Notice2025-19444
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Rule 5.4
Primary source
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Published
October 3, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 190 (Friday, October 3, 2025)</title>
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[Federal Register Volume 90, Number 190 (Friday, October 3, 2025)]
[Notices]
[Pages 48071-48073]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19444]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104157; File No. SR-CBOE-2025-075]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Amend Rule 5.4
September 30, 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 30, 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,
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
The Exchange proposes to amend Rule 5.4(a) to change the minimum
increment for all series of options on the Cboe Mini Bitcoin U.S. ETF
Index (``MBTX options'') to $0.01 for series trading lower than $3.00
and $0.05 for series trading at $3.00 or higher. The text of the
proposed rule change is provided in Exhibit 5.
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/options/regulation/rule_filings/">https://www.cboe.com/us/options/regulation/rule_filings/</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 5.4(a) to change the minimum
increment for all series of options on the Cboe Mini Bitcoin U.S. ETF
Index (``MBTX options'') to $0.01 for series trading lower than $3.00
and $0.05 for series trading at $3.00 or higher. The Exchange believes
market demand (including by retail investors, who generally prefer
lower trading increments) supports a lower trading increment for MBTX
options. Options overlying the components of the Cboe Mini Bitcoin U.S.
ETF Index (and the underlying exchange-traded funds (``ETFs'') \3\) are
actively traded. The Exchange expects this more granular pricing to
lead to narrowing of the bid-ask spread for these options and increase
the possible number of price points available to investors for these
series. The Exchange believes tighter spreads will increase order flow
in MBTX options, which additional liquidity ultimately benefits all
investors. Finer increments also permit more precise pricing in line
with the theoretical value of these options.
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\3\ See <a href="https://cdn.cboe.com/api/global/us_indices/governance/Cboe_Bitcoin_US_ETF_Index_Methodology.pdf">https://cdn.cboe.com/api/global/us_indices/governance/Cboe_Bitcoin_US_ETF_Index_Methodology.pdf</a> (which requires each
constituent to have monthly consolidated trading volume of at least
500,000 shares for each month within the immediately preceding six-
month period, an average consolidated trading volume of at least
1,000,000 shares over the immediately preceding six months, and a
market capitalization of at least $75 million).
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With regard to the impact of this proposed rule change on system
capacity, the Exchange has analyzed its capacity and represents that it
and the Options Price Reporting Authority have the necessary systems
capacity to handle any potential additional traffic associated with
this proposal. The Exchange does not believe any potential
[[Page 48072]]
increased traffic will become unmanageable since this proposed rule
change with respect to minimum trading increments is limited to a
single class of options.
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.\4\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \5\ 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) \6\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
\6\ Id.
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In particular, the Exchange believes the proposed rule change will
protect investors and the public interest. As discussed above, the
Exchange believes market demand (including by retail investors, who
generally prefer lower trading increments) supports a lower trading
increment for MBTX options. Options overlying the components of the
Cboe Magnificent 10 Index are among the most actively traded options
(as are the underlying stocks), the most actively traded of which
(iShares Bitcoin Trust (``IBIT'')) is eligible for a lower trading
increment, supporting the view that there will be market demand for the
proposed trading increments for MBTX options. The proposed rule change
will permit more granular pricing in MBTX options, which may lead to
narrower bid-ask spreads for these options and increase the possible
number of price points available to investors for these series, which
ultimately increases liquidity to the benefit of all investors. The
Exchange believes tighter spreads will also increase order flow in MBTX
options, which additional liquidity ultimately benefits all investors.
Further, finer increments also permit more precise pricing in line with
the theoretical value of these options.
Additionally, the Exchange believes the proposed rule change will
promote just and equitable principles of trade and remove impediments
to and perfect the mechanism of a free and open market and a national
market system because it will permit MBTX options to trade at the same
level of granularity as permitted for IBIT options, which is the
primary competitive product for MBTX options.\7\ As a result, the
Exchange believes MBTX options should be eligible for the same pricing
increments for competitive reasons to allow the Exchange to price these
weekly options at the same level of granularity as permitted for
competitor products.\8\ Market participants may also use IBIT options
to hedge MBTX options or as part of other investment strategies
involving IBIT options. Therefore, having the pricing increments for
MBTX options aligned with these related products will permit investors
to trade related products at more granular prices that may be more
aligned with their investment objectives. The Exchange notes that MBTX
options are eligible for complex order trading, which permits the legs
to execute in penny increments, and the automated improvement mechanism
(``AIM'') auction for simple orders, which also permits penny
executions.\9\ Therefore, current rules already allow MBTX options to
trade in penny increments in certain situations.
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\7\ IBIT is a component of the underlying index, and those
options qualify for the Penny Interval Program under Rule 5.4(a) and
is the 13th most actively traded equity option (based on six-month
trading volume as of September 19, 2025).
\8\ The Exchange notes that other index options that trade on
the Exchange are currently permitted to trade in smaller increments
because competitive products are able to trade in those smaller
increments. See Rule 5.4 (the minimum for XSP options is $0.01
because that is the minimum increment for SPY options, and the
minimum increment for DJX options is $0.01 for series below $3 and
$0.05 for series $3 and above because that is the minimum increment
for DIA options).
\9\ See Rule 5.37(a)(4).
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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 proposed rule change
will not impose any burden on intramarket competition that is not
necessary or appropriate, because all Trading Permit Holders will be
able to trade MBTX options in the proposed minimum trading increments.
The proposed rule change will not impose any burden on intermarket
competition that is not necessary or appropriate, because it will
permit MBTX options to have pricing consistent with the pricing of its
largest competitor product (IBIT options), which is part of the Penny
Interval Program and may currently trade in increments of $0.01 or
$0.05. Additionally, the proposed rule change to permit MBTX options to
be listed in penny and nickel increments may relieve any burden on, or
otherwise promote, competition, as it will allow market participants to
trade these options at the same level of granularity as permitted for
competitor products, as discussed above. The Exchange also expects the
more granular pricing to lead to narrowing of the bid-ask spread for
these options, which the Exchange believes will increase order flow and
price competition in MBTX options.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be 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#6f1d1a030a420c0002020a011b1c2f1c0a0c41080019"><span class="__cf_email__" data-cfemail="bccec9d0d991dfd3d1d1d9d2c8cffccfd9df92dbd3ca">[email protected]</span></a>. Please include
file number SR-CBOE-2025-075 on the subject line.
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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-2025-075. 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-CBOE-2025-075 and should be submitted on
or before October 24, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-19444 Filed 10-2-25; 8:45 am]
BILLING CODE 8011-01-P
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