Notice2025-20527
Self-Regulatory Organizations; MX2 LLC; Notice of Filing and Immediate Effectiveness of a Proposal To Amend Rule 11.6 To Clarify the Handling of Orders With a Post Only Instruction
Primary source
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Published
November 21, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 223 (Friday, November 21, 2025)</title>
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[Federal Register Volume 90, Number 223 (Friday, November 21, 2025)]
[Notices]
[Pages 52774-52776]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-20527]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104206; File No. SR-MX2-2025-04]
Self-Regulatory Organizations; MX2 LLC; Notice of Filing and
Immediate Effectiveness of a Proposal To Amend Rule 11.6 To Clarify the
Handling of Orders With a Post Only Instruction
November 18, 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, MX2 LLC (``MX2'' or the ``Exchange'') 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 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 is filing with the Commission a proposal to amend Rule
11.6(a) to clarify the handling of orders that contain both a Post Only
instruction and certain other order handling instructions maintained to
facilitate compliance with Rule 610(d) of Regulation NMS. The text of
the proposed rule change is provided in Exhibit 5 and is available on
the Exchange's website at <a href="https://info.memxtrading.com/regulation/rules-and-filings/">https://info.memxtrading.com/regulation/rules-and-filings/</a>.\5\
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\5\ The Exchange proposes to implement the proposed changes to
Exchange Rules 11.3(a)-(b) on a date that will be announced via
Regulatory Notice, notifying both existing and prospective
Sponsoring Members and Sponsored Participants, of the new rule
language and required contractual provisions.
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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 purpose of the proposed rule change is to amend Exchange Rule
11.6 to clarify the handling of orders that contain both a Post Only
instruction and certain other order handling instructions maintained to
facilitate compliance with Rule 610(d) of Regulation NMS (the ``Locked
and Crossed Markets Rule''). The Exchange is filing this proposal in
order to conform its rule text with that of its affiliated Exchange,
MEMX LLC (``MEMX''), which recently filed the same proposal.\6\
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\6\ See Securities Exchange Act Release No. 103968 (September
15, 2025), 90 FR 45069 (September 18, 2025) (SR-MEMX-2025-29).
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As background, the current rules state that an order entered with a
Post Only instruction does not remove liquidity, except when the order
is an order to buy or sell a security priced below $1.00, or when
executing as the taker of liquidity would be economically beneficial to
the firm entering the order--i.e., if the value of such execution when
removing liquidity equals or exceeds the value of such execution if the
order instead posted to the MX2 Book and subsequently provided
liquidity, including the applicable fees charged or rebates
provided.\7\ Today, the Exchange's rules state that this handling
applies to Post Only orders entered with a Display-Price Sliding \8\
instruction, which is a re-pricing instruction used for compliance with
the Locked and Crossed Markets Rule. Thus, an executable order entered
with a Post Only instruction is eligible to remove liquidity in the
circumstances described in Rule 11.6(l)(2) instead of having its ranked
price or display price adjusted pursuant to those order handling
instruction.
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\7\ See MX2 Rule 11.6(l)(2). To determine at the time of a
potential execution whether the value of such execution when
removing liquidity equals or exceeds the value of such execution if
the order instead posted to the MX2 book and subsequently provided
liquidity, the Exchange will use the highest possible rebate paid
and the highest possible fee charged for such executions on the
Exchange.
\8\ ``Display-Price Sliding'' is an order instruction requiring
that where an order would be a Locking Quotation or Crossing
Quotation of an external market if displayed by the System on the
MX2 Book at the time of entry, will be ranked at the Locking Price
in the MX2 Book and displayed by the System at one Minimum Price
Variation lower (higher) than the Locking Price for orders to buy
(sell). See MX2 Rule 11.6(j)(1)(A).
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However, the Exchange will also offer a ``Cancel Back'' instruction
that is not covered by MX2 Rule 11.6(l)(2). An order entered with a
Cancel Back instruction will be immediately cancelled instead of re-
priced when displaying the order at its limit price would create a
violation of the Locked and Crossed Markets Rule, or if the order could
not otherwise be executed or posted at its limit price.\9\ Even if
Users select the Cancel Back instruction, however, orders entered with
a Post Only instruction will be handled in the same manner regardless
of whether the Display-Price Sliding or Cancel Back instruction is
selected.\10\ The Exchange therefore proposes to amend MX2 Rule
11.6(l)(2) to eliminate the reference to Display-Price Sliding, given
that such an instruction is not required for a Post Only instruction to
remove liquidity under the noted circumstances.\11\
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\9\ ``Cancel Back'' is an instruction the User may attach to an
order instructing the System to immediately cancel the order when,
if displayed by the System on the MX2 Book at the time of entry, or
upon return to the System after being routed away, would create a
violation of Rule 610(d) of Regulation NMS or Rule 201 of Regulation
SHO, or the order cannot otherwise be executed or posted by the
System to the MX2 Book at its limit price. See MX2 Rule 11.6(a).
\10\ Rule 11.6(j)(1)(A)(iv) states: Any display-eligible order
with a Post Only instruction that would be a Locking Quotation or
Crossing Quotation of the Exchange upon entry will be executed as
set forth in Rule 11.6(l)(2) or cancelled. In the event the NBBO
changes such that an order with a Post Only instruction subject to
Display-Price Sliding instruction would be ranked at a price at
which it could remove displayed liquidity from the MX2 Book, the
order will be executed as set forth in Rule 11.6(l)(2) or cancelled.
\11\ EDGX similarly filed to remove the reference to Display
Price Sliding from their rule text, and allows all Post Only orders
to remove liquidity if economically beneficial to the firm entering
the order. See Securities Exchange Release No. 88515, (April 4,
2019), 84 FR 14427, (April 10, 2019), SR-CboeEDGX-2019-014.
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The Exchange believes that removing the reference to this
instruction in the rule would reduce potential confusion as the order
handling described in the rule today applies to all orders entered with
a Post Only instruction, and not a
[[Page 52775]]
specific subset of those orders. No changes to the Exchange's trading
or other systems are contemplated by this proposed change, which is
instead designed to increase transparency around the Exchange's
process.
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,\12\ in general, and Section 6(b)(5) of the Act,\13\ in particular,
in that it is designed to remove impediments to and perfect the
mechanism of a free and open market and a national market system, to
promote just and equitable principles of trade, and, in general, to
protect investors and the public interest.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that the proposed rule change
is consistent with the public interest and the protection of investors
as it would avoid potential confusion about how an order is handled if
entered with both a Post Only and Cancel Back instruction or no
additional instruction at all. Today, the Exchange's rules provide that
an order entered into the MX2 Book with a Post Only instruction would
remove liquidity in certain circumstances, such as when economically
beneficial for the firm entering the order. In addition, the rules
specify that this handling applies to orders entered with a Post Only
and a Display-Price Sliding instruction. The rules, however, are silent
as to the handling applied if an order with a Post Only instruction
contains a Cancel Back instruction or no additional instruction at all.
The Exchange's order handling will, in fact, be the same regardless of
which of these instructions are chosen by the member. As such, the
Exchange believes that it is appropriate to amend MX2 Rule 11.6(l)(2)
to eliminate the reference to the Display-Price Sliding instruction,
thereby making clear that this handling will apply to all orders
entered with a Post Only instruction and not only those that also
contain a Display-Price Sliding instruction.
The Exchange believes that this order handling is appropriate
regardless of whether an order entered with a Post Only instruction
also contains a Display-Price Sliding, Cancel Back, or no additional
instruction. Specifically, the Exchange believes that it is consistent
with just and equitable principles of trade to permit an order entered
with a Post Only instruction to remove liquidity when the order is an
order to buy or sell a security priced below $1.00, or when executing
as the taker of liquidity would be economically beneficial to the firm
entering the order. This handling is designed to ensure that orders
entered with a Post Only instruction are eligible to trade in certain
circumstances where the entering firm may have an interest in securing
an execution on entry--i.e., as the taker of liquidity--notwithstanding
the member's use of the Post Only instruction. Although the Exchange's
rules currently mention order handling for the Display-Price Sliding
instruction specifically, this functionality should be applied equally
to any order entered with a Post Only instruction. Thus, amending the
rule as proposed would provide additional transparency into a feature
that will be offered by the Exchange that is potentially beneficial to
members that utilize the Post Only instruction.
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, the proposed rule
change would remove ambiguity in the MX2 rules. No change to the
Exchange's order handling is contemplated by this proposed rule change,
which would merely clarify the handling for all orders entered with a
Post Only instruction. The Exchange therefore believes that the
proposed rule change would increase transparency around the operation
of the Exchange to the benefit of members and investors without
imposing any significant burden on competition.
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 \14\ and Rule 19b-4(f)(6) \15\ 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 \16\ and Rule 19b-4(f)(6) \17\ thereunder.
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6).
\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission
may designate a shorter time if such action is consistent with
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest
because the proposal avoids potential confusion by clarifying the
current handling of all orders entered with a Post Only instruction by
eliminating the reference to Display-Price Sliding in Rule 11.6 and
does not introduce any novel regulatory issues. Accordingly, the
Commission designates the proposed rule change to be operative upon
filing.\20\
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\18\ 17 CFR 240.19b-4(f)(6).
\19\ 17 CFR 240.19b-4(f)(6)(iii).
\20\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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.
[[Page 52776]]
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#cbb9bea7aee6a8a4a6a6aea5bfb88bb8aea8e5aca4bd"><span class="__cf_email__" data-cfemail="d2a0a7beb7ffb1bdbfbfb7bca6a192a1b7b1fcb5bda4">[email protected]</span></a>. Please include
file number SR-MX2-2025-04 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-MX2-2025-04. 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-MX2-2025-04 and should be submitted on
or before December 12, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-20527 Filed 11-20-25; 8:45 am]
BILLING CODE 8011-01-P
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