Notice2025-24054
Self-Regulatory Organizations; Cboe Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Amend Exchange Rule 5.4
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 31, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 247 (Wednesday, December 31, 2025)</title>
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[Federal Register Volume 90, Number 247 (Wednesday, December 31, 2025)]
[Notices]
[Pages 61490-61492]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-24054]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104508; File No. SR-CBOE-2025-075]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To Amend Exchange Rule 5.4
December 23, 2025.
I. Introduction
On September 30, 2025, Cboe Exchange, Inc. (``Exchange'') filed
with the Securities and Exchange Commission (``Commission''), pursuant
to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'' or
``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to amend Exchange Rule 5.4(a) to change the minimum increment
for options on the Cboe Mini Bitcoin U.S. ETF Index (``MBTX'') to $0.01
for series trading lower than $3.00 and $0.05 for series trading at
$3.00 or higher. The proposed rule change was published for comment in
the Federal Register on October 3, 2025.\3\ The Commission has received
no comments regarding the proposal.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 104157 (Sept. 30,
2025), 90 FR 48071 (Oct. 3, 2025) (``Notice'').
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On November 3, 2025, pursuant to Section 19(b)(2) of the Exchange
Act,\4\ the Commission designated a longer period within which to
approve the proposed rule change, disapprove the proposed rule change,
or institute proceedings to determine whether to disapprove the
proposed rule change.\5\ This order institutes proceedings under
Section 19(b)(2)(B) of the Act \6\ to determine whether to approve or
disapprove the proposed rule change.
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\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 104173 (Nov. 3,
2025), 90 FR 51424 (Nov. 17, 2025) (designating January 1, 2026, as
the date by which the Commission shall either approve, disapprove,
or institute proceedings to determine whether to disapprove the
proposed rule change).
\6\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change
As described more fully in the Notice,\7\ the Exchange proposes to
amend Exchange Rule 5.4(a) to establish a minimum increment of $0.01
for series of MBTX options trading lower than $3.00 and $0.05 for
series of MBTX options trading at $3.00 or higher. The Exchange states
that market demand, including from retail investors who, according to
the Exchange, generally prefer lower trading increments, supports a
lower trading increment for MBTX.\8\ The Exchange states that options
overlying the components of the MBTX (and the underlying exchange-
traded funds) (``ETFs'') are actively traded.\9\ The Exchange further
states that it expects that more granular pricing will lead to
narrowing of the bid-ask spread for MBTX options and an increase in the
possible number of price points available to investors for these
series.\10\ The Exchange states that tighter spreads will increase
order flow in MBTX options, providing additional liquidity that will
ultimately benefit all investors.\11\ In addition, the Exchange states
that finer increments permit more precise pricing in line with the
theoretical value of the options.\12\
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\7\ See supra note 3.
\8\ See Notice, 90 FR at 48071.
\9\ See Notice, 90 FR at 48071 (citing <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)).
\10\ See Notice, 90 FR at 48071.
\11\ See Notice, 90 FR at 48071.
\12\ See Notice, 90 FR at 48071.
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The Exchange states that it has analyzed its system capacity and
represents that the Exchange and the Options Price Reporting Authority
have the necessary systems capacity to handle any potential additional
traffic
[[Page 61491]]
associated with this proposal.\13\ The Exchange further states that it
does not believe any potential increased traffic will become
unmanageable because the proposal is limited to a single class of
options.\14\
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\13\ See Notice, 90 FR at 48071.
\14\ See Notice, 90 FR at 48071-2.
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The Exchange states that the proposal would permit MBTX options to
trade at the same level of granularity as options on the iShares
Bitcoin Trust (``IBIT''). The Exchange states that IBIT is a component
of the MBTX and that IBIT options are the primary competitive product
for MBTX options.\15\ The Exchange further states that IBIT options
qualify for the Penny Interval Program under Exchange Rule 5.4(a) and
that MBTX options should be eligible for the same pricing increments as
IBIT options for competitive reasons.\16\ The Exchange states that
market participants may use IBIT options to hedge MBTX options and that
aligning the pricing increments for these products would permit
investors to trade related products at more granular prices that may be
more aligned with their investment objectives.\17\
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\15\ See Notice, 90 FR at 48072.
\16\ See Notice, 90 FR at 48072. The Exchange states that as of
September 19, 2025, IBIT options are the 13th most actively traded
equity option (based on six-month trading volume as of September 19,
2025). See id. at footnote 7.
\17\ The Exchange states that, under Exchange Rule 5.4, 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. The Exchange states that the
minimum increment for Cboe Mini SPX Index (``XSP'') options is $0.01
because that is the minimum increment for SPDR S&P 500 ETF Trust
(``SPY'') options, and the minimum increment for Dow Jonex
Industrial Index (``DJX'') options is $0.01 for series below $3 and
$0.05 for series $3 and above because that is the minimum increment
for SPDR Dow Jones Industrial Average ETF (``DIA'') options. See
Notice, 90 FR at footnote 8.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-CBOE-
2025-075 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \18\ to determine whether the proposed rule
change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide comments
on the proposed rule change.
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\18\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\19\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with the Act and, in
particular, with Section 6(b)(5) of the Act,\20\ which requires, among
other things, that the rules of a national securities exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, 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, and not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\19\ Id.
\20\ 15 U.S.C. 78f(b)(5).
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Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the Exchange
Act and the rules and regulations issued thereunder . . . is on the
self-regulatory organization that proposed the rule change.'' \21\ The
description of a proposed rule change, its purpose and operation, its
effect, and a legal analysis of its consistency with applicable
requirements must all be sufficiently detailed and specific to support
an affirmative Commission finding,\22\ and any failure of a self-
regulatory organization to provide this information may result in the
Commission not having a sufficient basis to make an affirmative finding
that a proposed rule change is consistent with the Act and the
applicable rules and regulations.\23\ The Commission is instituting
proceedings to allow for additional consideration and comment on the
issues raised herein, including as to whether the proposal is
consistent with the Act. The Commission asks that commenters address
the sufficiency of the Exchange's statements in support of the
proposal, which are set forth in the Notice, in addition to any other
comments they may wish to submit about the proposed rule change. In
particular, the Commission asks commenters to address whether the
proposal includes sufficient data and analysis to support a finding
that the proposal is consistent with the requirements of Section
6(b)(5) of the Act.
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\21\ 17 CFR 201.700(b)(3).
\22\ See id.
\23\ See id.
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IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, and
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\24\
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\24\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by January 21, 2026. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
February 4, 2026.
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#2a585f464f07494547474f445e596a594f49044d455c"><span class="__cf_email__" data-cfemail="5a282f363f77393537373f342e291a293f39743d352c">[email protected]</span></a>. Please include
file number SR-CBOE-2025-075 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-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
[[Page 61492]]
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 January 21, 2026.
Rebuttal comments should be submitted by February 4, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-24054 Filed 12-30-25; 8:45 am]
BILLING CODE 8011-01-P
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