Notice2025-17930
Self-Regulatory Organizations; Cboe 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 44851-44853]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-17930]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103961; File No. SR-CBOE-2025-063]
Self-Regulatory Organizations; Cboe 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 Exchange, Inc. (the ``Exchange'' or
``Cboe Options'') 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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx">http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx</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, the Marketing Fee is assessed on transactions
of Market-Makers, resulting from customer orders at the per contract
rate provided in the Fees Schedule on all classes of equity options,
options on ETFs, options on ETNs and index options.\4\ A Designated
Primary Market-Maker (``DPM''), a ``Preferred Market[hyphen]Maker
(``PMM''), or a Lead Market-Maker (``LMM'') (collectively ``Preferenced
Market[hyphen]Maker'') are given access to the Marketing Fee funds
generated from a Preferenced order. The funds collected via this
Marketing Fee are then put into pools controlled by the Preferenced
Market-Maker. The Preferenced Market-Maker controlling a certain pool
of funds can then determine the order flow provider(s) to which the
funds should be directed in order to encourage such order flow
provider(s) to send orders to the Exchange. 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 Classes and a
Marketing Fee of $0.70 per contract will be assessed to Market-
Makers for transactions in all other classes. The Marketing Fee does
not apply to Sector Indexes, DJX, CBTX, MBTX, MRUT, MXEA, MXEF,
MXACW, MXUSA, MXWLD, XSP, SPEQX, NANOS, FLEX Micros or Underlying
Symbol List A. The fee also does not apply to:
Market[hyphen]Maker[hyphen]to[hyphen]Market[hyphen]Maker
transactions, including transactions resulting from orders from
non[hyphen]Trading Permit Holder market[hyphen]makers; transactions
resulting from penny cabinet trades and sub-penny cabinet trades;
transactions in Flexible Exchange Options; transactions executed as
a qualified contingent cross (``QCC'') under Rule 6.53(u);
transactions executed in open outcry; and transactions in the Penny
Program classes resulting from orders executed through the Step Up
Mechanism under Rule 5.35.
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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 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
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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 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 Trading Permit
Holders 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 Cboe Options, TPHs 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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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#6012150c054d030f0d0d050e1413201305034e070f16"><span class="__cf_email__" data-cfemail="7002051c155d131f1d1d151e0403300315135e171f06">[email protected]</span></a>. Please include
file number SR-CBOE-2025-063 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-2025-063. This file
number should be included on the subject line if email is used. To help
the Commission process and review your
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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-CBOE-2025-063 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. 2025-17930 Filed 9-16-25; 8:45 am]
BILLING CODE 8011-01-P
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