Notice2025-10969
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule With Respect to Professional Orders Transacted on the Trading Floor in Certain Products and To Adopt a Floor Broker Sliding Scale Supplemental Rebate Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 17, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 115 (Tuesday, June 17, 2025)</title>
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[Federal Register Volume 90, Number 115 (Tuesday, June 17, 2025)]
[Notices]
[Pages 25725-25730]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-10969]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103230; File No. SR-CBOE-2025-040]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule With Respect to Professional Orders Transacted on the
Trading Floor in Certain Products and To Adopt a Floor Broker Sliding
Scale Supplemental Rebate Program
June 11, 2025.
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 June 2, 2025, Cboe Exchange, Inc. (``Exchange'' or ``Cboe Options'')
filed with the Securities and Exchange Commission (``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
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend its Fees Schedule with respect to Professional orders
transacted on the trading floor (i.e., manual) in Equity, ETF, and ETN
Options, Sector Indexes and All Other Index Products and to adopt a
Floor Broker Sliding Scale Supplemental Rebate Program. The text of the
proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx">http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx</a>), at the Exchange's Office of the
Secretary, 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 Exchange proposes to amend its Fees Schedule, effective June 2,
2025.
The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 18 options venues to which market participants
may direct their order flow. Based on publicly available information,
no single options exchange has more than 17% of the market share.\3\
Thus, in such a low-concentrated and highly competitive market, no
single options exchange possesses significant pricing power in the
execution of option order flow. The Exchange believes that the ever-
shifting market share among the exchanges from month to month
demonstrates that market participants can shift order flow or
discontinue to reduce use of certain categories of products in response
to fee changes. Accordingly, competitive forces constrain the
Exchange's transaction
[[Page 25726]]
fees, and market participants can readily trade on competing venues if
they deem pricing levels at those other venues to be more favorable. In
response to competitive pricing, the Exchange, like other options
exchanges, offers rebates and assesses fees for certain order types
executed on or routed through the Exchange.
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\3\ See Cboe Global Markets U.S. Options Monthly Market Volume
Summary (May 29, 2025), available at <a href="https://markets.cboe.com/us/options/market_statistics/">https://markets.cboe.com/us/options/market_statistics/</a>.
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The Exchange first proposes to decrease the fee for Professional
(capacity ``U'') orders transacted on the trading floor (i.e., manual)
in Equity, ETF, and ETN Options, and All Other Index Products (yielding
fee code ``WA''), as set forth in the Rate Table for All Products
Excluding Underlying Symbol List A.\4\ Currently, the Exchange assesses
a fee of $0.12 per contract for manual Professional orders in Equity,
ETF, and ETN Options and All Other Index Products which yield fee code
WA; the Exchange proposes to decrease the fee from $0.12 per contract,
to $0.05 per contract. The proposed rule change is in-line with, albeit
still lower than, similar fees that other options exchanges with
trading floors currently assess manual Professional transactions.\5\
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\4\ Underlying Symbol List A: OEX, XEO, RUT, RLG, RLV, RUI,
UKXM, SPX (includes SPXW), SPESG and VIX. See Exchange Fees
Schedule, Footnote 34.
\5\ See e.g., NYSE American Options Fee Schedule, Section I,
paragraph A (Rates for Options transactions), which assesses a fee
of $0.25 per contract for manual NYSE American Options Professional
Customer transactions; see also BOX Options Fee Schedule, Section
V(A), Manual Transaction Fees: Qualified Open Outcry Order (``QOO'')
and FLEX Open Outcry Orders (``FOO'') Order Fees, which assesses a
fee of $0.10 per contract for manual Professional Customer orders.
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Also in response to the competitive environment, the Exchange
offers various tiered incentive programs which provide Trading Permit
Holders (``TPHs'') opportunities to qualify for higher rebates or
reduced rates where certain volume criteria and thresholds are met.
Tiered pricing provides an incremental incentive for TPHs to strive for
higher tier levels, which provides increasingly higher benefits or
discounts for satisfying increasingly more stringent criteria. For
example, the Exchange currently offers, among other tiered volume
programs, a Floor Broker Sliding Scale Rebate Program, which offers
four tiers that provide rebates on a sliding scale \6\ for qualifying
orders (i.e., Non-Customer, Non-Strategy, Floor Broker orders) where a
TPH meets certain liquidity thresholds. The Program applies to all
products except for Underlying Symbol List A,\7\ Sector Indexes,\8\
DJX, CBTX, MBTX, MRUT, MXEA, MXEF, MXACW, MXUSA, MXWLD, NANOS, SPEQX,
XSP and FLEX Micros (``multiply-listed options''). The Program offers
two categories of rebates that correspond to each of the proposed
tiers; one that applies to Firm Facilitated orders (i.e., orders that
yield fee code FF) \9\ and another that applies to all other non-Firm
Facilitated orders (i.e., orders that do not yield fee code FF).
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\6\ The rebate offered under each tier is only applied to the
qualifying volume within that tier. In addition, the Exchange
calculates the average rebate for each type of rebate (Firm
Facilitated and Non-Firm Facilitated) based on the TPH's total
qualifying volume across all four tiers plus its qualifying baseline
volume (which corresponds to a rebate of $0.00). Each respective
average rebate is applied to the percentage of qualifying volume
that corresponds specifically to the type of order (Firm Facilitated
or Non-Firm Facilitated) volume and added together, which results in
a final average rebate. The final average rebate is then applied to
the TPH's total qualifying executions. This is consistent with the
manner in which the Exchange calculates rebates for other sliding
scale programs offered under the Fees Schedule.
\7\ See Cboe Options Fees Schedule, Footnote 34, which provides
that Underlying Symbol List A includes OEX, XEO, RUT, RLG, RLV, RUI,
UKXM, SPX (includes SPXW), SPESG and VIX.
\8\ See Cboe Options Fees Schedule, Footnote 47, which provides
that Sector Index underlying symbols include IXB, SIXC, IXE, IXI,
IXM, IXR, IXRE, IXT, IXU, IXV AND IXY, and corresponding option
symbols include SIXB, SIXC, SIXE, SIXI, SIXM, SIXR, SIXRE, SIXT,
SIXU, SIXV AND SIXY.
\9\ Orders that yield fee code FF are not assessed a charge. See
Cboe Options Fees Schedule, Fees and Associated Fee Codes, available
at: <a href="https://markets.cboe.com/us/options/membership/fee_schedule/cboe/">https://markets.cboe.com/us/options/membership/fee_schedule/cboe/</a>.
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The Exchange now proposes to adopt a Floor Broker Sliding Scale
Supplemental Rebate Program. Similar to the Floor Broker Sliding Scale
Program, the Floor Broker Sliding Scale Supplemental Rebate Program
(``Supplemental Rebate Program'') applies to all products except
Underlying Symbol List A,\10\ Sector Indexes,\11\ DJX, CBTX, MBTX,
MRUT, MXEA, MXEF, MXACW, MXUSA, MXWLD, NANOS, SPEQX, XSP and FLEX
Micros. Pursuant to the proposed Supplemental Rebate Program, the
Exchange will calculate rebates based on qualifying volumes under the
Supplemental Rebate Program, and eligible TPHs will receive the rebates
only on qualifying Non-Firm Facilitated orders processed through the
Floor Broker Sliding Scale Rebate Program (specifically, Non-Customer,
Non-Strategy Floor Broker orders that do not yield fee code FF). As
proposed, the Supplemental Rebate Program has four tiers, each with its
own criteria and corresponding rebate, as follows:
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\10\ See Cboe Options Fees Schedule, Footnote 34, which provides
that Underlying Symbol List A includes OEX, XEO, RUT, RLG, RLV, RUI,
UKXM, SPX (includes SPXW), SPESG and VIX.
\11\ See Cboe Options Fees Schedule, Footnote 47, which provides
that Sector Index underlying symbols include IXB, SIXC, IXE, IXI,
IXM, IXR, IXRE, IXT, IXU, IXV AND IXY, and corresponding option
symbols include SIXB, SIXC, SIXE, SIXI, SIXM, SIXR, SIXRE, SIXT,
SIXU, SIXV AND SIXY.
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<bullet> Tier 1 provides no additional rebate for all qualifying
non-Firm Facilitated orders (i.e., Non-Customer, Non-Strategy Floor
Broker orders that do not yield fee code FF), where a TPH has FLEX
Floor Broker Volume (in applicable products) that is greater than zero
contracts but less than 2,000,000 contracts;
<bullet> Tier 2 provides an additional rebate of $0.01 per contract
for all qualifying non-Firm Facilitated orders, where a TPH has FLEX
Floor Broker Volume (in applicable products) that is greater than or
equal to 2,000,000 and less than 6,000,000 contracts;
<bullet> Tier 3 provides an additional rebate of $0.02 per contract
for all qualifying non-Firm Facilitated orders, where a TPH has FLEX
Floor Broker Volume (in applicable products) that is greater than or
equal to 6,000,000 and less than 10,000,000 contracts; and
<bullet> Tier 4 provides an additional rebate of $0.03 per contract
for all qualifying non-Firm Facilitated orders, where a TPH has FLEX
Floor Broker Volume (in applicable products) that is greater than or
equal to 10,000,000 contracts.
The proposed rule change makes it clear that the Exchange will
aggregate a TPH's volume with the volume of its affiliates
(``affiliate'' defined as having at least 75% common ownership between
the two entities as reflected on each entity's Form BD, Schedule A) for
the purposes of calculating Volume each month. Additionally, the
proposed rule change appends Footnote 33 to the Supplemental Rebate
Program and amends Footnote 33 to exclude FLEX Micros from the program
(similar to the Floor Broker Sliding Scale Rebate Program).\12\
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\12\ The proposed rule change also appends: footnote 39 to the
Program, which provides that each Trading Permit Holder is
responsible for notifying the Exchange of all of its affiliates and
is required to inform the Exchange immediately of any event that
causes an entity to cease to be an affiliate in a form and manner to
be determined by the Exchange. An ``affiliate'' is defined as having
at least 75% common ownership between two entities as reflected on
each entity's Form BD, Schedule A; and footnote 41 to the Program,
which provides, in relevant part, that Position Compression Cross
(``PCC'') transactions will not count towards any volume thresholds.
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The proposed Program is designed to encourage Floor Brokers to
increase their order flow in all multiply-listed FLEX equity and ETP
options to the Exchange's trading floor to meet the proposed tier
criteria in order to receive the proposed corresponding rebate for
their qualifying orders. The Exchange believes that incentivizing
increased liquidity to its trading floor allows the
[[Page 25727]]
Exchange to maintain a robust hybrid trading environment that serves to
support price discovery and increased execution opportunities in open
outcry, to the benefit of all market participants.
2. Statutory Basic
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\13\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \14\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \15\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes the proposed rule
change is consistent with Section 6(b)(4) of the Act,\16\ which
requires that Exchange rules provide for the equitable allocation of
reasonable dues, fees, and other charges among its TPHs and other
persons using its facilities.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ Id.
\16\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that its proposed change to decrease the fee
assessed for manual Professional orders yielding fee code ``WA'' is
consistent with Section 6(b)(4) of the Act in that the proposed rule
change is reasonable, equitable and not unfairly discriminatory. As
noted above, the Exchange operates in highly competitive market. The
Exchange is only one of several options venues to which market
participants may direct their order flow, and it represents a small
percentage of the overall market. The Exchange believes that the
proposed fee is reasonable, equitable, and not unfairly discriminatory
in that competing options exchanges offer similar fees in connection
with Professional transactions in open outcry, as the Exchange now
proposes.
The Exchange believes that the proposed rule change to decrease the
fee assessed for Professional manual orders in Equity, ETF, and ETN
Options and All Other Index Products yielding fee code ``WA'' is
reasonable in that the proposed change reflects a competitive pricing
structure designed to incentivize market participants to direct their
order flow to the Exchange's trading floor, which the Exchange believes
would enhance market quality to the benefit of all TPHs. The Exchange
believes that the proposed rule change is equitable and not unfairly
discriminatory because the proposed fee will apply automatically and
uniformly to all Professional orders transacted in open outcry (i.e.,
manual) which yield fee code ``WA''. Additionally, the proposed rule
change is reasonable, equitable and not unfairly discriminatory
because, as noted above, it is in-line with, albeit lower than, similar
fees that other options exchanges with trading floors currently assess
manual Professional transactions.\17\
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\17\ See e.g., NYSE American Options Fee Schedule, Section I,
paragraph A (Rates for Options transactions), which assesses a fee
of $0.25 per contract for manual NYSE American Options Professional
Customer transactions; see also BOX Options Fee Schedule, Section
V(A), Manual Transaction Fees: Qualified Open Outcry Order (``QOO'')
and FLEX Open Outcry Orders (``FOO'') Order Fees, which assesses a
fee of $0.10 per contract for manual Professional Customer orders.
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Similarly, the Exchange believes that its proposed change to adopt
the Floor Broker Sliding Scale Supplement Rebate Program is consistent
with Section 6(b)(4) of the Act in that the proposed rule change is
reasonable, equitable and not unfairly discriminatory. As noted above,
the proposed change reflects a competitive pricing structure designed
to incentivize market participants to direct their order flow to the
Exchange's trading floor, which the Exchange believes would enhance
market quality to the benefit of all TPHs. The Exchange notes that
volume-based incentives and discounts have been widely adopted by
exchanges,\18\ including the Exchange,\19\ and are reasonable,
equitable and non-discriminatory because they are open to all TPHs on
an equal basis and provide additional benefits or discounts that are
reasonably related to (i) the value to an exchange's market quality and
(ii) associated higher levels of market activity, such as higher levels
of liquidity provision and/or growth patterns. Additionally, as noted
above, the Exchange operates in a highly competitive market. The
Exchange is only one of several options venues to which market
participants may direct their order flow, and it represents a small
percentage of the overall market. Competing options exchanges offer
similar tiered pricing structures to that of the Exchange, including
incentive programs that offer rebates or rates that apply based upon
TPHs achieving certain volume threshold.
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\18\ See NYSE Arca Options Fee Schedule, Manual Billable Rebate
Program, which provides participating Floor Brokers that achieve
more than 500,000 manual billable sides in a month an additional
rebate of ($0.02) per billable side; and NYSE American Options Fee
Schedule, E.1, Floor Broker Fixed Cost Prepayment Incentive Program
(the ``FB Prepay Program''), which offers participating floor
brokers rebates for achieving billable manual volume of certain
amounts (the ``Manual Billable Rebate Program'').
\19\ See Cboe Options Fees Schedule, Liquidity Provider Sliding
Scale, Liquidity Provider Sliding Scale Adjustment Table, Volume
Incentive Program, and Cboe Options Clearing Trading Permit Holder
Proprietary Products Sliding Scale, each of which provides for a
scale of rebates or reduced fees applicable to certain orders for
various types of TPHs that meet certain volume thresholds under each
program.
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In particular, the Exchange believes that the proposed Supplemental
Rebate Program is reasonable and equitable because it is designed to
incentivize increased order flow in multiply-listed FLEX options to the
Exchange's trading floor. As noted above, the Exchange believes that
incentivizing increased liquidity to its trading floor allows the
Exchange to maintain a robust hybrid trading environment that serves to
support price discovery and increased execution opportunities in open
outcry, to the benefit of all market participants.
The Exchange believes that it is reasonable to apply the proposed
additional rebates under the Supplemental Rebate Program to Non-
Customer order flow as the Exchange recognizes that market participants
that submit Non-Customer order flow provide different, yet key,
liquidity to the Exchange's trading floor. For instance, Market-Maker
activity, including Non-TPH Market-Makers (``M'' and ``N'' capacities),
facilitates tighter spreads and signals additional corresponding
increase in order flow from other market participants. Increased
overall order flow benefits all investors by deepening the Exchange's
liquidity pool, potentially providing even greater execution incentives
and opportunities. Clearing TPHs (``F'' capacity), Non-Clearing TPH
Affiliates (``L'' capacity), Broker-Dealers (``B'' capacity), and Joint
Back-Offices (``J'' capacity) can be an important source of liquidity
as they specifically facilitate the execution of customer orders,
which, in turn, adds transparency, promotes price discovery and serves
to attract other participants, thus providing
[[Page 25728]]
continuous liquidity to the Exchange. Also, Professionals (``U''
capacity) generally provide a greater competitive stream of order flow
(by definition, more than 390 orders in listed options per day on
average during a calendar month), thus, providing increased competitive
execution and improved pricing opportunities for all market
participants. The Exchange further believes that applying the
additional rebates under the proposed Supplemental Rebate Program to
Non-Strategy, multiply-listed order flow is reasonable as it is
designed to compete with other option exchanges' for floor broker non-
strategy order flow as other options exchanges' have fee schedules in
place that offer similar incentives to their floor brokers that submit
non-strategy orders for execution in open outcry.\20\
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\20\ See BOX Options Fee Schedule, Section V(C), QOO and FOO
Order Rebate, which offers a rebate for floor broker orders of $0.10
or $0.05 per contract (depending on the capacity) and does not apply
to Strategy QOO or FOO Orders; see also NYSE Arca Options Fee
Schedule, Manual Billable Rebate Program, which provides all Floor
Brokers that participate in the FB Prepay Program a rebate on manual
billable volume of ($0.08) per billable side, provides participating
Floor Brokers that achieve more than 500,000 manual billable sides
in a month an additional rebate of ($0.02) per billable side, and
excludes any volume calculated to achieve the Limit of Fees on
Options Strategy Executions (``Strategy Cap''); and NYSE American
Options Fee Schedule, E.1, Floor Broker Fixed Cost Prepayment
Incentive Program (the ``FB Prepay Program''), which offers
participating floor brokers rebates by achieving billable manual
volume of certain amounts (the ``Manual Billable Rebate Program''),
and does not apply to volume executed as part of Strategy Execution
Fee Cap (that is, strategy orders).
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The Exchange believes that the proposed rebate amounts are
reasonable as they are comparable to the rebates or reduced rates
offered under similar volume-based incentive programs offered in the
Fees Schedule.\21\ For example, the Liquidity Provider Sliding Scale
provides a reduced fee of between $0.23 to $0.03 per contract for
Market-Maker orders (which are assessed a standard rate of $0.23 per
contract) where a Market-Maker meets certain volume thresholds, a
reduction of which the Exchange believes is comparable to the proposed
rebates that range from $0.01 to $0.03. The Exchange also believes that
it is reasonable to offer additional rebates for Non-Firm Facilitated
order flow than for Firm Facilitated order flow (i.e., where the same
executing broker and clearing firm are on both sides of the
transaction) because it wishes to further incentivize order flow that
attracts contra-side interest from a wider variety of market
participants, which may further contribute towards a robust, well-
balance market ecosystem. Further, Firm Facilitated orders (i.e.,
orders yielding fee code FF) are not currently charged any fees, as
compared to Non-Firm Facilitated orders, which are assessed fees. The
Exchange also notes that excluding Underlying Symbol List A, Sector
Indexes, DJX, CBTX, MBTX, MRUT, MXEA, MXEF, MXACW, MXUSA, MXWLD, NANOS,
SPEQX, XSP and FLEX Micros from the proposed program (thus,
incentivizing increased order flow in multiply-listed options), as well
as aggregating a TPH's volume with the volume of its affiliates for the
purposes of calculating Volume each month, is consistent with the
manner in which other incentive programs under the Fees Schedule
exclude the same products \22\ and/or aggregate volume and credits.\23\
Additionally, the Exchange notes that Floor Brokers already have an
opportunity to receive discounts on their fees for certain proprietary
products under the Floor Brokerage Fees Discount Scale.\24\
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\21\ See Cboe Options Fees Schedule, Liquidity Provider Sliding
Scale, Liquidity Provider Sliding Scale Adjustment Table, Volume
Incentive Program, and Cboe Options Clearing Trading Permit Holder
Proprietary Products Sliding Scale, each of which provides for a
scale of rebates or reduced fees applicable to certain orders for
various types of TPHs that meet certain volume thresholds under each
program.
\22\ See e.g., Cboe Options Fees Schedule, Liquidity Provider
Sliding Scale, Break-Up Credits table, Order Routing Subsidy
Program, and Complex Order Routing Subsidy Program.
\23\ See e.g., Cboe Options Fees Schedule, Volume Incentive
Program (VIP), Affiliate Volume Plan, QCC Rate Table, and Market-
Maker EAP Appointments Sliding Scale.
\24\ See Cboe Options Fees Schedule, Floor Brokerage Fees
Discount Scale.
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The Exchange believes that the proposed Supplemental Rebate Program
represents an equitable allocation of fees and is not unfairly
discriminatory because the Supplemental Rebate Program, as proposed,
will apply uniformly to all qualifying TPHs, in that all TPHs that
submit the requisite order flow (i.e., FLEX Floor Broker Volume in
multiply-listed options) have the opportunity to compete for and
achieve the proposed tiers. The proposed additional rebates will apply
automatically and uniformly to all TPHs that achieve the proposed
corresponding criteria.
The Exchange believes that the application of additional rebates
received under the proposed Supplemental Rebate Program to TPHs that
submit Non-Customer order flow is equitable and not unfairly
discriminatory because such market participants provide unique and
important liquidity to the Exchange's trading floor. Such order flow,
as described above, may result in overall tighter spreads, attracting
order flow from other market participants, more execution opportunities
at improved prices, and/or deeper levels of liquidity, which may
ultimately improve price transparency, provide continuous trading
opportunities and enhance market quality on the Exchange, to the
benefit of all market participants. The Exchange also notes that the
Fees Schedule currently provides for many other incentive opportunities
and rebate or reduced fee opportunities for Customer orders.\25\
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\25\ See generally Cboe Options Fee Schedule, which generally
assesses lower transaction fees for Customer orders as compared to
other capacities; see also Cboe Options Fee Schedule, Customer Large
Trade Discount, Break-Up Credits table, Select Customer Options
Reduction (``SCORe'') Program, and QCC Rate Table.
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In addition to this, while the Exchange has no way of knowing
whether this proposed rule change would definitively result in any
particular TPH qualifying for the proposed tiers, the Exchange believes
that at least nine TPHs will reasonably be able to compete for and
achieve the proposed criteria across the four proposed tiers by
submitting the requisite volume. The Exchange notes, however, that the
proposed tiers are open to any TPH that submits the requisite order
flow to satisfy the tiers' criteria. The Exchange also does not believe
the proposed tiers will adversely impact any TPH's pricing or ability
to qualify for other fee programs. Rather, should a TPH not meet the
criteria in any of the proposed tiers, the TPH will merely not receive
the corresponding rebate.
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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed changes to
increase the fee assessed for manual Professional orders yielding fee
code ``WA'' will apply uniformly to all applicable market participants.
Further, the Supplemental Rebate Program, as proposed, will apply
uniformly to all qualifying TPHs, in that all TPHs that submit the
requisite order flow (i.e., FLEX Floor Broker Volume in multiply-listed
options) have the opportunity to compete for and achieve the proposed
tiers, and any additional rebates achieved under the Supplemental
Rebate Program will apply equally to all Non-Firm Facilitated, Non-
Customer, Non-Strategy, Floor Broker orders in
[[Page 25729]]
multiply-listed options. The Exchange does not believe that the
application of the proposed rebates to Non-Customer orders will impose
any significant burden on intramarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act because the
Exchange recognizes that Non-Customer participation in the markets is
essential to a robust hybrid market ecosystem as each contributes
unique and important liquidity to the Exchange's trading floor, as
described above. Such Non-Customer order flow may result in overall
tighter spreads, attracting order flow from other market participants,
more execution opportunities at improved prices, and/or deeper levels
of liquidity, which may ultimately improve price transparency, provide
continuous trading opportunities and enhance market quality on the
Exchange, to the benefit of all market participants. The Exchange again
notes that the Fees Schedule currently provides for many other
incentive opportunities and rebate or reduced fee opportunities for
Customer orders.\26\
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\26\ See generally Cboe Options Fee Schedule, which generally
assesses lower transaction fees for Customer orders as compared to
other capacities; see also Cboe Options Fee Schedule, Customer Large
Trade Discount, Break-Up Credits table, Select Customer Options
Reduction (``SCORe'') Program, and QCC Rate Table.
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Next, the Exchange believes the proposed rule change does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As noted above,
the fee change for manual Professional orders yielding fee code ``WA''
is in-line with similar fees that other options exchanges with trading
floors currently assess manual market maker transactions,\27\ and the
competing options exchanges have similar incentive programs and
discount opportunities in place in connection with floor broker order
flow.\28\ As previously discussed, the Exchange operates in a highly
competitive market. TPHs have numerous alternative venues they may
participate on and direct their order flow, including 17 other options
exchanges. Additionally, the Exchange represents a small percentage of
the overall market. Based on publicly available information, no single
options exchange has more than 17% of the market share. Therefore, no
exchange possesses significant pricing power in the execution of order
flow. Indeed, participants can readily choose to send their orders to
other exchanges if they deem fee levels at those other venues to be
more favorable. As noted above, the Exchange believes that the proposed
fee changes are comparable to that of other exchanges offering similar
functionality. Moreover, the Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, 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.'' The fact that
this market is competitive has also long been recognized by the courts.
In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit
stated as follows: ``[n]o one disputes that competition for order flow
is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers 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.' . . .''. Accordingly, the Exchange
does not believe its proposed fee change imposes any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
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\27\ See e.g., NYSE American Options Fee Schedule, Section I,
paragraph A (Rates for Options transactions), which assesses a fee
of $0.25 per contract for manual NYSE American Options Professional
Customer transactions; see also BOX Options Fee Schedule, Section
V(A), Manual Transaction Fees: Qualified Open Outcry Order (``QOO'')
and FLEX Open Outcry Orders (``FOO'') Order Fees, which assesses a
fee of $0.10 per contract for manual Professional Customer orders.
\28\ See BOX Options Fee Schedule, Section V(C), QOO and FOO
Order Rebate, which offers a rebate for floor broker orders of $0.10
or $0.05 per contract (depending on the capacity) and does not apply
to Strategy QOO or FOO Orders; see also NYSE Arca Options Fee
Schedule, Manual Billable Rebate Program, which provides all Floor
Brokers that participate in the FB Prepay Program a rebate on manual
billable volume of ($0.08) per billable side, provides participating
Floor Brokers that achieve more than 500,000 manual billable sides
in a month an additional rebate of ($0.02) per billable side, and
excludes any volume calculated to achieve the Limit of Fees on
Options Strategy Executions (``Strategy Cap''); and NYSE American
Options Fee Schedule, E.1, Floor Broker Fixed Cost Prepayment
Incentive Program (the ``FB Prepay Program''), which offers
participating floor brokers rebates by achieving billable manual
volume of certain amounts (the ``Manual Billable Rebate Program''),
and does not apply to volume executed as part of Strategy Execution
Fee Cap (that is, strategy orders).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
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) of the Act \29\ and paragraph (f) of Rule 19b-4 \30\
thereunder. 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 necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 17 CFR 240.19b-4(f).
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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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#8ffdfae3eaa2ece0e2e2eae1fbfccffceaeca1e8e0f9"><span class="__cf_email__" data-cfemail="e496918881c9878b8989818a9097a4978187ca838b92">[email protected]</span></a>. Please include
file number SR-CBOE-2025-040 on the subject line.
Paper Comments
<bullet> 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-CBOE-2025-040. 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 (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). 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
[[Page 25730]]
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 a.m. and 3 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-CBOE-2025-040 and should be submitted on or before July 8, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-10969 Filed 6-16-25; 8:45 am]
BILLING CODE 8011-01-P
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