Notice2025-23816
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the Minimum Performance Standards Applicable to the Exchange's Lead Market Maker (“LMM”) Program in BZX-Listed Exchange-Traded Product (“ETP”) Securities as Provided in Footnote 14 of the Exchange's Fee Schedule and To Remove Closed-End Funds (“CEFs”) From the ETP LMM Program
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 60832-60837]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23816]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104472; File No. SR-CboeBZX-2025-163]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify
the Minimum Performance Standards Applicable to the Exchange's Lead
Market Maker (``LMM'') Program in BZX-Listed Exchange-Traded Product
(``ETP'') Securities as Provided in Footnote 14 of the Exchange's Fee
Schedule and To Remove Closed-End Funds (``CEFs'') From the ETP LMM
Program
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 12, 2025, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
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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[[Page 60833]]
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 proposed rule change to modify the Minimum Performance Standards
applicable to the Exchange's Lead Market Maker (``LMM'') program in
BZX-listed exchange-traded product (``ETP'') securities as provided in
footnote 14 of the Exchange's fee schedule and to remove Closed-End
Funds (``CEFs'') from the ETP LMM 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
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 its Fee Schedule applicable to its
equities trading platform (``BZX Equities'') to (1) modify the Minimum
Performance Standards \3\ applicable to the ETP LMM program \4\ by
changing the criteria needed to earn the Base Rates and Enhanced Rates
provided in footnote 14(B) of the fee schedule; (2) memorialize those
Minimum Performance Standards in the fee schedule; and (3) remove CEFs
from the ETP LMM Program. The Exchange proposes to implement these
changes effective December 1, 2025.\5\
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\3\ As defined in Rule 11.8(e)(1)(E), the term ``Minimum
Performance Standards'' means a set of standards applicable to an
LMM that may be determined from time to time by the Exchange. Such
standards will vary between LMM Securities depending on the price,
liquidity, and volatility of the LMM Security in which the LMM is
registered. The performance measurements will include: (A) percent
of time at the NBBO; (B) percent of executions better than the NBBO;
(C) average displayed size; and (D) average quoted spread.
\4\ The ETP LMM Program was adopted in 2019 and was designed to
encourage LMMs to maintain better market quality in BZX-listed
securities, and, in particular, in lower volume securities where
transaction-based compensation (i.e., rebates) may not be
sufficient. See Securities Exchange Act No. 91151 (February 10,
2021) 86 FR 11372 (February 24, 2021) (SR-CboeBZX-2021-016) (the
``Original Filing'').
\5\ The Exchange initially filed the proposed fee changes on
November 21, 2025 (SR-CboeBZX-2025-150), withdrew that filing on
December 4, 2025, and submitted a replacement filing (SR-CboeBZX-
2025-160). The Exchange withdrew SR-CboeBZX-2025-160 on December 12,
2025, and submitted this filing.
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The Exchange first notes that its listings business operates in a
highly-competitive market in which market participants, which includes
issuers of securities, LMMs, and other liquidity providers, can readily
transfer their listings, opt not to participate, or direct order flow
to competing venues if they deem fee levels, liquidity provision
incentive programs, or any other factor at a particular venue to be
insufficient or excessive. The proposed rule changes reflect a
competitive pricing structure designed to incentivize market
participants to participate as LMMs in the Exchange's LMM Program,
which the Exchange believes will enhance market quality in all
securities listed on the Exchange and encourage issuers to list new
products and transfer existing products to the Exchange.
The Exchange currently offers daily incentives for LMMs in ETPs and
CEFs and listed on the Exchange for which the LMM meets certain
``Base'' or ``Enhanced'' Minimum Performance Standards.\6\ Such daily
incentives are determined based on the number of BZX-listed ETPs/CEFs
for which the LMM meets such Minimum Performance Standards and the
average auction volume across such securities. Generally speaking, the
more LMM Securities \7\ for which the LMM meets the Minimum Performance
Standards and the higher the auction volume across those ETPs/CEFs, the
greater the total daily incentive to the LMM.
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\6\ Minimum Performance Standards generally refers to a set of
standards applicable to an LMM that may be determined from time to
time by the Exchange. See e.g., Exchange Rule 11.8(e)(1)(E).
\7\ The term ``LMM Security'' means BZX-listed securities for
which a Member is an LMM.
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The Exchange first proposes to eliminate CEFs from the ETP LMM
Program provided under footnote 14(B) of the fee schedule. To effect
this change, the Exchange proposes to remove CEFs from the definition
of ``Qualified ETP LMM'' and adopt a new term ``Qualified CEF LMM'' in
the fee schedule. The Exchange proposes to define ``Qualified CEF LMM''
to mean an LMM in a BZX-listed CEF security that meets the LMM
performance standards set forth in Rule 11.8(e)(1)(E)(ii). The Exchange
proposes to modify the existing definition of ``Qualified ETP LMM'' to
mean an LMM in a BZX-listed ETP that is registered as a market maker in
good standing on the Exchange that meets the Base or Enhanced Minimum
Performance Standards set forth in footnote 14(B). The Exchange also
proposes to eliminate all references to CEFs in footnote 14(B) of the
fee schedule. The Exchange proposes to adopt a new definition for the
term ``ETP Minimum Performance Standards'' which would mean the
``Base'' or ``Enhanced'' standards set forth in footnote 14(B) of the
fee schedule. The Exchange also proposes to modify references to
Standard Rates in footnote 14(B) to Base Rates.
The Exchange also proposes to amend both the Base and Enhanced
Minimum Performance Standards under which an ETP LMM would qualify for
the daily incentive. The Exchange proposes no changes to the amount of
the daily incentives currently provided in the fee schedule.
The Original Filing provided that the Exchange expects the Minimum
Performance Standards to include the below, and before diverging
significantly from those ranges, the Exchange would submit a rule
filing to the Commission describing such proposed changes.
Specifically, the Minimum Performance Standards included in Original
Filing required:
(i) registration as a market maker in good standing with the
Exchange;
(ii) time at the inside requirements (generally between 3% and 15%
of Regular Trading Hours for Base Minimum Performance Standards and
between 5% to 50% for Enhanced Minimum Performance Standards, depending
on the average daily volume of the applicable LMM Security);
(iii) auction participation requirements (generally requiring that
the auction price is between 3% and 5% of the last Reference Price, as
defined in Rule 11.23(a)(19), for Base Minimum Performance Standards
and 1%-3% for Enhanced Minimum Performance Standards);
(iv) market-wide NBB and NBO spread and size requirements
(generally requiring between 200 and 750 shares at both the NBB and NBO
for both Base and Enhanced Minimum Performance Standards with an NBBO
spread between 1% and 10% for Base
[[Page 60834]]
Minimum Performance Standards and .25% to 4% for Enhanced Minimum
Performance Standards, depending on price of the ETP and underlying
asset class); and
(v) depth of book requirements (generally requiring between $25,000
and $250,000 of displayed posted liquidity for both Base and Enhanced
Minimum Performance Standards within 1% to 10% of both the NBB and NBO
for Base Minimum Performance Standards and 0.25% and 5% for Enhanced
Minimum Performance Standards, depending on price of the ETP and
underlying asset class).
Now, the Exchange proposes to modify the Base and Enhanced Minimum
Performance Standards and memorialize those Minimum Performance
Standards in the fee schedule.
First, the Exchange proposes to provide under footnote 14(B)
introductory language related to a Qualified ETP LMM. Specifically, the
Exchange proposes to provide that Qualified ETP LMMs that meet the Base
or Enhanced Minimum Performance Standards below are entitled to the
Qualified ETP LMM daily incentive. Each assigned ETP is grouped based
on an asset class categorization.\8\ An ETP LMM is considered to have
met the Base and Enhanced Minimum Performance Standard for an assigned
ETP for the trading day if it meets each of the following Base or
Enhanced requirements:
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\8\ The Exchange proposes six asset class categories as follows:
(1) US Equity, (2) Single Stock, (3) Outcome Based, (4) Fixed
Income, (5) International Equity, and (6) Other.
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(1) Time with Two-Sided Quotation: ETP LMM must maintain both
bid(s) and offer(s) at least a certain percentage of the time the
security is in a trading state during Regular Trading Hours
(``RTH'').\9\ Specifically, across all six asset class categories and
for Base and Enhanced Minimum Performance Standards, the ETP LMM must
maintain both bid(s) and off(s) at least 98% of the time the security
is in a trading state during RTH, as follows:
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\9\ See Exchange Rule 1.5(w).
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Single stock Outcome based Fixed income International
US equity (%) (%) (%) (%) equity (%) Other (%)
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Base.............................................. 98 98 98 98 98 98
Enhanced.......................................... 98 98 98 98 98 98
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(2) Time at the National Best Bid and Offer (``NBBO''): ETP LMM
must maintain both bid(s) and offer(s) at the NBBO at least a certain
percentage of the time the security is in a trading state during RTH,
as summarized in the table below.\10\ The Base and Enhanced Minimum
Performance Standard is applied based on consolidated average daily
volume (``CADV'') of the ETP LMM Security.
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\10\ The Exchange calculates time at the NBBO by separately
determining the percentage of time the LMM is at the NBB and at the
NBO, then averaging those two percentages.
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Single stock Outcome based Fixed income International
US equity (%) (%) (%) (%) equity (%) Other (%)
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Base:
CADV >=500,000................................ 5 5 5 5 5 5
CADV <500,000................................. 20 20 20 20 20 20
Enhanced:
CADV >=500,000................................ 15 15 15 15 15 15
CADV <500,000................................. 60 60 60 60 60 60
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As provided above, the ETP LMM must maintain bid(s) and offer(s) at
the NBB or NBO, respectively, at least 5% of the time the security is
in a trading state during RTH for ETP LMM Securities with a CADV equal
than or greater than 500,000 shares across all six asset categories to
meet the Base Minimum Performance Standard. For ETP LMM Securities with
a CADV less than 500,000 shares, the ETP LMM must maintain bid(s) and
offer(s) at the NBB or NBO, respectively, at least 20% of the time the
security is in a trading state during RTH for ETP LMM Securities with a
CADV equal than or greater than 500,000 shares across all six asset
categories to meet the Base Minimum Performance Standard.
The Enhanced Minimum Performance Standard requires the ETP LMM must
maintain bid(s) and offer(s) at the NBB or NBO, respectively, at least
15% of the time the security is in a trading state during RTH for ETP
LMM Securities with a CADV equal than or greater than 500,000 shares
across all six asset categories. For ETP LMM Securities with a CADV
less than 500,000 shares, the ETP LMM must maintain bid(s) and offer(s)
at the NBB or NBO, respectively, at least 60% of the time the security
is in a trading state during RTH for ETP LMM Securities with a CADV
less than 500,000 shares across all six asset categories.
(3) Depth of Book: ETP LMM must maintain a minimum notional value
of both bid(s) and offer(s) within a certain percentage of the NBBO for
at least 90%\11\ during the time the security is in a trading state
during RTH, as follows:
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\11\ To calculate the time that the LMM meets the depth of book
requirement, the Exchange considers the time during which the LMM
has both bid(s) and offer(s) (i.e., a two-sided quote) posted to the
Exchange that satisfy the notional value and price requirements.
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International
US equity Single stock Outcome based Fixed income equity Other
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Base.............................................. $150,000 $150,000 $150,000 $150,000 $150,000 $150,000
1% 2% 2% 2% 2% 2%
[[Page 60835]]
Enhanced.......................................... $150,000 $150,000 $175,000 $175,000 $150,000 $150,000
0.25% 0.50% 0.35% 0.25% 0.40% 0.50%
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Based on the above, for the Base Minimum Performance Standard the
ETP LMM must maintain a notional value of $150,000 on both the bid and
the offer within at least 1-2% (dependent on the asset category) of the
NBB and NBO, respectively, across the six asset categories. The
Enhanced Minimum Performance Standard requires the LMM maintain a
notional value ranging from $150,000 to $175,000 on both the bid and
offer within at least 0.25-0.50% of the NBB and NBO, respectively,
across the six asset categories.
(4) Minimum Size at NBBO: market-wide NBBO must have a minimum
number of shares available at both the NBB and NBO at least 50% during
the time the security is in a trading state during RTH, as follows:
\12\
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\12\ The Exchange calculates the minimum size at the NBBO by
separately determining the percentage of time the LMM is at the NBB
and at the NBO, then averaging those two percentages.
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Single stock Outcome based Fixed income International
US equity (%) (%) (%) (%) equity (%) Other (%)
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Base.............................................. 500 300 300 300 300 300
Enhanced.......................................... 1,000 1,300 1,200 1,200 1,000 1,000
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As indicated above, the Base Minimum Performance Standard requires
300 to 500 shares available at the NBB and NBO across all market
centers for at least 50% of the trading day based on the asset
categorization of the LMM ETP Security. The Enhanced Minimum
Performance Standard requires 1,000 to 1,300 shares available at the
NBB and NBO across all market centers for at least 50% of the trading
day based on the asset categorization of the LMM ETP Security.
(5) Maximum NBBO Spread: market-wide NBBO spread must be within a
certain percentage for at least 95% during the time the security is in
a trading state during RTH, as follows:
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Single stock Outcome based Fixed income International
US equity (%) (%) (%) (%) equity (%) Other (%)
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Base.............................................. 0.50 1 0.75 0.50 1 1.50
Enhanced.......................................... 0.25 0.50 0.35 0.25 0.40 0.50
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As indicated above, the Base Minimum Performance Standard requires
the NBBO spread across all market centers be within 0.50-1% for at
least 95% of the trading day based on the asset categorization of the
LMM ETP Security. The Enhanced Minimum Performance Standard requires
the NBBO spread across all market centers be within 0.25-0.50% for at
least 95% of the trading day based on the asset categorization of the
LMM ETP Security.
(6) BZX Official Opening/Closing Price Requirement: the BZX
Official Opening Price \13\ and BZX Official Closing Price \14\ must be
within a certain percentage of the last Reference Price.\15\
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\13\ See Exchange Rule 11.23(a)(5).
\14\ See Exchange Rule 11.23(a)(3).
\15\ See Exchange Rule 11.23(a)(19)
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Single stock Outcome based Fixed income International
US equity (%) (%) (%) (%) equity (%) Other (%)
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Base:
Opening Price................................. 2 2 2 2 2 2
Closing Price................................. 1.50 1.50 1.50 1.50 1.50 1.50
Enhanced:
Opening Price................................. 0.50 0.50 0.50 0.50 0.50 0.50
Closing Price................................. 0.25 0.25 0.25 0.25 0.25 0.25
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As provided above, the Base Minimum Performance Standard requires
that the BZX Official Opening Price be within 2% of the last Reference
Price across all six asset categories, and the BZX Official Closing
Price be within 1.50% of the last Reference Price across all six asset
categories. The Enhanced Minimum Performance Standard requires that the
BZX Official Opening Price be within 0.50% of the last Reference Price
across all six asset categories, and the BZX Official Closing Price be
within 0.25% of the last Reference Price across all six asset
categories.
The Exchange believes the proposed amendments to the ETP LMM
Program, including the removal of CEFs, memorialization of Minimum
Performance Standards, and adoption of asset class-based requirements,
are
[[Page 60836]]
consistent with the requirements of the Act for the reasons discussed
below.
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.\16\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \17\ 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) \18\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \19\
as it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its Members and other persons using
its facilities.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
\18\ Id.
\19\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed changes to the ETP LMM
Program are consistent with Section 6(b)(5) of the Act because they are
designed to enhance market quality and liquidity in Exchange-listed
securities. Specifically, the proposed rule change memorializes the
Minimum Performance Standards applicable to ETP LMMs in the fee
schedule, providing greater transparency and clarity to market
participants regarding the obligations and expectations for LMMs
participating in the program. The Exchange notes that it is appropriate
to memorialize the ETP Minimum Performance Standards in the Fee
Schedule rather than the rule book, as this approach is consistent with
NYSE Arca's treatment of similar standards.\20\ This transparency
removes impediments to and perfects the mechanism of a free and open
market by ensuring that all market participants have clear notice of
the standards that must be met to qualify for LMM incentives.
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\20\ See NYSE Arca fee schedule at section III available at
<a href="https://www.nyse.com/publicdocs/nyse/vmarkets/nyse-arca/NYSE_cArca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/vmarkets/nyse-arca/NYSE_cArca_Marketplace_Fees.pdf</a>.
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The Exchange believes that segmenting the Minimum Performance
Standards into asset classes is consistent with Section 6(b)(5) of the
Act and is in line with how the Exchange understands market makers to
take on and quote ETP assignments. Different asset classes--including
US Equity, Single Stock, Outcome Based, Fixed Income, International
Equity, and Other--have distinct trading characteristics, liquidity
profiles, and market dynamics that affect how market makers can
effectively provide liquidity. By tailoring the performance standards
to reflect these differences, the Exchange believes that aligning asset
classes with respective quoting obligations will result in more
correlated market making support to the tickers that fall in each asset
class. This approach promotes just and equitable principles of trade by
establishing performance standards that are appropriately calibrated to
the unique characteristics of each asset class, which in turn enhances
liquidity provision and market quality for investors trading in these
securities.
The proposed asset class-based structure benefits investors and
protects the public interest by ensuring that LMMs are held to
standards that reflect the realities of providing liquidity in
different types of ETPs. For example, Fixed Income ETPs may have
different spread and depth characteristics than US Equity ETPs, and
International Equity ETPs may face different pricing dynamics than
Single Stock ETPs. By recognizing these differences in the Minimum
Performance Standards, the Exchange creates incentives for LMMs to
provide high-quality, consistent liquidity that is appropriate for each
product type. This tailored approach removes impediments to and
perfects the mechanism of a free and open market by encouraging market
making activity that is well-suited to the specific needs of each asset
class.
The Exchange also believes that removing CEFs from the ETP LMM
Program and establishing a separate ``Qualified CEF LMM'' definition is
consistent with Section 6(b)(5) of the Act. This change recognizes the
distinct trading characteristics and liquidity profiles of CEFs
compared to ETPs and allows the Exchange to tailor its LMM programs
appropriately to each product type. By applying the LMM performance
standards set forth in Rule 11.8(e)(1)(E)(ii) to CEFs, the Exchange
ensures that CEF LMMs are subject to appropriate standards while
focusing the proposed ETP LMM Program standards on ETPs, where such
standards are better suited to the product characteristics. This
tailored approach promotes just and equitable principles of trade and
protects investors by ensuring that LMM obligations are appropriately
calibrated to the securities for which they are responsible.
Furthermore, the proposed rule change is consistent with Section
6(b)(5) because it operates in a competitive environment where market
participants can readily choose among competing venues. The Exchange's
LMM Program is designed to attract and retain LMMs by offering
competitive incentives in exchange for meeting rigorous performance
standards. This competitive structure ensures that the Exchange's fees
and incentive programs remain fair and reasonable, as LMMs and issuers
can direct their business elsewhere if they find the Exchange's terms
to be insufficient or excessive. The proposed changes reflect the
Exchange's efforts to balance the need for high-quality market making
with appropriate incentives, which ultimately benefits all market
participants and promotes the public interest.
Finally, the Exchange believes that memorializing the specific
Minimum Performance Standards in the fee schedule, including the
detailed requirements across different asset class categories and CADV
thresholds, enhances transparency and removes impediments to a free and
open market. Market participants will have clear, accessible
information about the standards applicable to the ETP LMM Program,
enabling them to make informed decisions about participation and
allowing for more effective monitoring and compliance. This
transparency is consistent with the Act's objectives of promoting just
and equitable principles of trade and protecting investors.
For these reasons, the Exchange believes the proposed rule change
is consistent with the requirements of Section 6(b)(5) of the Act.
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
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Rather, the
[[Page 60837]]
Exchange believes the proposed rule change will enhance competition.
The Exchange does not believe 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. The proposed
Minimum Performance Standards apply equally to all ETP LMMs that choose
to participate in the ETP LMM Program. All ETP LMMs have the
opportunity to qualify for the daily incentives by meeting either the
Base or Enhanced Minimum Performance Standards, and the standards are
transparent and objective. The Exchange notes that participation in the
ETP LMM Program is voluntary, and market makers can choose whether to
participate based on their assessment of whether they can meet the
performance standards and whether the incentives are attractive
relative to their costs.
The proposed asset class-based structure does not impose a burden
on intramarket competition because it reflects the different
characteristics and trading dynamics of various ETP types. Market
makers specializing in different asset classes face different
operational requirements and market conditions, and the tailored
standards recognize these differences rather than creating competitive
advantages or disadvantages. An ETP LMM's ability to meet the standards
for any particular asset class depends on its operational capabilities
and market making strategies, which are within the control of each
market participant.
Additionally, the removal of CEFs from the ETP LMM Program does not
burden intramarket competition. CEF LMMs will continue to be subject to
the LMM performance standards set forth in Rule 11.8(e)(1)(E)(ii),
ensuring that all CEF LMMs are treated equally. The separation of CEFs
from ETPs in the LMM Program structure simply recognizes the distinct
nature of these products and allows the Exchange to apply appropriate
standards to each product type.
The Exchange does not believe 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. The Exchange
operates in a highly competitive market in which market participants
can readily direct their business to competing venues if they deem fee
levels, incentive programs, or other factors at a particular venue to
be insufficient or excessive. The proposed changes to the ETP LMM
Program are designed to attract and retain LMMs by offering competitive
incentives in exchange for meeting performance standards that enhance
market quality.
To the extent the proposed rule change makes the Exchange's LMM
Program more attractive to market makers or issuers, any resulting
competitive impact would be the result of the Exchange's competitive
pricing and program design, which is appropriate and consistent with
the Act. Other exchanges are free to adopt similar or different LMM
programs and incentive structures to compete for market maker
participation and issuer listings. The Exchange believes that
competition among venues for LMM participation and listings benefits
investors by encouraging exchanges to develop programs that promote
liquidity and market quality.
Furthermore, the proposed rule change may enhance intermarket
competition by encouraging other exchanges to evaluate and potentially
improve their own LMM programs. This type of competitive dynamic
promotes innovation and improvement in market structure, which
ultimately benefits investors and the broader market ecosystem.
The Exchange also notes that the proposed Minimum Performance
Standards are designed to enhance liquidity in Exchange-listed ETPs,
which benefits all market participants regardless of where they choose
to trade. Improved liquidity and tighter spreads resulting from the
enhanced LMM Program contribute to better price discovery and more
efficient markets across all trading venues, as the benefits of
improved market quality are not limited to the Exchange's platform.
For these reasons, the Exchange does not believe the proposed rule
change will impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
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 \21\ and paragraph (f) of Rule 19b-4 \22\
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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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 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#2b595e474e06484446464e455f586b584e48054c445d"><span class="__cf_email__" data-cfemail="82f0f7eee7afe1edefefe7ecf6f1c2f1e7e1ace5edf4">[email protected]</span></a>. Please include
file number SR-CboeBZX-2025-163 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-2025-163. 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-2025-163 and should be submitted
on or before January 20, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23816 Filed 12-23-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on December 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.