Notice2025-18795
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.23 To Introduce an Option for an Exchange-Traded Product (“ETP”) Eligible To Participate in an Initial Public Offering (“IPO”) Auction To Elect to Commence Trading in the BZX Early Trading Session
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 29, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 186 (Monday, September 29, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 186 (Monday, September 29, 2025)]
[Notices]
[Pages 46690-46692]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-18795]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104037; File No. SR-CboeBZX-2025-130]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 11.23 To Introduce an Option for an Exchange-Traded Product
(``ETP'') Eligible To Participate in an Initial Public Offering
(``IPO'') Auction To Elect to Commence Trading in the BZX Early Trading
Session
September 24, 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 22, 2025, Cboe BZX Exchange, Inc. (the ``Exchange''
or ``BZX'') 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 \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
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 proposal to amend Rule 11.23 to introduce an option for an exchange-
traded product (``ETP'') eligible to participate in an initial public
offering (``IPO'') auction to elect to commence trading in the BZX
Early Trading Session.\5\ The text of the proposed rule change is
provided in Exhibit 5.
---------------------------------------------------------------------------
\5\ See Rule 1.5(ff).
---------------------------------------------------------------------------
The text of the proposed rule change is also available on the
Commission's website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>), the
Exchange's website (<a href="https://www.cboe.com/us/equities/regulation/rule_filings/bzx/">https://www.cboe.com/us/equities/regulation/rule_filings/bzx/</a>), and at the principal office of the Exchange.
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 provide an option for
an ETP IPO Security \6\ to commence trading in the BZX Early Trading
Session. The Exchange also proposes to amend Rule 11.23(a) in order to
introduce the defined term ``ETP IPO Security.'' Additionally, the
Exchange proposes to make conforming changes to Rule 11.23(d)(2)(E) by
creating subsections 11.23(d)(2)(E)(i) and (ii) to improve clarity in
the Exchange's rulebook. The proposal is substantively identical to the
Nasdaq Stock Market LLC (``Nasdaq'') functionality that allows ETP IPO
Securities the option to commence trading at 4:00 a.m. Eastern Time
(``ET'') \7\ or in the IPO Auction (which generally occurs 9:30 a.m.
ET) on the first day of trading, as discussed further below.\8\
---------------------------------------------------------------------------
\6\ See proposed Rule 11.23(a)(24), as discussed below.
\7\ Hereinafter, all times referenced are in Eastern Time.
\8\ See Securities Exchange Act No. 103085 (May 20, 2025) 90 FR
22424 (May 27, 2025) (SR-Nasdaq-2025-011) (Notice of Filing of
Amendment No. 1, and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 1, To Introduce
Functionality To Initiate a Trading Halt for Exchange-Traded
Products on Launch Day) (the ``Nasdaq Approval Order'').
---------------------------------------------------------------------------
[[Page 46691]]
The Exchange proposes to introduce the defined term ``ETP IPO
Security'' as Rule 11.23(a)(24), which means a Derivative Security \9\
that is eligible to participate in an IPO Auction \10\ pursuant to Rule
11.23(d).
---------------------------------------------------------------------------
\9\ See Rule 1.5(dd). 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.
\10\ See Rule 11.22(1)(B). ``IPO Auction'' means the initial
pricing procedures described in Rule 11.23(d).
---------------------------------------------------------------------------
The Exchange also proposes to amend Rule 11.23(d)(2)(E) to
delineate the IPO Auction from the Halt Auction with no substantive
change. Specifically, the Exchange proposes to bifurcate Rule
11.23(d)(2)(E) by creating subsections (i) and (ii), which clarifies
the separate determination of each of the IPO Auction price and the
Halt Auction price, respectively. Rule 11.23(d)(2)(E)(i) provides that
``[f]or IPO Auctions, orders will be executed at the price level within
the Collar Price Range that maximizes the number of shares executed in
the auction. In the event of a volume based tie at multiple price
levels, the price level that results in the minimum total imbalance
will be used. In the event of a volume based tie and a tie in minimum
total imbalance at multiple price levels, the price level closest to
the issuing price will be used for IPO Auctions. The IPO Auction price
will be the BZX Official IPO Opening Price unless otherwise provided
under this Rule 11.23.'' The proposed new language under Rule
11.23(d)(2)(E)(i) is identical to existing language under Rule
11.23(d)(2)(E). Rule 11.23(d)(2)(E)(ii) provides that ``[f]or Halt
Auctions following a Regulatory Halt, orders will be executed at the
price level within the Halt Auction Collars that maximizes the number
of shares executed in the auction. In the event of a volume based tie
at multiple price levels, the price level that results in the minimum
total imbalance will be used. In the event of a volume based tie and a
tie in minimum total imbalance at multiple price levels, the price
level closest to the Final Last Sale Eligible Trade will be used for
Halt Auctions.'' The Exchange is only proposing to delete text from
proposed Rule 11.23(d)(2)(E)(ii) that is not applicable to Halt
Auctions under existing Rule 11.23(d)(2)(E).
The Exchange also proposes to adopt new Rule 11.23(a)(2)(E)(i)(a)
to provide that ETP IPO Securities may commence trading in the Early
Trading Session as an alternative to the IPO Auction. Specifically,
proposed Rule 11.23(a)(2)(E)(i)(a) states that ``[a]n ETP IPO Security
may elect to commence trading in the Early Trading Session described in
Rule 11.1(a). If an ETP IPO Security elects to commence trading during
the Early Trading Session, the BZX Official IPO Opening Price \11\ for
such ETP IPO Security shall be determined pursuant to Rule
11.23(b)(2)(B).''
---------------------------------------------------------------------------
\11\ See Rule 11.23(a)(4).
---------------------------------------------------------------------------
Today, ETP IPO Securities commence trading at the start of Regular
Trading Hours \12\ (9:30 a.m.) pursuant to the IPO Auction process set
forth under Exchange Rule 11.23(d). The amendments proposed herein
introduce an option for an ETP IPO Security to commence trading during
the Early Trading Session. As proposed, an ETP IPO Security would begin
trading pursuant to the current IPO Auction process provided under
existing Rule 11.23(d)(2)(E) unless otherwise specified by the issuer
of an ETP IPO Security. If the ETP IPO Security elects to commence
trading during the Early Trading Session, the ETP IPO Security would
simply open for trading at 4:00 a.m. ET in the Early Trading Session
\13\ in the same manner that an ETP transferred from another securities
exchange begins trading on BZX.\14\ An ETP IPO Security that elects to
commence trading during the Early Trading Session would participate in
the standard Opening Auction process under Exchange Rule 11.23(b)(2)(B)
rather than the IPO Auction process. As a result, the BZX Official IPO
Opening Price would also be determined pursuant to the Opening Auction
under Exchange Rule 11.23(b)(2)(B) rather than the IPO Auction.
---------------------------------------------------------------------------
\12\ See Rule 1.5(w). The term ``Regular Trading Hours'' means
the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
\13\ See Exchange Rule 1.5(ff).
\14\ See full details of the Exchange's auction process
specifications at Cboe_US_Equities_Auction_Process.pdf; see also
Rule 11.23(d)(2)(E).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
\17\ Id.
---------------------------------------------------------------------------
In particular, the proposed rule changes will remove impediments to
and perfect the mechanism of a free and open market and national market
system and will benefit investors by providing market participants with
additional opportunities to source and access liquidity for their
orders in new issue ETPs on the Exchange. The proposed option to permit
issuers to begin trading an ETP IPO Security during the Early Trading
Session is a response to feedback from ETP issuers that such an option
is desirable, as it would provide for earlier trading opportunities in
highly anticipated new issue ETPs. Further, the Exchange believes that
the issuer is best situated to make the decision whether to commence
trading in its ETP IPO Security during the Early Trading Session or
pursuant to the IPO Auction. The proposed amendments will have no
impact on the operation of trading in the Early Trading Session and
would simply allow for an ETP IPO Security to begin trading on the
Exchange at 4 a.m. in the same manner that that an ETP transferred from
another securities exchange begins trading on BZX. The Exchange
believes that amending its rules to extend trading hours for ETP IPO
Securities will benefit investors in that they will now be able to
trade ETP IPO Securities earlier in the day, providing additional
access to liquidity in securities that an ETP issuer deems appropriate
for trading in the Early Trading Session. The Exchange also believes
that offering the IPO Auction as a default for ETP IPO Securities with
the option to participate in the Early Trading Session will allow
issuers an alternative option if such issuer is concerned about
unexpected volatility in ETP pricing during the Early Trading
Session.\18\
---------------------------------------------------------------------------
\18\ See the Nasdaq Approval Order at 24430.
---------------------------------------------------------------------------
The Exchange believes that proposed rule changes raise no novel
issues as the proposed rules are consistent with early trading for ETPs
already in place under
[[Page 46692]]
the rules of another equities exchange,\19\ as previously approved by
the Commission.\20\
---------------------------------------------------------------------------
\19\ See Nasdaq Rule 4120(b)(4).
\20\ Supra note 7.
---------------------------------------------------------------------------
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. Particularly, the Exchange
does not believe that the proposed rule change will impose any burden
on intra-market competition that is not necessary or appropriate in
furtherance of purposes of the Act because all ETP IPO Securities may
commence trading in the BZX Early Trading Session if requested by the
issuer. The Exchange also does not believe that the proposed rule
change will impose any burden on intermarket competition but instead
may promote competition because the proposed early trading hours for
ETP IPO Securities are identical to those on Nasdaq.\21\ Market
participants on other exchanges are welcome to trade at BZX if they
determine that this proposed rule change has made BZX more attractive
or favorable.
---------------------------------------------------------------------------
\21\ See Securities Exchange Act No. 103085 (May 20, 2025) 90 FR
22424 (May 27, 2025) (SR-Nasdaq-2025-011) (Notice of Filing of
Amendment No. 1, and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 1, To Introduce
Functionality To Initiate a Trading Halt for Exchange-Traded
Products on Launch Day).
---------------------------------------------------------------------------
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 \22\ and Rule 19b-4(f)(6) \23\ 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 \24\ and Rule 19b-4(f)(6) \25\ thereunder.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 17 CFR 240.19b-4(f)(6).
\24\ 15 U.S.C. 78s(b)(3)(A).
\25\ 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.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \26\ normally
does not become operative prior to 30 days after the date of the
filing. However, Rule 19b-4(f)(6)(iii) \27\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay. The Exchange states
that waiver of the operative delay will allow it to quickly offer the
option for an ETP IPO Security to commence trading during the Early
Trading Session, thereby providing an additional source of liquidity
for ETP IPO Securities during this time. The Exchange also states that
the proposed change will not negatively impact investors or the public
interest because the proposal will not alter the operation of the
Exchange's Early Trading Session, and the ETP IPO Security would simply
open for trading at 4:00 a.m. ET \28\ in the same manner that an ETP
transferred from another securities exchange begins trading on BZX. For
these reasons, and because the proposed rule change does not raise any
new or novel regulatory issues, 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.\29\
---------------------------------------------------------------------------
\26\ Id.
\27\ 17 CFR 240.19b-4(f)(6)(iii).
\28\ See Exchange Rule 1.5(ff).
\29\ 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).
---------------------------------------------------------------------------
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#e290978e87cf818d8f8f878c9691a2918781cc858d94"><span class="__cf_email__" data-cfemail="b1c3c4ddd49cd2dedcdcd4dfc5c2f1c2d4d29fd6dec7">[email protected]</span></a>. Please include
file number SR-CboeBZX-2025-130 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-2025-130. 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-2025-130 and
should be submitted on or before October 20, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
---------------------------------------------------------------------------
\30\ 17 CFR 200.30-3(a)(12), (59).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-18795 Filed 9-26-25; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on September 29, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.