Notice2025-17928
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule To Adopt an Administrative Fee To Offset Its Costs in Administering the Marketing Fee Program
Primary source
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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 44853-44855]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-17928]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103959; File No. SR-CboeEDGX-2025-073]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fees Schedule To Adopt an Administrative Fee To Offset Its
Costs in Administering the Marketing Fee Program
September 12, 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 September 2, 2025, Cboe EDGX Exchange, Inc. (the ``Exchange''
or ``EDGX'') 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 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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend its Fees Schedule to adopt an administrative fee to offset its
costs in administering the Marketing Fee 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://markets.cboe.com/us/options/regulation/rule_filings/edgx/">http://markets.cboe.com/us/options/regulation/rule_filings/edgx/</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 Fees Schedule, effective
September 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 14% 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 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 (August 25, 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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By way of background, under the Marketing Fees Program, marketing
fees are charged to all Market Makers who are counterparties to a trade
with a Customer.\4\ Each Primary Market Maker (``PMM'') and Directed
Market Maker (``DMM'') will have a marketing fee pool into which the
Exchange will deposit the applicable per-contract marketing fee. For
orders directed to DMMs, the applicable marketing fees are allocated to
the DMM pool. For non-directed orders, the applicable marketing fees
are allocated to the PMM pool. All Market Makers that participated in
such transaction will pay the applicable marketing fees to the
Exchange, which will allocate such funds to the Market Maker that
controls the distribution of the marketing fee pool. Each month, the
Market Maker will provide instruction to the Exchange describing how
the Exchange is to distribute the marketing fees in the pool to the
order flow provider, who submit as agent, Customer orders to the
Exchange. The total balance of the undispersed marketing fees for a PMM
pool or DMM pool cannot exceed $250,000. Each month, undisbursed
marketing fees in excess of $250,000 will be reimbursed to the Market
Makers that contributed to the pool based upon a one month look back
and their pro-rata portion of the entire amount of marketing fee
collected during that month.
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\4\ A marketing fee of $0.25 per contract will be assessed to
Market Makers for transactions in Penny Program Securities and a
Marketing Fee of $0.70 per contract will be assessed to Market
Makers for transactions in Non-Penny Program Securities. Marketing
fees shall not apply to executions of: orders subject to AIM and SAM
Pricing set forth in footnote 6 of the Fees Schedule, Qualified
Contingent Cross Orders, or complex orders on the Exchange's complex
order book.
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The Exchange now proposes to adopt an administrative fee to offset
its costs in administering the Marketing Fee program. Specifically, the
Exchange proposes to assess an administrative fee of 0.45% of the total
amount of funds collected each month. The Exchange will closely monitor
the amount of funds raised by this administrative fee and amend the fee
in the future if necessary, so that the fee provides sufficient funds
to adequately offset the Exchange's costs in administering the program.
The Exchange is not making any other changes to its Marketing Fee
program. The Exchange also notes that the proposed administrative fee
is identical to the fee that at least one
[[Page 44854]]
other options exchange assesses in connection with administering their
respective marketing fee program.\5\
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\5\ See Nasdaq PHLX LLC Rules, Options 7 (Pricing Schedule),
Section 4, Marketing 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.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ 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) \8\ 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,\9\ 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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
\9\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that it is reasonable to assess the proposed
administrative fee to offset its costs in administering the Marketing
Fee program. As noted above, the Exchange will closely monitor the
amount of funds raised by this administrative fee and amend the fee in
the future if necessary, so that the fee provides sufficient funds to
adequately offset the Exchange's costs in administering the Marketing
Fee program. The Exchange believes that it is equitable and not
unfairly discriminatory to assess the administrative fee because it
would apply uniformly to all funds collected under the Marketing Fee
program as a means to offset costs of collecting and administering such
funds.
Also, as described above, the proposed rule change is reasonable,
equitable and not unfairly discriminatory as the proposed
administrative fee is identical to the fee that at least one other
options exchange assesses in connection with administering their
respective marketing fee program.\10\
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\10\ See Nasdaq PHLX LLC Rules, Options 7 (Pricing Schedule),
Section 4, Marketing Fees.
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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. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act. As noted above, the proposed
change will apply uniformly to all funds collected under the Marketing
Fee program as a means to offset costs of collecting and administering
such funds.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because, as noted
above, at least one competing options exchange, and currently has an
identical fee in place in connection with administering their
respective marketing fee program.\11\ The Exchange notes it operates in
a highly competitive market. In addition to the Exchange, Members have
numerous alternative venues that they may participate on and director
their order flow, including 17 other options exchanges, as well as off-
exchange venues, where competitive products are available for trading.
Based on publicly available information, no single options exchange has
more than 18% of the market share of executed volume of options
trades.\12\ Therefore, no exchange possesses significant pricing power
in the execution of option order flow. 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.'' \13\ 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'. . . .''.\14\ Accordingly, the Exchange does not believe its
proposed changes to the incentive programs impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
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\11\ Id.
\12\ See Cboe Global Markets U.S. Options Monthly Market Volume
Summary (August 25, 2025), available at <a href="https://markets.cboe.com/us/options/market_statistics/">https://markets.cboe.com/us/options/market_statistics/</a>.
\13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\14\ 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 \15\ and paragraph (f) of Rule 19b-4 \16\
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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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f).
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[[Page 44855]]
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#e99b9c858cc48a8684848c879d9aa99a8c8ac78e869f"><span class="__cf_email__" data-cfemail="1664637a733b75797b7b737862655665737538717960">[email protected]</span></a>. Please include
file number SR-CboeEDGX-2025-073 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-CboeEDGX-2025-073. 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-CboeEDGX-2025-073 and should be
submitted on or before October 8, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-17928 Filed 9-16-25; 8:45 am]
BILLING CODE 8011-01-P
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