Nasdaq Updates Rules for Upcoming Technology Migration
Published Date: 5/21/2026
Notice
Summary
Nasdaq is updating its rules for the Nasdaq Options Market to support a big technology upgrade. This affects traders, market makers, and anyone using NOM’s systems, with changes to how orders, quotes, and risk protections work. The new rules take effect immediately, aiming to keep trading smooth and safe during the tech switch—no extra costs announced.
Analyzed Economic Effects
7 provisions identified: 2 benefits, 1 costs, 4 mixed.
New Lead Market Maker Program
The Exchange will permit a Lead Market Maker (LMM) for each options class, with only one LMM per class. Applicants must submit background, clearing arrangements, and capital information and must report material capital changes in writing within two business days after the change.
Tough Quoting Duties for Market Makers
Lead Market Makers must provide two-sided quotations in 90% of the cumulative number of seconds their assigned options series are open for trading; Market Makers must provide two-sided quotations in 60% of those seconds. Series with expirations of nine months (equities/ETFs) or twelve months (indexes) and certain adjusted series are excluded, and the Exchange may evaluate compliance monthly.
Market Makers Barred From Reserve Orders
The Exchange will prohibit Market Makers from entering Reserve Orders, which contain both a displayed portion and a non-displayed portion, in both appointed and non-appointed classes. Reserve Orders will remain available to other participant types but not Market Makers.
NOM Keeps Price Improving Orders
NOM will continue to offer Price Improving Orders, which may be entered in increments smaller than the minimum price variation and as small as $0.01. Price Improving Orders that are displayed will be shown at the minimum price variation and rounded (sells rounded up, buys rounded down).
LMM Allocation Priority and Small-Order Entitlement
An LMM will receive a priority allocation equal to the greater of its Size Pro-Rata or (i) 50% of remaining interest if one other Market Maker is at that price, (ii) 40% if two other Market Makers are present, or (iii) 30% if more than two are present. The LMM also may be entitled to orders of 5 contracts or fewer under certain conditions, and the Exchange will quarterly reduce the size of orders included in this entitlement if such LMM-allocated small orders exceed 40% of exchange volume.
No More Sub-Penny Quotes
After the technology migration, quotes submitted in sub-penny increments will be rejected and quotes will be displayed at the nearest valid minimum price variation. The migration (Re-Platform) is scheduled to commence on July 27, 2026.
QUO Protocol Now Accepts Two-Sided Orders
The QUO protocol will no longer treat orders as quotes and will permit two-sided orders to be entered, making it identical to the OTTO protocol used at certain Nasdaq-affiliated options exchanges. This change will be part of the technology migration.
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