Notice2025-23810
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 11.9(c)(8) To Clarify Pegged Order Operation and To Align BYX Rule 11.9(c)(8) With the Corresponding Rule of Its Affiliate Exchanges, Cboe EDGA Exchange, Inc. (“EDGA”) and Cboe EDGX Exchange, Inc. (“EDGX”)
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
December 29, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 245 (Monday, December 29, 2025)</title>
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[Federal Register Volume 90, Number 245 (Monday, December 29, 2025)]
[Notices]
[Pages 60819-60822]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23810]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104463; File No. SR-CboeBYX-2025-036]
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Exchange Rule 11.9(c)(8) To Clarify Pegged Order Operation and To Align
BYX Rule 11.9(c)(8) With the Corresponding Rule of Its Affiliate
Exchanges, Cboe EDGA Exchange, Inc. (``EDGA'') and Cboe EDGX Exchange,
Inc. (``EDGX'')
December 19, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 16, 2025, Cboe BYX Exchange, Inc. (the ``Exchange'' or
``BYX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III 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)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BYX Exchange, Inc. (``BYX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposed rule change to amend Rule 11.9(c)(8) to clarify Pegged Order
operation and to align BYX Rule 11.9(c)(8) with the corresponding rule
of its affiliate exchanges, Cboe EDGA Exchange, Inc. (``EDGA'') and
Cboe EDGX Exchange, Inc. (``EDGX''). The text of the proposed rule
changes is 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/equities/regulation/rule_filings/bzx/">https://www.cboe.com/us/equities/regulation/rule_filings/bzx/</a>), and at the principal office of the Exchange.
[[Page 60820]]
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 11.9(c)(8) to clarify Pegged
Order operation and to align BYX Rules with the rules of its affiliate
exchanges in order to provide consistency amongst the Exchange and its
affiliates. The Exchange notes that the proposed rule text is based on
EDGA/EDGX Rule 11.6(j) and is different only to the extent necessary to
conform to the Exchange's current rules.\5\ The proposed amendment does
not propose to implement new or unique functionality that has not been
previously filed with the Commission or is not available on EDGA or
EDGX.
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\5\ To the extent a proposed rule change is based on existing
EDGA and EDGX Rules, the language of the EDGA, EDGX, and Exchange
Rules may differ to extent necessary to conform with existing
Exchange rule text or to account for details or descriptions
included in the Exchange Rules but not currently included in EDGA
and EDGX Rules based on the current structure of such rules.
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By way of background, Exchange Rule 11.9, Orders and Modifiers,
lists and describes the types of orders Users \6\ may enter into the
System,\7\ including Pegged Orders as described in Exchange Rule
11.9(c)(8). A Pegged Order \8\ is a limit order that after entry into
the System, the price of the order is automatically adjusted by the
System in response to changes in the NBBO.\9\ A Pegged Order will peg
to the NBB or NBO or a certain amount away from the NBB \10\ or
NBO,\11\ as described in Exchange Rules 11.9(c)(8)(A) and
11.9(c)(8)(B). Pegged Orders are not eligible for routing pursuant to
Exchange Rule 11.13(b).\12\ A new time stamp is created for a Pegged
Order each time it is automatically adjusted.\13\
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\6\ See Exchange Rule 1.5(cc).A ``User'' is defined as ``any
Member or Sponsored Participant who is authorized to obtain access
to the System pursuant to Rule 11.3.
\7\ See Exchange Rule 1.5(aa).The ``System'' is defined as ``the
electronic communications and trading facility designated by the
Board through which securities orders of Users are consolidated for
ranking, execution and, when applicable, routing away.''
\8\ See Rule 11.9(c)(8).
\9\ See Rule 1.5(o). The term ``NBBO'' shall mean the national
best bid or offer.
\10\ See Rule 1.5(o). The term ``NBB'' shall mean the national
best bid.
\11\ See Rule 1.5(o). The term ``NBO'' shall mean the national
best offer.
\12\ See Rule 11.9(c)(8).
\13\ Id.
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A Pegged Order may be a Primary Pegged Order or a Market Pegged
Order.\14\ A Primary Pegged Order will have its price pegged by the
System to the NBB, for a buy order, or the NBO for a sell order.\15\ A
User may, but is not required to, specify that such order's price will
offset the inside quote on the same side of the market by an amount set
by the User (the ``Primary Offset Amount'').\16\ A Primary Pegged Order
is eligible to be displayed or non-displayed, however, the Primary
Offset Amount for a displayed Primary Pegged Order must result in the
price of such order being inferior to or equal to the inside quote on
the same side of the market.\17\ A displayed Primary Pegged Order with
a Primary Offset Amount shall only include a time-in-force of RHO,\18\
or if entered during Regular Trading Hours,\19\ a time-in-force of
Day.\20\
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\14\ Id.
\15\ See Rule 11.9(c)(8)(A).
\16\ Id.
\17\ Id.
\18\ See Rule 11.9(b)(7). A time-in-force of Regular Hours Only
(``RHO'') may be applied to a limit or market order that is
designated for execution only during Regular Trading Hours, which
includes the Opening Auction, the Closing Auction, and IPO/Halt
Auctions for BYX listed securities and the Opening Process for non-
BYX-listed securities (as such terms are defined in Rule 11.23 and
11.24). Any portion of a market RHO order will be cancelled
immediately following any auction in which it is not executed.
\19\ 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.
\20\ See Rule 11.8(b)(2). A time-in-force of Day may be applied
to a limit order to buy or sell, which, if not executed, expires at
the end of Regular Trading Hours. Any Day Order entered into the
System before the opening of business on the Exchange as determined
pursuant to Rule 11.1, or after the closing of Regular Trading
Hours, will be rejected.
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A Market Pegged Order has its price pegged by the System to the
NBB, for a sell order, or the NBO, for a buy order.\21\ A User entering
a Market Pegged Order can specify that such order's price will offset
the inside quote on the contra side of the market by an amount set by
the User (the ``Offset Amount'').\22\ A Market Pegged Order is not
eligible to be displayed on the Exchange.\23\
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\21\ See Rule 11.9(c)(8)(B).
\22\ Id.
\23\ Id.
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Now, the Exchange proposes to amend the description of a Pegged
Order under Rule 11.9(c)(8) to align with EDGA/EDGX Rule 11.6(j) and to
clarify that a Pegged Order will not be eligible for execution where
the NBB or NBO, as applicable, is no longer available. Further, the
proposed rule text will provide that a new timestamp is created for an
order that has been ineligible for execution and again becomes eligible
for execution because the NBB or NBO it is pegged to becomes
unavailable [sic].
Currently, when the NBB or NBO becomes unavailable, a Pegged Order
is cancelled back to the User. As proposed, instead of being cancelled
back to the User, a Pegged Order will remain on the BYX Book. When the
NBB or NBO that the Pegged Order is pegged to becomes available again,
the order will receive a new time stamp and be eligible for execution.
The proposed rule change provides additional detail with regard to the
operation of Pegged Orders when the NBB or NBO, as applicable, is
unavailable, that is currently not included in Exchange Rule 11.9(c).
This proposed rule change does not propose to implement new or unique
functionality that has not been previously filed with the Commission or
is not available on EDGA or EDGX.
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.\24\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \25\ 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) \26\ requirement that
[[Page 60821]]
the rules of an exchange not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers. The
proposed rule change is designed to support the principles of Section
11A(a)(1) \27\ of the Act in that it seeks to assure fair competition
among brokers and dealers and among exchange markets.
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\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(5).
\26\ Id.
\27\ 15 U.S.C. 78k-1(a)(1).
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The proposed rule change is intended to more thoroughly describe
Pegged Order operation and to align BYX Rules with the rules of its
affiliate exchanges in order to provide consistent offerings amongst
the Exchange and its affiliates, which the Exchange believes is
designed to remove impediments to and perfect the mechanism of a free
and open market and a national market system, thereby protecting
investors and the public interest. Consistency amongst the rules of the
Exchange and its affiliates, in turn, will promote rule compliance for
Users of the Exchange that are also participants on EDGA and/or EDGX.
The proposed rule change does not propose to implement new or unique
functionality that has not been previously filed with the Commission or
is not described in the rules of its affiliate exchanges. By aligning
BYX Rules with the rules of EDGA and EDGX, the Exchange believes the
proposed rule change will remove impediments to the mechanism of a free
and open market and protect investors by providing investors with
increased transparency regarding rules that reflect the behavior of
Pegged Order on the Exchange when the NBB or NBO, as applicable,
becomes unavailable. As a result, the Exchange's proposal 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. Additionally, the proposal does not permit unfair
discrimination among customers, brokers, or dealers because the
proposed Pegged Order behavior will apply to all Users equally in that
any User's Pegged Order will become non-executable in the event that
the NBB or NBO, as applicable, becomes unavailable and a Pegged Order
will receive a new timestamp when the NBB or NBO becomes available and
the order again becomes eligible for execution.
As described above, the proposed amendment is designed to ensure
clarity in the Exchange's rulebook with respect to the operation of
Pegged Orders in the event that the NBB or NBO, as applicable, becomes
unavailable. The Exchange notes that the proposed amendment is based on
EDGA/EDGX Rule 11.6(j) and is different only to the extent necessary to
conform to the Exchange's current rules. Thus, the proposed amendment
to Rule 11.9(c)(8) is directly targeted at removing impediments to and
perfecting the mechanism of a free and open market and national market
system, as well as to assure fair competition among brokers and dealers
and among exchange markets.
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 notes that the
proposed amendment to clarify Pegged Order behavior will provide
consistent offerings amongst the Exchange and its affiliates. The
Exchange does not believe the proposed change will have any impact on
intermarket competition as the proposal is not being made for
competitive reasons, but rather to align the text of BYX Rule
11.9(c)(8) with the corresponding rule text of its affiliate exchanges.
In addition, the Exchange believes the proposed rule change will
benefit all Users in that Users will have a more complete understanding
of Pegged Order behavior when the NBB or NBO, as applicable, becomes
unavailable. The proposed rule change will apply equally to all Users
of Pegged Orders.
The Exchange does not believe that the proposed amendments will
impose any burden on intra-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
provides services in a highly competitive market in which participants
may avail themselves of a wide variety of order types and order
operations offered by self-regulatory organizations, other broker-
dealers, market participants' own proprietary routing systems, and
service bureaus. In such an environment, more detailed descriptions of
the types of orders Users may enter into the System, such as the
changes proposed in this rule filing do not burden competition, because
they can succeed in attracting order flow to the Exchange only if they
offer investors higher quality and better value than services offered
by others. The Exchange reiterates that the proposed rule change to
clarify Pegged Order behavior is being proposed in an effort to add
consistency to offerings across the Exchange and its affiliates.
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
Because the foregoing proposed rule change does not:
A. significantly affect the protection of investors or the public
interest;
B. impose any significant burden on competition; and
C. 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 \28\ and
Rule 19b-4(f)(6) \29\ 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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\28\ 15 U.S.C. 78s(b)(3)(A).
\29\ 17 CFR 240.19b-4(f)(6).
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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#acded9c0c981cfc3c1c1c9c2d8dfecdfc9cf82cbc3da"><span class="__cf_email__" data-cfemail="fc8e899099d19f9391919992888fbc8f999fd29b938a">[email protected]</span></a>. Please include
file number SR-CboeBYX-2025-036 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-CboeBYX-2025-036. 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
[[Page 60822]]
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-CboeBYX-2025-036 and should be submitted on or
before January 20, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23810 Filed 12-23-25; 8:45 am]
BILLING CODE 8011-01-P
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