Notice2025-13735
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule To Clarify the Application of Its Certification Logical Port Fees
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Published
July 22, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 138 (Tuesday, July 22, 2025)</title>
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[Federal Register Volume 90, Number 138 (Tuesday, July 22, 2025)]
[Notices]
[Pages 34540-34542]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13735]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103494; File No. SR-C2-2025-015]
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule To Clarify the Application of Its Certification
Logical Port Fees
July 17, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 8, 2025, Cboe C2 Exchange, Inc. (the ``Exchange'' or
``C2'') 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 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 C2 Exchange, Inc. (the ``Exchange'' or ``C2'' or ``C2
Options'') is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend its Fee Schedule to
clarify its fees for Certification Logical Port fees. 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://markets.cboe.com/us/options/regulation/rule_filings/ctwo/">http://markets.cboe.com/us/options/regulation/rule_filings/ctwo/</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 to clarify its
fees for Certification Logical Port fees.\3\
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\3\ The Exchange initially filed this proposed rule change on
May 31, 2024 for June 3, 2024 effectiveness (SR-C2-2024-007). On
June 13, 2024, the Exchange withdrew that filing and submitted SR-
C2-2024-011. On June 25, 2024, the Commission rejected SR-C2-2024-
011 due to a formatting oversight (i.e., an inadvertent use of
superfluous bullet point) in the Exhibit 5. On July 8, 2025 the
Exchange resubmitted this filing.
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By way of background, the Exchange offers a variety of logical
ports, which provide TPHs and non-TPHs with the ability within the
Exchange's System to accomplish a specific function through a
connection, such as order entry, data receipt or access to information.
Specifically, the Exchange offers Logical Ports,\4\ Purge Ports,\5\
Multicast PITCH GRP Ports and Multicast PITCH Spin Server Ports.\6\ For
each type of the aforementioned logical ports that is used in the
production environment, the Exchange also offers corresponding ports
which provide Trading Permit Holders (``TPHs'') and non-TPHs access to
the Exchange's certification environment to test proprietary systems
and applications (i.e., ``Certification Logical Ports''). The
certification environment facilitates testing using replicas of the
Exchange's production environment process configurations which provide
for a robust and realistic testing experience. For example, the
certification environment allows unlimited firm-level testing of order
types, order entry, order management, order throughput,
acknowledgements, risk settings, mass cancelations, and purge requests.
The Exchange currently provides free of charge one Certification
Logical Port per port type offered in the production environment (i.e.,
Logical Ports, Purge, Multicast PITCH GRP, and Multicast PITCH Spin
Server Ports) and a monthly fee of $250 per Certification Logical Port
for any additional Certification Logical Ports.\7\
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\4\ Logical Ports include FIX and BOE ports (used for order
entry), drop logical port (which grants users the ability to receive
and/or send drop copies) and ports that are used for receipt of
certain market data feeds.
\5\ Purge Ports are dedicated ports that permit a TPH to
simultaneously cancel all or a subset of its orders in one or more
symbols across multiple logical ports by requesting the Exchange to
effect such cancellation.
\6\ Spin Ports and GRP Ports are used to request and receive a
retransmission of data from the Exchange's Multicast PITCH data
feeds.
\7\ For example, if a TPH maintains 3 FIX Certification Logical
Ports, 1 Purge Certification Logical Port, and 1 set of Multicast
PITCH Spin Server Certification Logical Port, the TPH will be
assessed $500 per month for Certification Logical Port Fees (i.e., 1
FIX, 1 Purge and 1 set of Multicast PITCH Spin Server Certification
Logical Ports x $0 and 2 FIX Certification Logical Ports x $250).
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The Exchange proposes to make clear in the notes section under the
Logical Port Fees section of the Fees Schedule that the Certification
Logical Port fees only apply if the corresponding logical port type is
also in the production environment. For example, if the Exchange
intends to adopt a new port type that has not yet been launched in the
live production environment, any certification port for that port type
will be free until such time that the proposed new port is in the
production environment. Once any new logical port type is in the live
production environment, TPHs and Non-TPHs will only be entitled to one
free certification logical port for that port type, and any additional
certifications ports of that type will be assessed the regular monthly
$250 per port charge.
The Exchange notes that purchasing additional Certification Logical
Ports continues to be voluntary and not required in order to
participate in the production environment, including live production
trading on the Exchange. Additionally, TPHs and non-TPHs are not
required to purchase any particular production logical port in order to
receive a corresponding Certification Logical Port free of charge.\8\
Further, the Exchange also notes that other exchanges similarly assess
fees related to their respective testing environments.\9\
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\8\ For example, a TPH may obtain a Certification Purge Port
free of charge, even if that TPH has not otherwise purchased a Purge
Port for the live production environment. Certification Logical
Ports are not automatically enabled, but rather must be proactively
requested by TPHs or Non-TPHs.
\9\ See e.g., Nasdaq Stock Market LLC, Equity 7, Pricing
Schedule, Section 130. See also MIAX Options Exchange Fee Schedule,
Section 4, Testing and Certification Fees.
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2. Statutory Basis
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.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ 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
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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 Section 6(b)(4) of the Act,\12\ which requires that
Exchange rules provide for the equitable allocation of reasonable dues,
fees, and other charges among its Members and other persons using its
facilities.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b)(4).
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As noted above, the Exchange's certification environment provides a
robust and realistic testing experience using a replica of the
Exchange's production environment process configurations. This
environment enables market participants to manage risk more effectively
through testing software development changes in certification prior to
implementing them in the live trading environment, thereby reducing the
likelihood of a potentially disruptive system failure in the live
trading environment, which has the potential to affect all market
participants. The Exchange believes this is especially true when
testing a new port type that has not yet launched in the production
environment. As such, the Exchange believes it's reasonable to only
assess the Certification Logical Port fee to ports that are also
available in the production environment as to not discourage the
testing of new ports ahead of any respective launch date. The Exchange
also believes applying the Certification Logical Port fee is reasonable
once such ports are available in the production environment because
while such ports will no longer be completely free, TPHs and non-TPHs
will continue to be entitled to receive free of charge one
Certification Logical Port for such port. The Exchange continues to
believe one Certification Logical Port per logical port type will be
sufficient for most TPHs or Non-TPHs and indeed anticipates that the
majority of users will not purchase additional Certification Logical
Ports. For those who wish to obtain additional Certification Logical
Ports based on their respective business needs, such as those wishing
to test across various diverse systems within their own infrastructure,
they are able to do so for a modest fee. Indeed, the decision to
purchase additional ports is optional and no market participant is
required or under any regulatory obligation to purchase excess
Certification Logical Ports in order to access the Exchange's
certification environment.\13\ Further, the Exchange has observed that
market participants that do choose to purchase additional Certification
Logical Ports maintain significantly fewer Certification Logical Ports
as compared to the corresponding logical ports they use in the
production in environment.
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\13\ Although many TPHs and Non-TPHs use Certification Logical
Ports on a daily basis, the Exchange notes frequency of use of
Certification Logical Ports varies by user and depends on their
respective business needs. To the extent a TPH or Non-TPH purchases
additional Certification Logical Ports and their needs later change,
or they determines they no longer wish to maintain excess
Certification Logical Ports, the TPH or Non-TPH is free to cancel
such ports for the following month(s).
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The Exchange believes the proposal to make clear that the
Certification Logical Port fee applies only to logical ports that are
in the production environment is equitable and not unfairly
discriminatory because it applies uniformly to all market participants
that choose to obtain additional Certification Logical Ports and all
market participants will have further clarity as to which certification
ports are subject to the current fee. The Exchange also believes the
proposed change is reasonable, equitable and not unfairly
discriminatory because it is designed to encourage market participants
to avail themselves of Certification Logical Ports for new port types
before they launch to become acclimated with the new connectivity
offering ahead of going live in the trading environment. The Exchange
believes the proposal to add this language to the notes section in the
Fees Schedule also provides clarity in the rules as to when the
Certification Logical Port fee applies and reduces potential confusion.
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 intramarket or intermarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act. The
Exchange does not believe that the proposed rule change will impose any
burden on intramarket competition because as the proposed change
applies uniformly to all market participants. Additionally, the
Exchange does not believe that the proposed fee creates an undue burden
on competition because the Exchange will continue to offer free of
charge one Certification Logical Port per each logical port type once
offered in the production environment. Also as discussed, the purchase
of additional ports is optional and based on the business needs of each
market participant. Moreover, such market participants will continue to
benefit from access to the certification environment, which the
Exchange believes provides a robust and realistic testing experience
via a replica of the production environment, which may be especially
critical during the time leading up to the launch of a new port type in
the production environment.
The Exchange does not believe that the proposed rule changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. Particularly,
the proposed change applies only to the Exchange's certification
environment. Additionally, the Exchange notes that it operates in a
highly competitive market. TPHs have numerous alternative venues that
they may participate on and direct their order flow, including 16 other
options exchanges, as well as a number of alternative trading systems
and other off-exchange venues, where competitive products are available
for trading. Indeed, participants can readily choose to send their
orders to other exchanges, and, additionally off-exchange venues, if
they deem overall fee levels at those other venues to be more
favorable. 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.'' \14\ 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
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dealers'. . . .''.\15\ 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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\14\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\15\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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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 \16\ and paragraph (f) of Rule 19b-4 \17\
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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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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#a8daddc4cd85cbc7c5c5cdc6dcdbe8dbcdcb86cfc7de"><span class="__cf_email__" data-cfemail="4032352c256d232f2d2d252e3433003325236e272f36">[email protected]</span></a>. Please include
file number SR-C2-2025-015 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-C2-2025-015. 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 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-C2-2025-015 and should be submitted on
or before August 12, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-13735 Filed 7-21-25; 8:45 am]
BILLING CODE 8011-01-P
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