Notice2026-01206
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 1.1 (Definitions) To Add New Designation “L” to the Definition of “Capacity”
Primary source
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Published
January 23, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 15 (Friday, January 23, 2026)</title>
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[Federal Register Volume 91, Number 15 (Friday, January 23, 2026)]
[Notices]
[Pages 2982-2984]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-01206]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104630; File No. SR-C2-2026-002]
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 1.1 (Definitions) To Add New Designation ``L'' to the Definition
of ``Capacity''
January 20, 2026.
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 January 5, 2026, Cboe C2 Exchange, Inc. (the ``Exchange'' or
``C2'') 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)(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 C2 Exchange, Inc. (``C2'' or the ``Exchange'') is filing with
the Securities and Exchange Commission (``Commission'' or ``SEC'') a
proposed rule change to amend Rule 1.1 (Definitions) to add new
designation ``L'' to the definition of ``Capacity''. 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/bzx/">https://www.cboe.com/us/options/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 Rule 1.1 (Definitions) to add a new
capacity designation code ``L'' to the definition of ``Capacity.''
Currently, Rule 1.1 defines ``Capacity'' as the capacity in which a
User submits an order, which the User specifies by applying the
corresponding code to the order. The rule currently includes seven
capacity codes: B (broker-dealer), C (Public Customer), F (OCC clearing
member firm proprietary), J (joint back office), M (Market-Maker), N
(market-maker on another options exchange), and U (Professional). The
Exchange now proposes to add capacity code ``L,'' which will be
designated ``For the account of a non-Trading Permit Holder affiliate
of a Clearing Trading Permit Holder as defined and for the purposes
described in the Cboe C2 Options Fees Schedule.'' This new capacity
designation will allow the Exchange to identify and apply appropriate
fees to orders submitted by non-Trading Permit Holder affiliates of
Clearing Trading Permit Holders, consistent with the fee structure
established in the Exchange's fee schedule.\5\
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\5\ The Exchange notes that no change to the C2 Options Fees
Schedule is necessary, as the existing non-customer, non-Market-
Maker capacity already encompasses non-Trading Permit Holder
affiliates of Clearing Trading Permit Holders. See Cboe C2 Options
Exchange Fee Schedule.
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By adopting this capacity designation, C2 will align its capacity
codes with those available on Cboe Options, providing consistency
between the two exchanges and facilitating operational efficiency for
market participants that trade on both platforms.\6\
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\6\ The Exchange notes that its FIX specification already
provides for this capacity designation; the proposed rule change
formalizes the definition in the Exchange's rulebook. See
US_Options_FIX_Specification.pdf.
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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.\7\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section
[[Page 2983]]
6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ Id.
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In particular, the proposed rule change will remove impediments to
and perfect the mechanism of a free and open market and a national
market system by codifying in the Exchange's rulebook a capacity
designation that is already supported by the System and included in the
Exchange's FIX specification. By formalizing the ``L'' capacity code,
the Exchange will provide clear rule text that enables proper
identification and categorization of orders submitted by non-Trading
Permit Holder affiliates of Clearing Trading Permit Holders. This
capacity designation will enhance transparency and ensure that the
Exchange can consistently administer its rules and fee schedule with
respect to this category of market participant.
The proposed rule change promotes just and equitable principles of
trade by establishing a clear, rule-based definition for a specific
category of market participant. This allows for transparent and
consistent application of fees and other rules that may apply to such
participants. The capacity designation provides clarity to market
participants regarding how their orders will be identified and provides
that orders of similarly situated market participants are treated
consistently.
The proposed rule change does not permit unfair discrimination
because the capacity designation will be available to all market
participants that meet the criteria of being a non-Trading Permit
Holder affiliate of a Clearing Trading Permit Holder. The Exchange will
apply the capacity code consistently to all such participants, and any
fees or other treatment associated with this capacity will be clearly
disclosed in the C2 Options Fees Schedule.\10\
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\10\ The Exchange notes that non-Trading Permit Holder
affiliates of Clearing Trading Permit Holders are currently treated
as non-customer, non-Market-Maker capacity under the C2 Options Fees
Schedule; therefore, no fee schedule change is necessary.
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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
does not impose any burden on intramarket competition because it simply
adds a new capacity designation that will be available to all market
participants that meet the specified criteria. The capacity code itself
does not confer any competitive advantage or disadvantage; it merely
provides a mechanism for identifying a particular category of market
participant for purposes of fee administration and other Exchange
rules. Any fees or other treatment associated with this capacity will
be established through separate fee filings and will be subject to the
requirement that they not be unfairly discriminatory.
The Exchange does not believe the proposed rule change will impose
any burden on intermarket competition. The proposed capacity
designation is based on Cboe Options' existing Rule 1.1 and therefore
brings C2 into alignment with another options exchange rather than
creating a competitive disparity. Market participants on other
exchanges are welcome to become Trading Permit Holders and trade at C2
if they determine that this proposed rule change has made C2 more
attractive or favorable. Moreover, the capacity designation is an
internal categorization mechanism that does not affect the ability of
market participants on other exchanges to compete.
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 designated this rule filing as non-controversial
under Section 19(b)(3)(A) \11\ of the Act and Rule 19b-4(f)(6) \12\
thereunder. Because the proposed rule change does not (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (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 \13\ and Rule 19b-4(f)(6)
thereunder.\14\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization 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 pursuant to Rule 19b-4(f)(6) under the
Act \15\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay so that it
may immediately implement a capacity designation that is already
supported by the Exchange's FIX specification, providing clarity to
market participants without delay. The Commission believes that the
proposed rule change raises no novel issues and that waiver of the
operative delay is consistent with the protection of investors and the
public interest. Therefore, the Commission hereby waives the operative
delay and designates the proposal operative upon filing.\17\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 shall institute proceedings under
Section 19(b)(2)(B) \18\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\18\ 15 U.S.C. 78s(b)(2)(B).
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[[Page 2984]]
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#9eecebf2fbb3fdf1f3f3fbf0eaeddeedfbfdb0f9f1e8"><span class="__cf_email__" data-cfemail="5b292e373e76383436363e352f281b283e38753c342d">[email protected]</span></a>. Please include
file number SR-C2-2026-002 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-C2-2026-002. 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-C2-2026-002 and should be submitted on
or before February 13, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-01206 Filed 1-22-26; 8:45 am]
BILLING CODE 8011-01-P
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