[Federal Register Volume 89, Number 12 (Thursday, January 18, 2024)]
[Notices]
[Pages 3466-3468]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-00851]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99329; File No. SR-NASDAQ-2024-002]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Exchange's Membership Fee at Equity 7, Section 10

January 11, 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 January 2, 2024, 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 Membership Fee at 
Equity 7, Section 10.
    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 
Membership Fee at Equity 7, Section 10. Specifically, the Exchange 
proposes to increase its annual membership fee (``Annual Membership 
Fee'') from $3,000 per year to $4,000 per year. This fee is assessed on 
all Nasdaq members on an annual basis.
    Nasdaq has not increased its Annual Membership Fee since 2007.\3\ 
The Exchange believes the proposed modest fee increase is warranted to 
ensure that its Annual Membership Fee better reflects the current value 
of being a

[[Page 3467]]

member of the Exchange rather than the value when the Annual Membership 
Fee was last increased to $3,000 per year more than 15 years ago. The 
Exchange believes that its ability to deliver value to its customers 
through technology, liquidity and functionality merits the proposed 
change to its Annual Membership Fee. The membership team also provides 
ongoing support to Exchange members with respect to membership changes, 
registration, and other questions that commonly arise from Exchange 
members regarding such matters.
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    \3\ See Exchange Act Release No. 56617 (Oct. 4, 2007), 72 FR 
58142 (Oct. 12, 2007) (SR-NASDAQ-2007-083).
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    Even with the proposed fee increase, the cost of Nasdaq membership 
is lower than the cost of membership in other SROs such as the Long-
Term Stock Exchange, Inc. (``LTSE'').\4\
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    \4\ See, e.g., Long-Term Stock Exchange, Inc. Rule 15.200(a) 
(Annual Membership Fee) at https://assets-global.website-files.com/6462417e8db99f8baa06952c/64cd4f221126981fa31652b3_LTSE%20Rule%20Book%20through%20June%209%202023%20(SR-LTSE-2023-01%20Amendment%20No.%202).pdf.
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    Ultimately, Exchange membership is voluntary and if Nasdaq is 
incorrect in its determination that the proposed Annual Membership Fee 
change reflects the value of Exchange membership, then any Exchange 
member that is dissatisfied with the proposal can choose not to be a 
member of the Exchange and send its order flow to another exchange.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes its proposal to increase its Annual 
Membership Fee from $3,000 per year to $4,000 per year is reasonable, 
equitable and not unfairly discriminatory. Nasdaq believes that this 
modest increase is an equitable method of ensuring that its Annual 
Membership Fee better reflects the value of the services it provides 
its membership. Nasdaq also believes the proposed modest increase of 
Nasdaq membership is reasonable since it has not been increased since 
2007 and, even following the proposed increase to its Annual Membership 
Fee, the cost of Nasdaq membership still is less than those of other 
SROs.\7\ Additionally, the Exchange believes that the proposed change 
is both an equitable allocation and is not designed to permit unfair 
discrimination between Exchange members because the fee is applied 
equally to all Exchange members.
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    \7\ Supra note 4.
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    The decision to become a member of an exchange is complex, and not 
solely based on the non-transactional costs assessed by an exchange. 
Becoming a member of an exchange does not ``lock'' a potential member 
into a market or diminish the overall competition for exchange 
services. The decision to become a member of an exchange is no less 
subject to competition than trading fees.
    In 2022, MEMX LLC (``MEMX'') commenced assessing a monthly 
membership fee.\8\ MEMX reasoned in that rule change that there is 
value in becoming a member of the exchange.\9\ MEMX stated that it 
believed that its proposed membership fee ``is not unfairly 
discriminatory because no broker-dealer is required to become a member 
of the Exchange.'' \10\ In this respect, MEMX is correct; a membership 
fee is reasonable, equitably allocated and not unfairly discriminatory. 
Market participants may voluntarily choose to become a member of one or 
more of a number of different exchanges, of which, Nasdaq is but one 
choice. Additionally, any Exchange member that is dissatisfied with the 
proposal is free to choose not to be a member of the Exchange and send 
order flow to another exchange.
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    \8\ See Securities Exchange Act Release No. 93927 (January 7, 
2022), 87 FR 2191 (January 13, 2022) (SR-MEMX-2021-19).). In 2023, 
MEMX filed to establish fees for members of its options exchange. 
See Securities Exchange Act Release No. 98648 (September 29, 2023), 
88 FR 68762 (October 4, 2023) (SR-MEMX-2023-26).
    \9\ Id.
    \10\ Id.
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    The Exchange's proposal to increase its Annual Membership Fee from 
$3,000 per year to $4,000 per year is reasonable, equitable and not 
unfairly discriminatory. As a self-regulatory organization, Nasdaq's 
membership department reviews existing members and new applicants to 
ensure that each complies with its rules and regulations, as well as 
other requirements for membership. New applicants must also meet the 
Exchange's qualification criteria prior to approval. The membership 
review includes, but is not limited to, the registration and 
qualification of associated persons, financial health, the validity of 
the required clearing relationship, and the history of disciplinary 
matters. All members are required to comply with the Exchange's By-Laws 
and Rules and are subject to regulation by Nasdaq.
    As noted above, if the Exchange is incorrect in its determination 
that the proposed Annual Membership Fee change reflects the value of 
Exchange membership, then any Exchange member that is dissatisfied with 
the proposal may voluntarily decide whether membership to the Exchange 
is worthwhile and has the option of sending order flow to another 
exchange.

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. Nasdaq believes that the 
proposed modest fee increase to its Annual Membership Fee proves 
unattractive to market participants, it is likely that Nasdaq will 
experience a decline in membership as a result.
    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 Exchange notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem annual membership fees 
levels at a particular venue to be excessive or opportunities available 
at other venues to be more favorable. Because competitors are free to 
modify their own annual membership fees in response, the Exchange 
believes that the degree to which annual membership fees changes in 
this market may impose any burden on competition is extremely limited.
    The Exchange notes that other markets have adopted membership fees. 
MEMX recently reasoned that it should be permitted to adopt membership 
fees because MEMX's proposed membership fees would be lower than the 
cost of membership on other exchanges, and therefore,

. . . may stimulate intramarket competition by attracting additional 
firms to become Members on the Exchange or at least should not deter 
interested participants from joining the Exchange. In addition, 
membership fees are subject to competition from other exchanges. 
Accordingly, if the changes proposed herein are unattractive to 
market participants, it is likely the Exchange will see a decline in 
membership as a result. The proposed fee change will not impact 
intermarket competition because it will apply to all Members 
equally. The Exchange operates in a highly competitive market in 
which market participants can determine whether or not to join the 
Exchange based on

[[Page 3468]]

the value received compared to the cost of joining and maintaining 
membership on the Exchange.\11\
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    \11\ See Securities Exchange Act Release No. 93927 (January 7, 
2022), 87 FR 2191 (January 13, 2022) (SR-MEMX-2021-19).

    As noted above, Nasdaq's Annual Membership Fee would remain 
substantially lower than the analogous fees of LTSE,\12\ and membership 
fees are subject to competition from other exchanges. Accordingly, if 
the Annual Membership Fee change proposed herein is unattractive to 
market participants, it is likely that Nasdaq will experience a decline 
in membership as a result.
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    \12\ Supra note 4.
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    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.\13\ 
Nasdaq does not believe that the proposed rule change places an 
unnecessary burden on competition because it is a modest fee increase 
for a fee that has remained unchanged since 2007 and that will now 
better reflect the value of the services it provides its membership.
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    \13\ 15 U.S.C. 78f(b)(8).
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    Accordingly, any Exchange member that is dissatisfied with the 
proposal is free to choose not to be a member of the Exchange and send 
order flow to another exchange.

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.\14\
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    \14\ 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-2024-002 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-2024-002. 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 
10:00 a.m. and 3:00 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-2024-002, and 
should be submitted on or before February 8, 2024.

    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. 2024-00851 Filed 1-17-24; 8:45 am]
BILLING CODE 8011-01-P