminate the credit on all tapes as it has not been effective in accomplishing its intended purpose, which is to incent members to increase their liquidity adding activity on both Nasdaq and NOM. Although the Exchange amended the credit in April 2021to incentivize members to increase the extent of their liquidity providing activity on Nasdaq,3 no members have received this credit since the Exchange last amended the credit and it has served to neither meaningfully increase activity on the Exchange or NOM nor improve the quality of those markets since April 2021. Moreover, no member currently qualifies for the credit. The Exchange therefore proposes to eliminate it.

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issuers, brokers, or dealers. The proposal is also consistent with Section 11A of the Act relating to the establishment of the national market system for securities.
The Proposal Is Reasonable The Exchanges proposal 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: no one disputes that competition for order flow is fierce.
. . . As the SEC explained, in the U.S.
national market system, buyers and sellers of securities, and the brokerdealers 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. . . . 6
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. 7
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.
6 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, 7478283
December 9, 2008 SRNYSEArca200621.
7 Securities Exchange Act Release No. 51808
June 9, 2005, 70 FR 37496, 37499 June 29, 2005
Regulation NMS Adopting Release.

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