Notice2026-01521
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend Rule 14.11(j) To Eliminate the Requirement That the Exchange Distribute an Information Circular Prior to the Commencement of Trading in Each UTP Derivative Security
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
January 27, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 17 (Tuesday, January 27, 2026)</title>
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[Federal Register Volume 91, Number 17 (Tuesday, January 27, 2026)]
[Notices]
[Pages 3569-3572]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-01521]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104655; File No. SR-CboeBZX-2026-003]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Amend Rule 14.11(j) To Eliminate
the Requirement That the Exchange Distribute an Information Circular
Prior to the Commencement of Trading in Each UTP Derivative Security
January 22, 2026.
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 January 7, 2026, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
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 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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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 amend Rule 14.11(j) to eliminate the
requirement that the Exchange distribute an information circular prior
to the commencement of trading in each UTP Derivative Security.\3\
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\3\ See Exchange Rule 1.5(ee) (defining ``UTP Derivative
Security'').
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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 Rule 14.11(j) to eliminate the
requirement that the Exchange distribute an information circular prior
to the commencement of trading in each UTP Derivative Security as
provided in Rule 14.11(j)(1). The Exchange also proposes to make
conforming changes to the numbering of Rule 14.11(j)(1) through (5).
Rule 14.11(j) governs the trading of UTP Derivative Securities on
the Exchange. These securities are listed on another national
securities exchange and trade on the Exchange pursuant to unlisted
trading privileges (``UTP''). Under current Rule 14.11(j)(1), the
Exchange must distribute an information circular before trading begins
in each UTP Derivative Security.\4\ The Exchange now proposes to delete
Rule 14.11(j)(1) in its entirety, thereby removing this requirement.
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\4\ The information circular generally includes the same
information as contained in the information circular provided by the
listing exchange, including: (a) the special risks of trading the
Derivative Security; (b) the Exchange Rules that will apply to the
Derivative Security, including Rule 3.7; (c) information about the
dissemination of the value of the underlying assets or indexes; and
(d) the risk of trading during the Early Trading Session (2:30 a.m.-
8:00 a.m. Eastern Time), Pre-Opening Session (8:00 a.m.-9:30 a.m.
Eastern Time) and the After Hours Trading Session (4:00 p.m.-8:00
p.m. Eastern Time) due to the lack of calculation or dissemination
of the underlying index value, the Intraday Indicative Value (as
defined in Rule 14.11(b)(3)(C)) or a similar value.
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The Exchange believes the existing information circular requirement
is unnecessary and, in some cases, places a greater burden on a UTP
trading venue than on the primary listing exchange. Under Rule 14.11,
the Exchange is required to issue an information circular as a primary
listing market only for
[[Page 3570]]
Trust Certificates,\5\ Selected Equity-linked Debt Securities
(``SEEDS''),\6\ Other Securities,\7\ Managed Fund Shares,\8\ and
Managed Portfolio Shares.\9\ The Exchange does not currently list any
of these product types. As a result, under today's rules, the Exchange
would not be required to disseminate an information circular for any
exchange-traded product (``ETP'') it lists upon initial listing and
trading.
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\5\ See Interpretation and Policy .07 to Exchange Rule
14.11(e)(3). The Exchange will evaluate the nature and complexity of
the issue, and, if appropriate, distribute a circular to Members
providing guidance regarding compliance responsibilities (including
suitability recommendations and account approval) when handling
transactions in Trust Certificates.
\6\ See Exchange Rule 14.11(e)(12)(B)(ii)(d).
\7\ See Exchange Rule 14.11(h)(F).
\8\ See Exchange Rule 14.11(m)(6).
\9\ See Exchange Rule 14.11(k)(6).
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Before the adoption of Rule 14.11(l) and Rule 6c-11 under the
Investment Company Act of 1940 (``Rule 6c-11''), ETFs that now list
under those rules typically listed under Rule 14.11(c) (Index Fund
Shares) or Rule 14.11(i) (Managed Fund Shares). As noted, the Managed
Fund Shares rules require the primary listing market to issue an
information circular. In contrast, the final amendment adopting Rule
14.11(l) (ETF Shares) \10\ included no such requirement, even though
both the initial application \11\ and Amendment No. 1 \12\ did.
Although the Commission's approval order did not expressly address this
change, the removal of the information circular requirement between the
initial and final amendments indicates that the omission was
intentional. This supports the view that the Commission does not
consider information circulars necessary in all circumstances, even for
primary listing markets. Consistent with this, Nasdaq Rule 5704 and
NYSE Arca Rule 5.2-E(j)(8), which govern ETF Shares, also do not impose
an information circular requirement on the primary listing exchange.
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\10\ See Securities Exchange Act No. 88566 (April 6, 2020) 85 FR
20312 (April 10, 2020) (SR-CboeBZX-2019-097) (Notice of Filing of
Amendment No. 2 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 2, To Adopt BZX
Rule 14.11(l) Governing the Listing and Trading of Exchange-Traded
Fund Shares).
\11\ See Securities Exchange Act No. 87560 (November 18, 2019)
84 FR 64607 (SR-CboeBZX-2019-097) (Notice of Filing of a Proposed
Rule Change To Adopt BZX Rule 14.11(l) To Permit the Listing and
Trading of Exchange-Traded Fund Shares That Are Permitted To Operate
in Reliance on Rule 6c-11 Under the Investment Company Act of 1940).
\12\ See Securities Exchange Act No. 88208 (February 13, 2020)
85 FR 9834 (February 20, 2020) (SR-CboeBZX-2019-097) (Notice of
Filing of Amendment No. 1 and Order Instituting Proceedings To
Determine Whether To Approve or Disapprove a Proposed Rule Change,
as Modified by Amendment No. 1, To Adopt BZX Rule 14.11(l) To Permit
the Listing and Trading of Exchange-Traded Fund Shares That Are
Permitted To Operate in Reliance on Rule 6c-11 Under the Investment
Company Act of 1940).
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The Exchange further notes that the information typically included
in an information circular is already publicly available. Fund and
trust information generally mirrors disclosures in a registration
statement, which is accessible through the Commission's EDGAR database.
For context, Rule 14.11(j)(1) currently requires an information
circular to include:
(a) the special risks of trading the Derivative Security;
(b) the Exchange Rules that will apply to the Derivative Security,
including Rule 3.7;
(c) information about the dissemination of the value of the
underlying assets or indexes; and
(d) the risk of trading during the Early Trading Session (2:30
a.m.-8:00 a.m. Eastern Time), Pre-Opening Session (8:00 a.m.-9:30 a.m.
Eastern Time) and the After Hours Trading Session (4:00 p.m.-8:00 p.m.
Eastern Time) due to the lack of calculation or dissemination of the
underlying index value, the Intraday Indicative Value (as defined in
Rule 14.11(b)(3)(C)) or a similar value.
Information relating to the risks of trading the Derivative
Security and the dissemination of underlying values (i.e., Exchange
Rules 14.11(j)(1)(a) and (c)) is already included in publicly available
registration statements. Accordingly, these disclosures do not need to
be duplicated in an Exchange-issued circular.
Exchange Rule 14.11(j)(1)(b) simply reiterates that existing
Exchange rules, including Rule 3.7 (Recommendations to Customers),
apply to these securities. To enhance clarity, the Exchange proposes to
amend Rule 14.11(j) to expressly reference Rule 3.7 rather than rely on
an information circular.
Similarly, Rule 14.11(j)(1)(d) restates the risks of trading
outside Regular Trading Hours already addressed in Rule 3.21 (Customer
Disclosures), which requires Members to disclose such risks before
accepting customer orders for execution outside Regular Trading Hours.
The Exchange likewise proposes to amend Rule 14.11(j) to specifically
reference Rule 3.21.
For these reasons, the Exchange proposes to amend Rule 14.11(j) to
eliminate the requirement to distribute an information circular before
trading begins in each UTP Derivative Security. Based on the above, the
Exchange proposes to renumber existing Rule 14.11(j)(2) through (5) as
Rule 14.11(j)(1) through (4), respectively.
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.\13\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \14\ 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) \15\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ Id.
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The Exchange believes the proposed rule change removes impediments
to and perfects the mechanism of a free and open market and a national
market system because it eliminates an unnecessary regulatory
requirement that does not provide meaningful investor protection
benefits. Specifically, the proposal eliminates the requirement to
distribute an information circular prior to the commencement of trading
in each UTP Derivative Security, while ensuring that all relevant
information remains available to market participants through other
means.
The Exchange believes the existing information circular requirement
under Rule 14.11(j)(1) is unnecessary because the information that
would be included in such circulars is already publicly available or
otherwise addressed through existing Exchange rules. As noted above,
the information required under Rule 14.11(j)(1) includes: (a) special
risks of trading the Derivative Security; (b) applicable Exchange
Rules, including Rule 3.7; (c) dissemination of underlying asset or
index values; and (d) risks of trading outside Regular Trading Hours.
Information relating to the risks of trading Derivative Securities and
the dissemination of underlying values (i.e., items (a) and (c)) is
generally included in the fund or trust's registration statement, which
is publicly available through the Commission's
[[Page 3571]]
EDGAR database. Requiring the Exchange to duplicate this information in
an information circular does not enhance investor protection, as the
information is already accessible to market participants.
With respect to item (b), the Exchange proposes to amend Rule
14.11(j) to expressly reference Rule 3.7 (Recommendations to
Customers), thereby providing clear notice that this rule applies to
UTP Derivative Securities without the need for an information circular.
Similarly, with respect to item (d), the Exchange proposes to expressly
reference Rule 3.21 (Customer Disclosures), which already requires
Members to disclose the risks of trading outside Regular Trading Hours
before accepting customer orders for execution during such sessions. By
incorporating these express references into Rule 14.11(j), the Exchange
ensures that market participants are on notice of applicable
requirements without the need for repetitive information circulars.
The Exchange believes the proposed rule change promotes consistency
across markets and removes an undue burden on UTP trading venues. Under
current Exchange rules, the Exchange is required to issue an
information circular as a primary listing market only for certain
product types: Trust Certificates, Selected Equity-linked Debt
Securities, Other Securities, Managed Fund Shares, and Managed
Portfolio Shares. The Exchange does not currently list any of these
products. Accordingly, under existing rules, the Exchange would not be
required to disseminate an information circular for any exchange-traded
product it lists upon initial listing and trading. However, as a UTP
trading venue, the Exchange is required to issue an information
circular for each UTP Derivative Security before trading begins. This
creates an inconsistency whereby a UTP venue may be subject to a
greater burden than the primary listing exchange.
The Exchange notes that the Commission's adoption of Rule 14.11(l)
(ETF Shares) supports the view that information circulars are not
necessary in all circumstances. Although earlier versions of the rule
proposal included an information circular requirement for ETF
Shares,\16\ the final amendment adopted by the Commission omitted this
requirement.\17\ The removal of this requirement between the initial
application and the final approved amendment suggests that the omission
was intentional and that the Commission does not consider information
circulars necessary in all cases, even for primary listing markets.
Consistent with this, Nasdaq Rule 5704 and NYSE Arca Rule 5.2-E(j)(8),
which govern ETF Shares, also do not impose an information circular
requirement on the primary listing exchange.
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\16\ Supra notes 12 and 13.
\17\ Supra note 11.
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By eliminating the information circular requirement for UTP
Derivative Securities, the Exchange aligns its rules with the
regulatory framework applicable to primary listing markets for ETF
Shares and removes an unnecessary burden that does not provide
commensurate investor protection benefits.
The Exchange believes the proposed rule change protects investors
and the public interest because it ensures that all relevant
information regarding UTP Derivative Securities remains available to
market participants while eliminating duplicative and unnecessary
regulatory requirements. As discussed above, the information that would
otherwise be included in an information circular is already publicly
available through registration statements filed with the Commission or
is addressed through existing Exchange rules that will be expressly
referenced in Rule 14.11(j). Accordingly, the proposal does not
diminish the information available to investors or market participants.
Moreover, by expressly referencing Rules 3.7 and 3.21 in Rule
14.11(j), the Exchange provides clear notice of the regulatory
requirements applicable to UTP Derivative Securities, thereby enhancing
transparency and promoting compliance by Members.
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 the proposed rule change will impose any burden on intramarket
competition because it applies uniformly to all Members trading UTP
Derivative Securities on the Exchange.
The Exchange does not believe the proposed rule change will impose
any burden on intermarket competition. To the contrary, the Exchange
believes the proposal promotes intermarket competition by removing an
unnecessary regulatory burden that currently applies to UTP trading
venues. As discussed above, under current Exchange rules, the Exchange
would not be required to disseminate an information circular for any
exchange-traded product it lists upon initial listing and trading, as
it does not currently list any of the product types for which an
information circular is required. However, as a UTP trading venue, the
Exchange is required to issue an information circular for each UTP
Derivative Security before trading begins. This creates an
inconsistency whereby a UTP venue is subject to a greater burden than
the primary listing exchange for the same security.
By eliminating the information circular requirement for UTP
Derivative Securities, the proposed rule change levels the playing
field between primary listing markets and UTP trading venues, thereby
promoting competition. The proposal does not disadvantage any market
participant or market center, as the information that would otherwise
be included in an information circular remains publicly available
through registration statements filed with the Commission or is
addressed through existing Exchange rules that will be expressly
referenced in Rule 14.11(j).
The Exchange notes that other national securities exchanges may
propose similar rule changes to eliminate information circular
requirements for UTP Derivative Securities. To the extent other
exchanges choose to maintain such requirements, that would be a
competitive choice that does not impose a burden on competition. The
Exchange believes that reducing unnecessary regulatory requirements
enhances its ability to compete for order flow in UTP Derivative
Securities while maintaining appropriate investor protections.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which
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the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be 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. 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#2d5f584148004e4240404843595e6d5e484e034a425b"><span class="__cf_email__" data-cfemail="3c4e495059115f5351515952484f7c4f595f125b534a">[email protected]</span></a>. Please include
file number SR-CboeBZX-2026-003 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-2026-003. 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-2026-003 and should be submitted
on or before February 17, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-01521 Filed 1-26-26; 8:45 am]
BILLING CODE 8011-01-P
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