Notice2026-05016
Self-Regulatory Organizations; Cboe Futures Exchange, LLC; Notice of a Filing of a Proposed Rule Change Regarding Exchange of Contract for Related Position and Block Trade Order Recordkeeping Requirements
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
March 16, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 50 (Monday, March 16, 2026)</title>
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[Federal Register Volume 91, Number 50 (Monday, March 16, 2026)]
[Notices]
[Pages 12631-12634]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05016]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104973; File No. SR-CFE-2026-002]
Self-Regulatory Organizations; Cboe Futures Exchange, LLC; Notice
of a Filing of a Proposed Rule Change Regarding Exchange of Contract
for Related Position and Block Trade Order Recordkeeping Requirements
March 11, 2026.
Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act''),\1\ notice is hereby given that on March
3, 2026 Cboe Futures Exchange, LLC (``CFE'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change described in Items I, II, and III below, which Items have
been prepared by CFE. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
CFE also has filed this proposed rule change with the Commodity Futures
Trading Commission (``CFTC''). CFE filed a written certification with
the CFTC under Section 5c(c) of the Commodity Exchange Act (``CEA'')
\2\ on March 2, 2026.
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\1\ 15 U.S.C. 78s(b)(7).
\2\ 7 U.S.C. 7a-2(c).
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I. Self-Regulatory Organization's Description of the Proposed Rule
Changes
CFE proposes to revise its recordkeeping requirements applicable to
orders for Exchange of Contract for Related Position (``ERCP'') \3\
transactions and Block Trades.\4\ The scope of this filing is limited
solely to the application of the proposed rule change to security
futures that may be traded on CFE. Although no security futures are
currently listed for trading on CFE, CFE may list security futures for
trading in the future. The text of the proposed rule change is attached
as Exhibit 4 to the filing but is not attached to the publication of
this notice.
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\3\ An ECRP transaction consists of a transaction in a Contract
listed on CFE and a transaction in a related position that is
negotiated off of CFE's trading facility and is then reported to CFE
which meets the parameters for an ECRP transaction under CFE's
rules. The related position must have a high degree of price
correlation to the underlying of the Contract transaction so that
the Contract transaction would serve as an appropriate hedge for the
related position. In every ECRP transaction, one party is the buyer
of (or the holder of the long market exposure associated with) the
related position and the seller of the corresponding Contract and
the other party is the seller of (or the holder of the short market
exposure associated with) the related position and the buyer of the
corresponding Contract.
\4\ A Block Trade is a large transaction in a Contract listed on
CFE that is negotiated off of CFE's trading facility and is then
reported to CFE which meets the parameters for a Block Trade under
CFE's rules.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Changes
In its filing with the Commission, CFE 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. CFE 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, Proposed Rule Changes
1. Purpose
CFE Rule 403 (Order Entry and Maintenance of Front-End Audit Trail)
governs various aspects relating to orders in CFE products. Rule 403(h)
includes recordkeeping requirements regarding orders received by a CFE
Trading Privilege Holder (``TPH''), including its Authorized Traders,
where those orders cannot be immediately entered into CFE's trading
system (``CFE System''). For those orders, Rule 403(h) requires that a
TPH, including its Authorized Traders, prepare an order form in a non-
alterable written medium, which must be time-stamped and include the
account designation, date,
[[Page 12632]]
and other required information. Rule 403(h) further requires that any
such orders be entered into the CFE System as soon as they can be
entered. Rule 403(h) is consistent with applicable recordkeeping
requirements established by the CFTC Regulation 1.35 (Records of
commodity interest and related cash or forward transactions),\5\ and in
particular, CFTC Regulation 1.35(b)(1).\6\
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\5\ 17 CFR 1.35.
\6\ 17 CFR 1.35(b)(1).
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CFE Rule 414 (Exchange of Contract for Related Position) and CFE
Rule 415 (Block Trades) govern ECRP transactions and Block Trades,
respectively. Rules 414(g) and 415(e) currently require that each TPH
that acts as an agent for an order involving an ECRP transaction or
Block Trade record the following information in an order ticket (which
in the case of an ECRP transaction is required to be recorded in
relation to the Contract leg of the transaction, which is the CFE
product leg of an ECRP transaction): (i) the Contract (including the
expiration); (ii) the number of contracts traded; (iii) the price of
execution or premium; (iv) the time of execution (i.e., the time at
which the parties agreed to the transaction); (v) the arrangement time,
if any (i.e., the time at which the parties agreed to enter into the
transaction at a later time); (vi) the identity of the counterparty;
(vii) that the transaction is an ECRP transaction or Block Trade;
(viii) the account number of the Customer for which the transaction was
executed; and (ix) the identity, quantity, and price or premium
(including the expiration, strike price, type of option (put or call),
and delta in the case of an option). These requirements are not
specifically dictated by CFTC Regulation 1.35.\7\
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\7\ 17 CFR 1.35(b).
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Rule 415(s)(xiii) sets forth additional requirements relating to
order tickets for Derived Block Trades which are also not specifically
dictated by CFTC Regulation 1.35.\8\ Specifically, Rule 415(s)(xiii)
currently requires that each TPH that acts as an agent for an order
involving a Derived Block Trade record the following details in an
order ticket for the Derived Block Trade (in addition to the above
details that are required to be included in an order ticket under Rule
415(e) for any Block Trade): (i) identification of the transaction as a
Derived Block Trade; (ii) the product(s) in which the hedging
transaction(s) by the Hedging Party relating to the Derived Block Trade
took place; (iii) the start time and end time of the hedging
transaction(s) by the Hedging Party relating to the Derived Block
Trade; (iv) the execution methodology for the hedging transaction(s) by
the Hedging Party relating to the Derived Block Trade (which may be
Volume Weighted Average Price (``VWAP''), Time Weighted Average Price
(``TWAP''), Percentage of Volume (``POV''), Limit Orders, or a
description of any other execution methodology that was utilized); and
(v) the methodology for calculating the price of the Derived Block
Trade, including specification of the amount of any basis, ratio, or
other value to be used in that calculation.
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\8\ A Derived Block Trade is a Block Trade in which the trade
price and contract quantity of the Block Trade are dependent upon
one or more hedging transactions conducted by one of the parties to
the Block Trade referred to as a Hedging Party that take place after
the Block Trade has been consummated between the parties but prior
to the submission of the Block Trade to the Exchange.
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The proposed rule changes would delete the specific order ticket
recordkeeping requirements for ECRP transactions set forth in Rule
414(g) and the specific order ticket recordkeeping requirements for
Block Trades (including Derived Block Trades) set forth in Rules 415(e)
and 415(s)(xiii).\9\ Further, the proposed rule changes would add
language to Rule 403(h) specifically stating that orders which cannot
be immediately entered into the CFE system include, without limitation,
ECRP transactions and Block Trades. As such, the order recordkeeping
requirements set forth in Rule 403(h) would apply equally to ECRP
transactions and Block Trades, instead of the order ticket requirements
in Rule 414(g), 415(e), and 415(s)(xiii), which would be deleted.
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\9\ While the proposed rule changes would delete portions of
Rule 414(g), 415(e), and 415(s)(xiii), other portions of those
provisions would be retained. See, infra, footnotes 15-17.
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The proposed rule change would also clarify what information must
be included in an order form prepared by a TPH for an order, including
an ECRP transaction or Block Trade, which cannot be immediately entered
into the CFE System. Rule 403(h) currently states that such an order
form must include ``the account designation, date and other required
information.'' The proposed change would insert the phrase ``under
Applicable Law'' after the preceding language in Rule 403(h) so that
the language would read ``the account designation, date and other
required information under Applicable Law'' \10\ to further clarify
what is meant by ``other required information'' that must be included
in an order form. In particular, this language would encompass the
requirements under CFTC Regulation 1.35 \11\ which addresses, among
other things, CFTC recordkeeping requirements relating to customer
orders.
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\10\ Applicable Law is defined in Chapter 1 of the CFE Rulebook
(Definitions) and includes, but is not limited to, the CEA, CFTC
Regulations, margin rules adopted by the Board of Governors of the
Federal Reserve System (as amended from time to time) and, to the
extent applicable, the Exchange Act and Exchange Act Regulations.
\11\ 17 CFR 1.35.
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Additionally, the proposed rule change would revise Rule 403(h) in
order to clarify that only orders that can eventually be entered into
the CFE System must be entered into the CFE System in the order they
were received as soon as they can be entered into the CFE System.
Orders for ECRP transactions and Block Trades are not required to be
entered into the CFE System since these orders are for off-exchange
transactions that are agreed upon off of CFE's trading facility and
since these orders are not executed by the CFE System. Instead, after
an ECRP transaction or Block Trade is agreed upon by the parties to the
transaction, the terms of the agreed-upon transaction are reported to
the CFE System.
Neither the CEA nor CFTC regulations include specific order ticket
recordkeeping requirements for ECRP transactions or Block Trades beyond
the requirement set forth in CFTC Regulation 1.38 (Execution of
Transactions) \12\ that orders, records, and memoranda pertaining to
trades not competitively executed, which includes ECRP transactions and
Block Trades, be appropriately marked as such. Rather, the general
recordkeeping requirements relating to orders set forth in CFTC
Regulation 1.35 \13\ apply to ECRP transactions and Block Trades.
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\12\ 17 CFR 1.38.
\13\ 17 CFR 1.35.
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CFE's rules, as proposed to be amended, would continue to require
TPHs and their Authorized Traders to keep records regarding orders in
compliance with Applicable Law, as defined in the CFE Rulebook, which
includes the CEA and CFTC regulations as well as, to the extent
applicable, the Exchange Act and Exchange Act Regulations. The proposed
rule change would simply remove specific additional prescriptive
internal recordkeeping requirements for TPHs with respect to orders for
ECRP transactions and Block Trades that are not required by Applicable
Law. Notably, the proposed rule change does not affect the portions of
Rules 414(g) and 415(e) that require every TPH handling, executing,
clearing, or carrying ECRP transactions or Block Trades, respectively,
to identify and mark all orders, records, and memoranda pertaining to
those
[[Page 12633]]
transactions as such with an appropriate symbol or designation
consistent with CFTC Regulation 1.38.\14\
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\14\ 17 CFR 1.38.
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The proposed rule change would alter only internal order
recordkeeping requirements for TPHs and their Authorized Traders with
respect to ECRP transactions and Block Trades. The proposed rule change
would not change any other Exchange rules regarding ECRP transactions
or Block Trades. Accordingly, TPHs will continue to be required to
report to the Exchange through their Authorized Reporters, among other
information, the same type of information that is identified in current
Rules 414(g), 415(e), and 415(s)(xiii) as is currently required to be
included in an order ticket for an ECRP transaction or Block Trade.
Notably, CFE's requirements for reporting ECRP transactions and Block
Trades (including Derived Block Trades) to the Exchange, which are set
forth in CFE Rule 414(k),\15\ CFE Rule 415(h),\16\ and
415(s)(xiii),\17\ respectively, are unaffected and encompass the
information currently required to be captured in an order ticket for an
ECRP transaction or Block Trade.
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\15\ Rule 414(k) requires that the notification to the Exchange
of an ECRP transaction shall include (i) whether the component of
the transaction in the Contract listed on the Exchange is a single
leg transaction, a transaction in a spread or transaction in a
strip; (ii) the Contract identifier (or product and contract
expiration for a future or product, expiration, strike price and
type of option (put or call) in the case of an option), price (or
premium for an option) and quantity of the relevant Contract leg of
the transaction and whether the relevant Contract leg is buy or
sell; (iii) the time of execution (i.e., the time at which the
parties agreed to the transaction); (iv) the arrangement time, if
any (i.e., the time at which the parties agreed to enter into the
transaction at a later time); (v) Order Entry Operator ID; (vi)
EFID; (vii) account; (viii) Clearing House origin code (C for
Customer or F for Firm); (ix) Customer Type Indicator code; (x) the
identity, quantity and price or premium of the Related Position
(including the expiration, strike price, type of option (put or
call) and delta in the case of an option); and (xi) any other
information required by the Exchange.
\16\ Rule 415(h) requires that the notification to the Exchange
of a Block Trade shall include (i) whether the Block Trade is a
single leg transaction, a transaction in a spread, or a transaction
in a strip; (ii) the Contract identifier (or product and contract
expiration for a future or product, expiration, strike price, and
type of option (put or call) in the case of an option), price (or
premium for an option) and quantity of the Block Trade and whether
the Block Trade is buy or sell; (iii) the time of execution (i.e.,
the time at which the parties agreed to the transaction); (iv) the
arrangement time, if any (i.e., the time at which the parties agreed
to enter into the transaction at a later time); (v) Order Entry
Operator ID; (vi) executing firm ID (``EFID''); (vii) account;
(viii) Clearing Corporation origin code; (ix) Customer Type
Indicator code; and (x) any other information required by the
Exchange. Additionally, among the other information that the
Exchange requires be included as part of the notification to the
Exchange of a Block Trade under Rule 415(h) is the identity of the
counterparty.
\17\ Rule 415(s)(xiii) requires that the notification to the
Exchange of a Derived Block Trade include the following information
(in addition to the above information that is required to be
provided to the Exchange under Rule 415(h) for any Block Trade): (i)
identification of the transaction as a Derived Block Trade; (ii) the
product(s) in which the hedging transaction(s) by the Hedging Party
relating to the Derived Block Trade took place; (iii) the start time
and end time of the hedging transaction(s) by the Hedging Party
relating to the Derived Block Trade; (iv) the execution methodology
for the hedging transaction(s) by the Hedging Party relating to the
Derived Block Trade (which may be VWAP, TWAP, POV, Limit Orders, or
a description of any other execution methodology that was utilized);
and (v) the methodology for calculating the price of the Derived
Block Trade, including specification of the amount of any basis,
ratio, or other value to be used in that calculation.
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Unlike an order ticket, which a TPH creates and maintains in its
own records, the Exchange receives the information currently required
under Rules 414(g), 415(e), and 415(s)(xiii) to be included in an order
ticket for an ECRP transaction or Block Trade directly through the
reporting process to the Exchange for an ECRP transaction or a Block
Trade, and this information becomes part of the records of the
Exchange. As such, the proposed rule change would not alter the
information received by the Exchange or the Exchange's internal records
with respect to ECRP transactions and Block Trades and would not alter
the information immediately available to the Exchange in performing its
self-regulatory functions.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\18\ in general, and furthers the
objectives of Sections 6(b)(1) \19\ and 6(b)(5) \20\ in particular, in
that it is designed:
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\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(1).
\20\ 15 U.S.C. 78f(b)(5).
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<bullet> to enable the Exchange to enforce compliance by its TPHs
and persons associated with its TPHs with the provisions of the rules
of the Exchange,
<bullet> to prevent fraudulent and manipulative acts and practices,
<bullet> to promote just and equitable principles of trade,
<bullet> to remove impediments to and perfect the mechanism of a
free and open market and a national market system,
<bullet> and in general, to protect investors and the public
interest.
The proposed rule change would clarify and simplify the
recordkeeping requirements with respect to orders for ECRP transactions
and Block Trades and align them with applicable legal requirements.
More specifically, the proposed rule change would consolidate
recordkeeping requirements specifically applicable to orders which
cannot be immediately entered into the CFE System, which include orders
for ECRP transactions and Block Trades, in Rule 403(h). The Exchange
believes that consolidating and simplifying these order recordkeeping
requirements will make it easier for TPHs and their Authorized Traders
to comply with them. Accordingly, the Exchange believes that the
proposed rule change facilitates compliance with Exchange rules.
Notably, the proposed rule change would only affect the internal
recordkeeping of TPHs. The proposed rule change would not affect any
other requirements related to ECRP transactions or Block Trades and
therefore would not impact the likelihood of fraudulent or manipulative
trading on the Exchange or impact the Exchange's ability to promote
just and equitable trading.
In particular, the proposed changes would not affect the
information submitted to the Exchange regarding ECRP transactions or
Block Trades. The requirements for submission of information to the
Exchange regarding ERCP transactions and Block Trades are set forth CFE
Rules 414(k), 415(h), and 415(s)(xiii), respectively, and these
requirements would not be amended by the proposed changes. This
information includes, among other information, the same type of
information that is identified in current Rules 414(g), 415(e), and
415(s)(xiii) as currently required to be included in an order ticket
for an ECRP transaction or Block Trade. As such, the proposed changes
would not impact the Exchange's internal records regarding ECRP
transactions and Block Trades and would not impact the Exchange's
ability to carry out its responsibilities as a self-regulatory
organization. The Exchange would receive the same information regarding
ECRP transactions and Block Trades that it currently receives and could
continue to use this information to prevent fraudulent and manipulative
trading practices.
B. Self-Regulatory Organization's Statement on Burden on Competition
CFE does not believe that the proposed rule change would impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. Specifically, the Exchange believes that the
proposed rule change would not burden intra-market competition because
the proposed rule updates would apply equally to all TPHs. The Exchange
also
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believes that the proposed rule change would not burden inter-market
competition because the Exchange will continue to apply the order entry
recordkeeping requirements set forth by Applicable Law, in particular
the requirements under CFTC Regulations 1.35 \21\ and 1.38,\22\ and the
proposed rule change would not alter any other requirements relating to
ECRP transactions and Block Trades.
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\21\ 17 CFR 1.35.
\22\ 17 CFR 1.38.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change will become operative on March 16, 2026.
At any time within 60 days of the date of effectiveness of the proposed
rule change, the Commission, after consultation with the CFTC, may
summarily abrogate the proposed rule change and require that the
proposed rule change be refiled in accordance with the provisions of
Section 19(b)(1) of the Act.\23\
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\23\ 15 U.S.C. 78s(b)(1).
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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#691b1c050c440a0604040c071d1a291a0c0a470e061f"><span class="__cf_email__" data-cfemail="b3c1c6dfd69ed0dcdeded6ddc7c0f3c0d6d09dd4dcc5">[email protected]</span></a>. Please include
file number SR-CFE-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-CFE-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="http://www.sec.gov/rules/sro.shtml">http://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-CFE-2026-002, and should be submitted on or
before April 6, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(73).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-05016 Filed 3-13-26; 8:45 am]
BILLING CODE 8011-01-P
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