Notice2025-17926
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule by Revising the Additive Rebate Associated With Securities Priced Below $1.00 in LMM Add Volume Tiers 2-4
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 44861-44864]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-17926]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103957; File No. SR-CboeBZX-2025-123]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule by Revising the Additive Rebate Associated With
Securities Priced Below $1.00 in LMM Add Volume Tiers 2-4
September 12, 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 September 2, 2025, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
amend its Fee Schedule by revising the additive rebate associated with
securities priced below $1.00 in LMM Add Volume Tiers 2-4. 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/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 its Fee Schedule applicable to its
equities trading platform (``BZX Equities'') by revising the additive
rebate associated with securities priced below $1.00 in LMM Add Volume
Tiers 2-4. The Exchange proposes to implement these changes effective
September 1, 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 16 registered equities exchanges, as well as a
number of alternative trading systems and other off-exchange venues
that do not have similar self-regulatory responsibilities under the
Securities Exchange Act of 1934 (the ``Act''), to which market
participants may direct their order flow. Based on publicly available
information,\3\ no single registered equities exchange has more than
14% of the market share. Thus, in such a low-concentrated and highly
competitive market, no single equities exchange possesses significant
pricing power in the execution of order flow. The Exchange in
particular operates a ``Maker-Taker'' model whereby it pays rebates to
members that add liquidity and assesses fees to those that remove
[[Page 44862]]
liquidity. The Exchange's Fee Schedule sets forth the standard rebates
and rates applied per share for orders that provide and remove
liquidity, respectively. Currently, for orders in securities priced at
or above $1.00, the Exchange provides a standard rebate of $0.00160 per
share for orders that add liquidity and assesses a fee of $0.0030 per
share for orders that remove liquidity.\4\ For orders in securities
priced below $1.00, the Exchange does not provide a rebate for orders
that add liquidity and assesses a fee of 0.30% of the total dollar
value for orders that remove liquidity.\5\ Additionally, in response to
the competitive environment, the Exchange also offers tiered pricing
which provides Members opportunities to qualify for higher rebates or
reduced fees where certain volume criteria and thresholds are met.
Tiered pricing provides an incremental incentive for Members to strive
for higher tier levels, which provides increasingly higher benefits or
discounts for satisfying increasingly more stringent criteria.
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\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (August 19, 2025), available at <a href="https://www.cboe.com/us/equities/market_statistics/">https://www.cboe.com/us/equities/market_statistics/</a>.
\4\ See BZX Equities Fee Schedule, Standard Rates.
\5\ Id.
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LMM Tiers
Under footnote 14 of the Fee Schedule, the Exchange details pricing
for its Lead Market Makers (``LMMs'') in BZX-listed securities. In
particular, the Exchange offers four LMM Add Volume Tiers that provide
an additive rebate for orders yielding fee codes B,\6\ V,\7\ Y,\8\
HB,\9\ HV,\10\ and HY \11\ where a Member in enrolled as an LMM in a
minimum number of securities and reaches certain add volume-based
criteria. Currently, the Exchange provides an additive rebate of
$0.0006 per share in all securities for orders appended with fee codes
V and HV that satisfy the criteria of LMM Add Volume Tier 2. The
Exchange currently provides an additive rebate of $0.0003 per share in
all securities for orders appended with fee codes B and HB that satisfy
the criteria of LMM Add Volume Tier 3. Additionally, the Exchange
provides an additive rebate of $0.0006 per share in all securities for
orders appended with fee codes Y and HY that satisfy the criteria of
LMM Add Volume Tier 4. The Exchange does not currently offer a separate
additive rebate for orders appended with the applicable fee codes that
satisfy the criteria of LMM Add Volume Tiers 2-4 in securities priced
below $1.00.\12\ The Exchange now proposes to provide a separate
additive rebate of 0.15% of total dollar value in securities priced
below $1.00 appended with the applicable fee codes that satisfy the
criteria of LMM Add Volume Tiers 2-4. The purpose of separating the
additive rebate for securities priced below $1.00 from the additive
rebate paid to orders appended with the applicable fee codes that
satisfy the criteria of LMM Add Volume Tiers 2-4 in securities priced
at or above $1.00 is for business and competitive reasons, as the
Exchange believes that paying an additive rebate to LMMs that satisfy
the criteria of LMM Add Volume Tiers 2-4 in securities priced below
$1.00 as proposed would decrease the Exchange's expenditures with
respect to transaction pricing in a manner that is still consistent
with the Exchange's overall pricing philosophy of encouraging added
liquidity. The Exchange does not propose to amend the additive rebate
currently paid to orders appended with the applicable fee codes that
satisfy the criteria of LMM Add Volume Tiers 2-4 in securities priced
at or above $1.00.
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\6\ Fee code B is appended to displayed orders that add
liquidity to BZX in Tape B securities.
\7\ Fee code V is appended to displayed orders that add
liquidity to BZX in Tape A securities.
\8\ Fee code Y is appended to displayed orders that add
liquidity to BZX in Tape C securities.
\9\ Fee code HB is appended to non-displayed orders that add
liquidity to BZX in Tape B securities.
\10\ Fee code HV is appended to non-displayed orders that add
liquidity to BZX in Tape A securities.
\11\ Fee code HY is appended to non-displayed orders that add
liquidity to BZX in Tape C securities.
\12\ Fee codes V and HV are applicable to LMM Add Volume Tier 2;
fee codes B and HB are applicable to LMM Add Volume Tier 3; and fee
codes Y and HY are applicable to LMM Add Volume Tier 4.
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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.\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 as well as Section 6(b)(4) \16\
as it is designed to 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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\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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As described above, the Exchange 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. The Exchange believes that
its proposal to reduce the additive rebate associated with securities
priced below $1.00 in LMM Add Volume Tiers 2-4 reflects a competitive
pricing structure designed to incentivize market participants to direct
their order flow to the Exchange, which the Exchange believes would
enhance market quality to the benefit of all Members. In particular,
the Exchange believes its proposal to reduce the additive rebate
associated with securities priced below $1.00 in LMM Add Volume Tiers
2-4 is reasonable, equitable, and consistent with the Act because such
change is designed to decrease the Exchange's expenditures with respect
to transaction pricing in order to offset some of the costs associated
with the Exchange's current pricing structure, which provides various
rebates for liquidity-adding orders, and the Exchange's operations
generally, in a manner that is consistent with the Exchange's overall
pricing philosophy of encouraging added liquidity. The proposed reduced
additive rebate of 0.15% of total dollar value is reasonable and
appropriate because while it is slightly lower than the existing
rebate, it remains competitive with other fees assessed by competing
Exchanges offering similar LMM Add Volume Tiers.\17\ The Exchange
further believes that the proposed reduction to the additive rebate
associated with LMM Add Volume Tiers 2-4 is not unfairly discriminatory
because it applies to all LMMs equally, in that all LMMs will receive
the lower additive rebate upon satisfying the criteria associated with
[[Page 44863]]
LMM Add Volume Tiers 2-4 in securities priced below $1.00.
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\17\ See e.g., NYSE Arca Marketplace: Market Maker Fees and
Credits, LMM Transaction Fees and Credits. NYSE Arca provides
enhanced credits based on the quality of the market in an assigned
ETP, but limits these credits to securities priced at or above
$1.00.
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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. Rather, as discussed above,
the Exchange believes that the proposed change would encourage the
submission of additional order flow to a public exchange, thereby
promoting market depth, execution incentives and enhanced execution
opportunities, as well as price discovery and transparency for all
Members. As a result, the Exchange believes that the proposed changes
further the Commission's goal in adopting Regulation NMS of fostering
competition among orders, which promotes ``more efficient pricing of
individual stocks for all types of orders, large and small.''
The Exchange believes the proposed rule changes do not impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Particularly, the proposed
change to reduce the additive rebate associated with securities priced
below $1.00 in LMM Add Volume Tiers 2-4 does not impose an unnecessary
burden as all LMMs will receive the reduced additive rebate for orders
that satisfy the criteria of LMM Add Volume Tiers 2-4 in securities
priced below $1.00. The Exchange does not believe the proposed changes
burden competition, but rather, enhances competition as it is intended
to increase the competitiveness of BZX by amending existing pricing
incentives in order to attract order flow and incentivize participants
to increase their participation on the Exchange. Greater overall order
flow, trading opportunities, and pricing transparency benefits all
market participants on the Exchange by enhancing market quality and
continuing to encourage LMMs to send orders, thereby contributing
towards a robust and well-balanced market ecosystem.
Next, the Exchange believes the proposed rule changes do not impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the
Exchange represents a small percentage of the overall market. Based on
publicly available information, no single equities exchange has more
than 14% of the market share.\18\ Therefore, no exchange possesses
significant pricing power in the execution of order flow. Indeed,
participants can readily choose to send their orders to other exchange
and off-exchange venues if they deem 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.'' \19\ 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'. . . .''.\20\ 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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\18\ Supra note 3.
\19\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\20\ 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 \21\ and paragraph (f) of Rule 19b-4 \22\
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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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 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#b1c3c4ddd49cd2dedcdcd4dfc5c2f1c2d4d29fd6dec7"><span class="__cf_email__" data-cfemail="7a080f161f57191517171f140e093a091f19541d150c">[email protected]</span></a>. Please include
file number SR-CboeBZX-2025-123 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-CboeBZX-2025-123. 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-CboeBZX-2025-123 and should be submitted
on or before October 8, 2025.
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-17926 Filed 9-16-25; 8:45 am]
BILLING CODE 8011-01-P
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