Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Enhance the Designated Liquidity Provider Program and Add a New Market Quality Supporter Program

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-104444; File No. SR-NASDAQ-2025-102]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Enhance the Designated Liquidity Provider Program and Add a New Market Quality Supporter Program</SUBJECT> <DATE>December 18, 2025.</DATE> Pursuant to Section 19(b)(1) of 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 December 11, 2025, 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. <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 proposes to (i) enhance the Designated Liquidity Provider (as defined below) program in Equity 7, Section 114(f), and (ii) add a new Market Quality Supporter (as defined below) program in Equity 7, Section 114(g). The text of the proposed rule change is available on the Exchange's website at <E T="03">https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings,</E> and at the principal office of the Exchange. <HD SOURCE="HD1">II. Self-Regulatory Organization's Statement of 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 Exchange 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> The purpose of the proposed rule change is to (i) enhance the Designated Liquidity Provider  <SU>3</SU> <FTREF/> (“DLP”) program in Equity 7, Section 114(f), and (ii) add a new Market Quality Supporter  <SU>4</SU> <FTREF/> (“MQS”) program in Equity 7, Section 114(g). <FTNT> <SU>3</SU>  A “Designated Liquidity Provider” or “DLP” is a registered Nasdaq market maker for a Qualified Security that has committed to maintain minimum performance standards. A DLP shall be selected by Nasdaq based on factors including, but not limited to, experience with making markets in exchange-traded products, adequacy of capital, willingness to promote Nasdaq as a marketplace, issuer preference, operational capacity, support personnel, and history of adherence to Nasdaq rules and securities laws. Nasdaq may limit the number of DLPs in a security, or modify a previously established limit, upon prior written notice to members. <E T="03">See</E> Equity 7, Section 114(f)(2). </FTNT> <FTNT> <SU>4</SU>  As set out in proposed paragraph (g)(2) of Equity 7, Section 114, a “Market Quality Supporter” or “MQS” has committed to maintain minimum performance standards in Low Volume ETPs. An MQS shall be selected by Nasdaq based on factors including, but not limited to, experience with making markets in exchange-traded products, adequacy of capital, willingness to promote Nasdaq as a marketplace, issuer preference, operational capacity, support personnel, and history of adherence to Nasdaq rules and securities laws. </FTNT> Together, these proposed changes are intended to create a more scalable, targeted, and effective market quality support structure for Nasdaq-listed exchange-traded products (“ETPs”). The Exchange initially filed the proposed pricing changes on December 1, 2025 (SR-NASDAQ-2025-097). On December 11, 2025, the Exchange withdrew that filing and submitted this filing. <HD SOURCE="HD3">Background</HD> Pursuant to Equity 7, Section 114(f), the Exchange currently maintains a DLP program that is designed to enhance liquidity and market quality in Nasdaq-listed ETPs by providing incentives to the DLP for a Qualified Security. <SU>5</SU> <FTREF/> The DLP program provides tiered rebates to qualifying DLPs based on a combination of performance criteria ( <E T="03">i.e.,</E> market quality metrics or “MQM”) and trading activity based on average daily volume (“ADV”) in the DLP's assigned ETP. The MQMs are set out in paragraph (f)(4) of Equity 7, Section 114, and measure:  <SU>6</SU> <FTREF/> (1) percentage of time at the national best bid (best offer) (“NBBO”), (2) percentage of time within 5 basis points of NBBO, (3) average notional depth within specified basis points of the NBBO, (4) average spread, <SU>7</SU> <FTREF/> and (5) auction quality. <SU>8</SU> <FTREF/> Primary DLPs may qualify for either a standard DLP rebate by meeting at least 4 of 5 standard MQMs in the assigned ETP or an enhanced DLP rebate by meeting all 5 enhanced MQMs, as specified in Equity 7, Section 114(f)(4). As set out in Section 114(f)(5), a Primary DLP that satisfies the MQMs in Section 114(f)(4) will be eligible to receive the rebates provided in paragraph (A) of Section 114(f)(5) in each of its assigned ETPs for which it qualified. For ETPs with higher ADV ( <E T="03">i.e.,</E> Tiers 1 and 2), eligible Primary DLPs receive the standard or enhanced rebate for which they qualified for each displayed share that adds liquidity in the ETP. For lower ADV ETPs ( <E T="03">i.e.,</E> Tiers 3-5), the Primary DLP receives fixed monthly payments for their standard or enhanced rebates, as applicable, which are in addition to any other rebate the Primary DLP is eligible for under Equity 7, Sections 114 and 118. Specifically, Nasdaq currently pays qualifying Primary DLPs in accordance with the following rebate schedule in Section 114(f)(5)(A): <FTNT> <SU>5</SU>  Under this program, a security may be designated as a “Qualified Security” if it (1) is an ETP listed on Nasdaq pursuant to Rules 5704, 5705, 5710, 5711, 5713, 5715, 5720, 5735, 5745, 5750 or 5760, and (2) has at least one DLP. <E T="03">See</E> Equity 7, Section 114(f)(1). </FTNT> <FTNT> <SU>6</SU>  These MQMs are measured on average in the DLP's assigned ETP during regular market hours, except for auction quality requirements that are measured each auction against the metrics. <E T="03">See</E> Equity 7, Section 114(f)(4). </FTNT> <FTNT> <SU>7</SU>  Average spread is the time weighted average spread in basis points when the DLP has a two-sided quote. </FTNT> <FTNT> <SU>8</SU>  Auction quality is measured by auction price deviation from first reference price after 30 seconds before the market open (Opening) and 120 before the market close (Closing). </FTNT> <GPOTABLE COLS="4" OPTS="L2,nj,tp0,i1" CDEF="xs60,r100,xs117,xs117"> <TTITLE> </TTITLE> <CHED H="1">Tiers</CHED> <CHED H="1">ADV</CHED> <CHED H="1">Standard rebate</CHED> <CHED H="1">Enhanced rebate</CHED> <ROW> <ENT I="01">Tier 1</ENT> <ENT>ETP with monthly ADV greater than 1 million in the prior month</ENT> <ENT>$0.0034 per executed share</ENT> <ENT>$0.0036 per executed share.</ENT> </ROW> <ROW> <ENT I="01">Tier 2</ENT> <ENT>ETP with monthly ADV between 250,001 and 1 million in the prior month</ENT> <ENT>$0.0040 per executed share</ENT> <ENT>$0.0042 per executed share.</ENT> </ROW> <ROW> <ENT I="01">Tier 3</ENT> <ENT>ETP with monthly ADV between 150,001 and 250,000 in the prior month</ENT> <ENT>$200 per month</ENT> <ENT>$350 per month.</ENT> </ROW> <ROW> <ENT I="01">Tier 4</ENT> <ENT>ETP with monthly ADV between 50,001 and 150,000 in the prior month</ENT> <ENT>$225 per month</ENT> <ENT>$450 per month.</ENT> </ROW> <ROW> <ENT I="01">Tier 5</ENT> <ENT>ETP with monthly ADV less than 50,001 in the prior month</ENT> <ENT>$300 per month</ENT> <ENT>$500 per month.</ENT> </ROW> </GPOTABLE> Further, if two DLPs are assigned to a Nasdaq-listed ETP, one may be designated as the Secondary DLP, which may receive rebates if it meets 2 of the enhanced MQMs in Section 114(f)(4) (excluding the auction quality MQM). <SU>9</SU> <FTREF/> Section 114(f)(5)(A) sets forth the rebate schedule for Secondary DLPs. For ETPs with higher ADV ( <E T="03">i.e.,</E> Tiers 1 and 2), eligible Secondary DLPs receive an additional $0.0003 per executed share that is in addition to any other rebate the Secondary DLP is eligible for under Equity 7, Sections 114 and 118. For ETPs with lower ADV ( <E T="03">i.e.,</E> Tiers 3-5), eligible Secondary DLPs receive an additional $150 per month that is in addition to any other rebate the Secondary DLP is eligible for under Equity 7, Sections 114 and 118. <FTNT> <SU>9</SU>  The Secondary DLP is determined by using the same factors for DLPs in Section 114(f)(2), including, but not limited to, experience with making markets in exchange-traded products, adequacy of capital, willingness to promote Nasdaq as a marketplace, issuer preference, operational capacity, support personnel, and history of adherence to Nasdaq rules and securities laws. </FTNT> Lastly, the DLP program also has an additional Tape C ETP incentive for Primary DLPs based on their quoting performance across their ETP assignments. As set forth in Section 114(f)(4), the Exchange currently requires that the average time the Primary DLP is at the NBBO for each assigned ETP averages at least 20%, and the average liquidity provided by the Primary DLP for each assigned ETP averages at least 5% of the liquidity provided on Nasdaq in t ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 66k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━