Notice2025-17925
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.23 To Explicitly Provide That the Exchange May Extend the Quote-Only Period for an Initial Public Offering Auction Where a Derivative Security Fails To Meet the Exchange's Listing Qualification Requirements as Set Forth in Exchange Rule 14.11
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
September 17, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 178 (Wednesday, September 17, 2025)</title>
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[Federal Register Volume 90, Number 178 (Wednesday, September 17, 2025)]
[Notices]
[Pages 44859-44861]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-17925]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103955; File No. SR-CboeBZX2025-125]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 11.23 To Explicitly Provide That the Exchange May Extend the
Quote-Only Period for an Initial Public Offering Auction Where a
Derivative Security Fails To Meet the Exchange's Listing Qualification
Requirements as Set Forth in Exchange Rule 14.11
September 12, 2025.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on September 3, 2025 Cboe BZX Exchange, Inc. (the ``Exchange'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change as described in Items I and II below, which
Items have been prepared by the Exchange. The Exchange filed the
proposal as a ``non-controversial'' proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-4(f)(6)
thereunder.\5\ 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ 15 U.S.C. 78s(b)(3)(A)(iii).
\5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (``Commission'' or ``SEC'')
a proposed rule change to amend Rule 11.23 to explicitly provide that
the Exchange may extend the Quote-Only Period \6\ for an initial public
offering (``IPO'') Auction \7\ where a Derivative Security \8\ fails to
meet the Exchange's listing qualification requirements as set forth in
Exchange Rule 14.11. The text of the proposed rule change is provided
in Exhibit 5.
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\6\ The term ``Quote-Only Period'' shall mean a designated
period of time prior to a Halt Auction, a Volatility Closing
Auction, or an IPO Auction during which Users may submit orders to
the Exchange for participation in the auction. See Exchange Rule
11.23(a)(17).
\7\ See Exchange Rule 11.22(l)(2)(B).
\8\ The term ``Derivative Security'' means a security that meets
the definition of ``new derivative securities product'' in Rule 19b-
4(e) under the Exchange Act. See Exchange Rule 1.5(dd).
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The text of the proposed rule change is also available on the
Exchange's website (<a href="http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/">http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/</a>) and at the Exchange's Office of the Secretary.
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 Rule 11.23 to explicitly provide
that the Exchange may extend the Quote-Only period for an IPO Auction
where a Derivative Security fails to meet the Exchange's listing
qualification requirements as set forth in Rule 14.11. The Exchange
believes this proposal reinforces the Exchange's broad discretionary
authority over the initial and continued listing of securities,\9\ and
particularly its authority to halt a Derivative Security listed on the
Exchange that does not meet the Exchange's listing qualifications
requirements. The Exchange also believes the proposal clarifies that in
order to halt trading in a Derivative Security eligible for an IPO
Auction the Exchange will extend the Quote-Only Period of an IPO
Auction.
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\9\ See Exchange Rules 14.2 and 14.6.
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Exchange Rule 11.23(d)(2) sets forth the IPO and Halt Auction
Process. Specifically, Rule 11.23(d)(2)(B) provides that the Quote-Only
Period of an IPO Auction may be extended in four specific instances:
(i) there are unmatched market orders on the Auction Book \10\
associated with the auction; (ii) the underwriter requests an
extension; (iii) where the Indicative Price \11\ moves the greater of
10% or fifty (50) cents in the fifteen (15) seconds prior to the
auction; or (iv) in the event
[[Page 44860]]
of a technical or systems issue at the Exchange that may impair the
ability of Users \12\ to participate in the IPO Auction or of the
Exchange to complete the IPO Auction. Now, the Exchange proposes to
adopt Rule 11.23(d)(2)(B)(v) which would provide that the Quote-Only
Period may also be extended where a Derivative Security fails to meet
the Exchange's listing qualification requirements as set forth in Rule
14.11.
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\10\ See Exchange Rule 11.23(a)(1).
\11\ See Exchange Rule 11.23(a)(10).
\12\ See Exchange Rule 1.5(cc).
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The Exchange believes this proposal reinforces the Exchange's broad
discretionary authority over the initial and continued listing of
securities,\13\ and particularly its authority to halt a Derivative
Security listed on the Exchange that does not meet the Exchange's
listing qualifications requirements. The Exchange also believes the
proposal clarifies that in order to halt trading in a Derivative
Security eligible for an IPO Auction the Exchange will extend the
Quote-Only Period of an IPO Auction. The Exchange notes that another
exchange's rules explicitly provide that it may halt trading in a
listed security when it requests from the issuer information relating
to the issuer's ability to meet listing qualification requirements,\14\
which mirrors the intent of this proposed rule.
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\13\ See Exchange Rules 14.2 and 14.6.
\14\ See Nasdaq Stock Market, LLC (``Nasdaq'') Rule
4120(a)(5)(B).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\15\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \16\ 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) \17\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
\17\ Id.
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In particular, the Exchange believes that this proposal benefits
and protects investors because it is designed to reinforce the
Exchange's broad discretionary authority over the initial and continued
listing of securities,\18\ and particularly its authority to halt a
Derivative Security listed on the Exchange that does not meet the
Exchange's listing qualifications requirements. The Exchange believes
this proposed change will avoid confusion and enhance clarity with
respect to how the Exchange will halt trading in a Derivative Security
that is eligible to participate in an IPO Auction.
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\18\ See Exchange Rules 14.2 and 14.6.
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The Exchange does not believe that the proposal is an expansion of
the Exchange's broad discretionary authority over the initial and
continued listing of securities on the Exchange, but instead reinforces
such authority applicable under existing Exchange rules.\19\ The
Exchange also notes that another exchange has explicit rule language
permitting trading halts when requesting issuer information about
listing qualification compliance, which mirrors the intent of this
proposed rule.\20\
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\19\ Interpretation and Policy .01(c) to Exchange Rule 14.6
broadly references the Exchange's discretion for instituting a halt
for the maintenance of a fair and orderly market. Exchange Rule 14.2
provides the Exchange with ``broad discretionary authority over the
initial and continued listing of securities on the Exchange in order
to maintain the quality of and public confidence in its market, to
prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, and to protect investors and
the public interest. The Exchange may use such discretion to deny
initial listing, apply additional or more stringent criteria for the
initial or continued listing of particular securities, or suspend or
delist particular securities based on any event, condition, or
circumstance that exists or occurs that makes initial or continued
listing of the securities on the Exchange inadvisable or unwarranted
in the opinion of the Exchange, even though the securities meet all
enumerated criteria for initial or continued listing on the
Exchange.'' Furthermore, the Exchange notes that various Exchange
rule filings to adopt rules governing the listing and trading of
Derivative Securities contemplate the Exchanges authority to halt
trading in such securities. For example, the order approving the
adoption of the ETF Shares listing rule under Exchange Rule 14.11(l)
provided that the Exchange ``may consider all relevant factors in
exercising its discretion to halt or suspend trading in a series of
ETF Shares. Trading may be halted . . . because of other market
conditions, or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable. These may include . . . or (4)
whether other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present.'' See
Securities Exchange Act No. 88566 (April 6, 2020) 85 FR 20312 (April
10, 2020) (SR-CboeBZX-2019-097) (Notice of Filing of Amendment No. 2
and Order Granting Accelerated Approval of a Proposed Rule Change,
as Modified by Amendment No. 2, To Adopt BZX Rule 14.11(l) Governing
the Listing and Trading of Exchange-Traded Fund Shares).
\20\ See Nasdaq Rule 4120(a)(5)(B).
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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. On the contrary, the
proposed rule change is not designed to address any competitive issues
but is only intended to reinforce the Exchange's broad discretionary
authority over the initial and continued listing of securities and
clarify that the Exchange will extend the Quote-Only Period of an IPO
Auction if the Derivative Security fails to meet the Exchange's listing
qualification requirements as set forth in Rule 14.11.
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \21\ and Rule 19b-4(f)(6) \22\ thereunder.
Because the foregoing proposed rule change does not: (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; or (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \23\ and Rule 19b-4(f)(6) \24\ thereunder.
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f)(6).
\23\ 15 U.S.C. 78s(b)(3)(A).
\24\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of its
intent to file the proposed rule change, along with a brief
description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \25\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \26\ permits the Commission to
designate a shorter time if such action is consistent with the
[[Page 44861]]
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the Exchange
may immediately add clarity to its rulebook by explicitly providing
that the Exchange will extend the Quote-Only Period of an IPO Auction
if the Derivative Security fails to meet the Exchange's listing
qualification requirements as set forth in Rule 14.11. The Commission
finds that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposed rule change as operative upon filing.\27\
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\25\ Id.
\26\ 17 CFR 240.19b-4(f)(6)(iii).
\27\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See U.S.C. 78c(f).
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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 shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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#542621383179373b3939313a2027142731377a333b22"><span class="__cf_email__" data-cfemail="1f6d6a737a327c7072727a716b6c5f6c7a7c31787069">[email protected]</span></a>. Please include
file number SR-CboeBZX2025-125 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-CboeBZX2025-125. 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 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-CboeBZX2025-125 and should be submitted
on or before October 8, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-17925 Filed 9-16-25; 8:45 am]
BILLING CODE 8011-01-P
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