Self-Regulatory Organizations: Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Liquidity Incentive Program

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-103700; File No. SR-LTSE-2025-18]</DEPDOC> <SUBJECT>Self-Regulatory Organizations: Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Liquidity Incentive Program</SUBJECT> <DATE>August 13, 2025.</DATE> Pursuant to the provisions of Section 19(b)(1) under the Securities Exchange Act of 1934 (“Act”), <SU>1</SU> <FTREF/> and Rule 19b-4 thereunder, <SU>2</SU> <FTREF/> notice is hereby given that on August 11, 2025, Long-Term Stock Exchange, Inc. (“LTSE” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  17 CFR 240.19b-4. </FTNT> <HD SOURCE="HD1">I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change</HD> The Exchange is filing with the Securities and Exchange Commission (“Commission”) a proposed rule change to amend the Liquidity Incentive Program (“LTSE LIP” or “Program”) which is designed, among other things, to enhance market quality by incentivizing market participants to provide liquidity in LIP Enhanced Securities. The Exchange proposes to implement the changes to the fee schedule pursuant to this proposal on August 11, 2025. The text of the proposed rule change is available at the Exchange's website at <E T="03">https://longtermstockexchange.com/,</E> and at the principal office of the Exchange. <HD SOURCE="HD1">II. Self-Regulatory Organization's Statement on the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> 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 self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. <HD SOURCE="HD2">A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change </HD> <HD SOURCE="HD3">1. Purpose</HD> On July 1, 2025, the Exchange implemented the LTSE LIP to enhance liquidity and improve market quality in LIP Enhanced Securities  <SU>3</SU> <FTREF/> traded on the Exchange by incentivizing Members to quote at or better than the National Best Bid and Offer (“NBBO”) and provide liquidity in both select securities, the LIP Enhanced Securities and more generally in all other securities traded on LTSE, the LIP Standard Securities.  LIP Enhanced Securities means a list of securities designated as such, that are used for the purposes of qualifying for the incentives within the LIP. The universe of these securities will be determined by the Exchange and published on the Exchange's website. <E T="03">See</E> Definitions Section of the Fee Schedule. </FTNT> <FTNT> <SU>4</SU>  LIP Standard Securities means a security not defined as a “LIP Enhanced Security” and traded on LTSE. <E T="03">See</E> Definitions Section of the Fee Schedule. <SU>5</SU>   <E T="03">See</E> Securities Exchange Release No. 34-103517 (July 22, 2025), 90 FR 35325 (July 25, 2025) (SR-LTSE-2025-16). The Program includes three key incentives: (1) a proportional share of 80% of LTSE's SIP Quote Revenue for LIP Enhanced Securities, distributed among qualifying Members based on quoting activity; (2) reduced taker fees for LIP Enhanced Securities, available to all Members without quoting obligations; and (3) for LIP Standard Securities, a choice between a proportional share of 20% of LTSE's SIP Quote Revenue or a quarterly credit, contingent on meeting specific quoting thresholds. </FTNT> Currently, the eligibility threshold for Incentive #1 requires a Member to display a quote in a LIP Enhanced Security of a Minimum Quoted Size, for at least 60% of the time at the NBBO of the Regular Market Session  <SU>6</SU> <FTREF/> in a calendar quarter, in order to share in SIP Quote Revenue, <SU>7</SU> <FTREF/> which is distributed proportionally among eligible Members based on quoting activity. <FTNT> <SU>6</SU>  Regular Market Session or Regular Market Hours means the time between 9:30 a.m. and 4:00 p.m. Eastern Time. <E T="03">See</E> Exchange Rule 1.160(kk). </FTNT> <FTNT> <SU>7</SU>  The Securities Information Processors (“SIPs”), which include the Unlisted Trading Privileges and Consolidated Tape Association, collect fees from subscribers for trade and quote tape data received from trading centers and reporting facilities, such as the Exchange (collectively, “SIP Participants”). After deducting the cost of operating each tape, the profits are allocated among the SIP Participants on a quarterly basis, according to a complex set of calculations that consider estimates of anticipated Market Data Revenue (“MDR”), adjustments to comport to actual MDR from previous quarters and a non-linear aggregation of total trading and quoting activity in Tape A, B, and C securities in attributing MDR to each SIP Participant. Based on these calculations, the SIPs provide MDR payments to each SIP Participant during the second month of each quarter for trade and quote data from the previous calendar quarter, which are subject to adjustment through subsequent quarterly payments. These payments can be divided into six pools ( <E T="03">i.e.,</E> trade and quote activity in Tape A, B, and C securities). </FTNT> The Exchange now proposes to amend Incentive #1 of the LTSE LIP to reduce the quoting threshold in a LIP Enhanced Security from 60% to 30% of the time at the NBBO of the Regular Market Session for the months of August and September in the current quarter and going forward for qualifying Members. This intraquarter adjustment is designed to address observed challenges with the initial quoting requirement and to encourage greater participation in LIP Enhanced Securities. <SU>8</SU> <FTREF/> <FTNT> <SU>8</SU>  The Exchange notes that no Member qualified for the 60% quoting threshold in July 2025. </FTNT> This adjustment is designed to account for the fact that the original quoting threshold of 60% will not apply uniformly across the quarter, as the Exchange is proposing to reduce the threshold to 30% for the months of August and September 2025. Therefore, LTSE will share a share of 80% of July's LTSE SIP Quote Revenue for that LIP Enhanced Security, distributed proportionally with firms who quoted at the NBBO at least 60% of the time for the month of July. For the months of August and September 2005, LTSE will share 80% of the combined August and September LTSE SIP Quote Revenue for that LIP Enhanced Security with firms who quoted at the NBBO at least 30% of the time across August and September. By allowing Members to qualify based on a reduced quoting performance in August and September, the Exchange seeks to make this intra-quarter adjustment from 60% to 30% to encourage greater participation in LIP Enhanced Securities as soon as possible and provide the opportunity to share in SIP Quote Revenue, which is distributed proportionally among eligible Members based on quoting activity.” The Exchange notes that it is not proposing any changes to the SIP Quote Revenue distribution, which will continue to occur at the end of each calendar quarter. This approach continues to promote consistent quoting behavior while also reflecting the intra-quarter change. The Exchange believes that the reduction from 60% to 30% provides a fair and reasonable opportunity for Members to participate in the Program and aligns with the Exchange's broader goal of enhancing liquidity and market quality in LIP Enhanced Securities. The Exchange notes that this proposal is limited in scope and that Incentives #2 and #3 are unchanged and remain in full force and effect as implemented on July 1, 2025. This modification is intended to enhance market quality by encouraging Members to contribute to displayed liquidity and tighter spreads in LIP Enhanced Securities. By lowering the barrier to entry mid-quarter, the Exchange aims to increase quoting activity during the remainder of the quarter, allowing firms that did not initially meet the 60% threshold to participate meaningfully in the Program. The Exchange believes this targeted adjustment will improve overall effectiveness of the Program while preserving the integrity and design of Incentives #2 and #3, which continues to operate as originally adopted. The Exchange is proposing to amend Incentive #1 by reducing the quoting threshold from 60% to 30% thereby allowing more Members to qualify for SIP revenue based on quoting activity at the NBBO in LIP Enhanced Securities. Through the amendments to Incentive #1 of the Program, the Exchange seeks to provide improved liquidity for all market participants through narrower bid-ask spreads and increased depth of liquidity in LIP Enhanced Securities. <HD SOURCE="HD3">(b) Statutory Basis</HD> The Exchange believes that its proposal is consistent with Section 6(b) of the Act, <SU>9</SU> <FTREF/> in general, and furthers the objectives of Section 6(b)(4) of the Act, <SU>10</SU> <FTREF/> in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among all of its Members and issuers and other persons using its facilities; Section 6(b)(5) of the Act, <SU>11</SU> <FTREF/> which requires, among other things, that the rules of the Exchange be designed to promote just and equitable pri ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 19k characters. 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