Notice2026-07039
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Average Daily Quote and Average Daily Order Fees To Be Effective April 1, 2026
Primary source
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Published
April 13, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 70 (Monday, April 13, 2026)</title>
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[Federal Register Volume 91, Number 70 (Monday, April 13, 2026)]
[Notices]
[Pages 18928-18933]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07039]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105177; File No. SR-CboeBZX-2026-023]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Average Daily Quote and Average Daily Order Fees To Be Effective
April 1, 2026
April 8, 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 April 1, 2026, Cboe BZX Exchange, Inc. (the ``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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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
amend its Average Daily Quote and Average Daily Order fees to be
effective April 1, 2026. 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.
[[Page 18929]]
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
Effective April 1, 2026, the Exchange proposes to amend its fee
schedule to amend its Average Daily Quote and Average Daily Order fees.
Average Daily Quotes and Average Daily Order Fees
The Exchange proposes to revise its Average Daily Order (``ADO'')
and Average Daily Quote (``ADQ'') fees. ``ADO'' represents the total
number of orders for the month, divided by the number of trading days.
``ADQ'' represents the total number of quotes for the month, divided by
the number of trading days.\3\ When measuring a Member's ADO, orders
and cancel/replace modify orders which submit a bid or offer and do not
include cancels, are included. To measure a Member's ADQ, quotes and
quote updates which submit a bid or offer and do not include cancels,
are included. Further, ADO will include orders submitted by a Member
from all logical port types (i.e., non-unitized logical ports and
Unitized Logical Ports).\4\
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\3\ The term ``quote'' refers to bids and offers submitted in
bulk messages. A bulk message means a single electronic message a
user submits with an M (Market-Maker) capacity to the Exchange in
which the User may enter, modify, or cancel up to an Exchange-
specified number of bids and offers. A User may submit a bulk
message through a bulk port as set forth in Exchange Rule
21.1(l)(3). See Rule 16.1 (definition of bulk message).
\4\ Only quotes may be placed via Unitized Bulk Ports, as such,
only Unitized Ports are used to determine a Member's ADQ.
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September 2024--Proposed ADQ Tiers & Fees
By way of background, the Exchange initially proposed its ADQ and
ADO Tiers and additional fees on September 13, 2024.\5\ Specifically,
the Exchange's current tiers allow a Member to submit up to 2,000,000
average daily orders or up to 250,000,000 average daily quotes per
calendar month without incurring any ADO or ADQ fees, respectively. In
the event that the average number of quotes per trading day during a
calendar month submitted exceeded 250,000,000, each incremental usage
of up to 20,000 average daily quotes would incur an additional fee as
set forth in the table below. Similarly, in the event that the average
number of orders per trading day during a calendar month submitted
exceeds 2,000,000, each incremental usage of up to 1,000 average daily
orders would incur an additional ADO fee as set forth in the table
below. A Member's ADO and ADQ would be aggregated together with any
affiliated Member sharing at least 75% common ownership.
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\5\ The Exchange initially submitted the proposed rule change on
August 30, 2024, which was immediately effective upon filing on
September 3, 2024 (SR-CboeBZX-2024-082). Subsequently, on September
13, 2024, the Exchange withdrew that filing and submitted SR-Cboe-
BZX-2024-088.
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Fee
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Tier 4 Tier 5
Tier 1 <=250,000,000 Tier 2 >250,000,000 Tier 3 >500,000,000 >1,000,000,000 >3,500,000,000
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ADQ Fee Rate per 20,000 ADQ
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$0.00 $0.05 $0.075 $0.10 $0.20
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ADO Fee Rate per 1,000 ADO
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Tier 1 Tier 2 Tier 3 Tier 4 Tier 5
<=2,000,000 >2,000,000 >2,500,000 >3,000,000 >3,500,000
$0.00 $1.00 $1.50 $2.00 $2.50
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Notably, in its initial filing the Exchange noted that while it had
no way of predicting with certainty how the proposed ADQ and ADO
changes would impact Member activity, it believed that based on trading
activity from the months preceding its September 13, 2024 filing that,
absent any changes to Member behavior, all Members would fall within
proposed ADO Tier 1 (and thus not be subject to any new fees) and that
approximately 74% of Market Makers would fall within proposed ADQ Tier
1 (and thus also not be subject to any new fees). With regards to the
remaining Market Makers (approximately 26%), the Exchange estimated
that based on their current activity, and absent any changes to their
behavior, that such Market Makers would fall into the following ADQ
Tiers: approximately 3 Market Makers in Tier 2; approximately 6 Market
Makers in Tier 3; approximately 3 Market Makers in Tier 4; and no
Market Makers in Tier 5.
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\6\ Importantly, the Exchange notes that it will, from time to
time, review actual ADQ and ADO rates, and that based on a review of
such data, may choose to adjust its ADO and ADQ Tiers and fees
accordingly. While the Exchange is now proposing to double the upper
bound of proposed ADQ Tier 1 and increase the upper bounds of Tiers
2-4 such that a greater level of quoting activity is permitted
before Market Makers are subject to increased fees as their quoting
activity places them in progressively higher Tiers, a review of
future data could in fact justify the Exchange proposing to narrow
its ADQ Tiers (or ADO Tiers) in order to achieve its purpose of
encouraging efficient quoting behavior so that market participants
do not exhaust System resources.
\7\ While allocation of Market Makers differed from that
initially estimated by the Exchange in its initial filing, the
Exchange notes that average daily volume (``ADV'') in August 2025
across Cboe's four U.S. options exchange was at an all-time high of
19.2 million contracts, comprised of: record multi-listed options
ADV of 14.3 million contracts, which surpassed the ADV record of
13.6 million contracts set in February 2025; and S&P 500 Index (SPX)
options ADV of 3.8 million contracts, the second-best month of all
time, with zero-days-to-expiry (0DTE) trading representing a record
ADV of 2.4 million contracts. In this regard, the Exchange notes
that its September 2024 estimates were skewed in large part to
unforeseeable record-setting ADV volume in options contract trading.
See ``Cboe Global Markets Reports Trading Volume for August 2025,''
available at: https://ir.cboe.com/news/news-details/2025/Cboe-
Global-Markets-Reports-Trading-Volume-for-August-2025/
default.aspx#:~:text=%20multi%2%20options%20ADV,ADV%20of%202.4%20mill
ion%20contracts.
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The Exchange notes that a Member's ADO and ADQ rates will naturally
vary
[[Page 18930]]
based on options trading volume on the Exchange, and given the record
options trading volume through 2025, the Exchange recently undertook to
analyze actual ADO and ADQ rates for 2025.\6\ In doing so, the Exchange
observed that the actual ADQ rates for its Market Makers differed from
the estimates utilized by the Exchange to establish its initial ADQ
Tiers and their additional fees. Specifically, the Exchange's data
showed that the Exchange's market makers fell into the following tiers:
\7\
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Month Tier 1 Tier 2 Tier 3 Tier 4 Tier 5
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January 2025............................................. 10 3 3 2 1
February 2025............................................ 10 3 3 2 1
March 2025............................................... 9 3 3 3 1
April 2025............................................... 8 2 4 2 2
May 2025................................................. 9 3 3 2 1
June 2025................................................ 9 2 4 2 1
July 2025................................................ 9 4 2 2 1
August 2025.............................................. 9 4 2 2 0
September 2025........................................... 11 3 2 2 1
October 2025............................................. 11 2 2 4 0
November 2025............................................ 12 2 2 3 0
December 2025............................................ 13 2 2 3 0
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April 2026--Proposed ADQ Tiers and Fees
Given the actual ADQ rates, the Exchange now proposes that,
effective April 1, 2026, a Market Maker may submit up to 500,000,000
average daily quotes per calendar month without incurring any ADQ
additional fees. In the event that the average number of quotes per
trading day during a calendar month exceeds 500,000,000, each
incremental usage of up to 20,000 average daily quotes will incur an
additional fee as set forth in the table below. Moreover, as initially
proposed, a Market Maker's ADQ will still be aggregated together with
any affiliated Market Maker sharing at least 75% common ownership.
The proposed ADQ tiers and additional fees are set forth in the
table, below. The Exchange proposes that the proposed ADQ Tiers and
fees will be effective beginning April 1, 2026. The Exchange believes
the proposed ADQ fees are reasonable as Members that do not exceed the
high threshold of 500,000,000 ADQ will not be charged any fee under the
proposed tiers. Moreover, the Exchange believes it is reasonable,
equitable and not unfairly discriminatory to assess higher fees when a
Member has higher ADO and ADQ rates because these Members utilize a
greater proportion of the Exchange's Trading System resources, and as
such, the Exchange believes that Members who choose to enter orders or
quote at the very high ADQ rates established by the Exchange should
reasonably expect to be charged more.
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Fee
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Tier 1 Tier 2 Tier 3 Tier 4 Tier 5
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ADQ Fee Rate per 20,000 ADQ.......... <=500,000,000 >=500,000,001 >=1,000,000,001 >=1,500,000,001 >=000,000,001
------------------------------------------------------------------------------------------------------------------
$0.00 $0.05 $0.075 $0.125 $0.20
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As an example, a Market Maker that has 1,000,040,000 ADQ would
subsequently have 50,002 ``ADQ increments'' (1,000,040,000 ADQ/20,000
ADQ increments). While 25,000 of the 50,002 ADQ increments are free
within Tier 1, 25,000 of the ADQ increments would be fee liable at
$0.050 within Tier 2, and 2 of the ADQ increments would be fee liable
at $0.075 within Tier 3, resulting in a total ADQ fee of $1,250.15
(Tier 2 total of $1,250 + Tier 3 total of $0.15) for that month.\8\
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\8\ The Exchange proposes to include this example in the Fees
Schedule to provide further clarity as to the application of the
proposed fees.
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The Exchange notes that in the event a firm has an odd lot
increment, that they will not be charged a prorated portion of that
increment. For example, if a firm has 1,000,010,000 ADQ, they would be
charged based on 50,000 (1,000,000,000/20,000) increments as the
remainder of 10,000 does not hit the 20,000 ADQ increment.\9\
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\9\ The Exchange proposes to include this example in the Fees
Schedule to provide further clarity as to the application of the
proposed fees.
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ADO Rates
With regards to ADO, the Exchange is not proposing to change the
ADO tiers and additional tiers from those initially proposed. The
Exchange does not propose to amend the ADO tiers as it believes they
are properly calibrated to current market activity. When the ADO Tiers
were first contemplated, the Exchange noted that based on the prior
month's activities, that all firms would fall into the proposed Tier 1,
and thus, would not be fee liable. As this has remained largely
consistent with what the Exchange sees now (unlike the ADQ levels which
have varied from initial projections), the Exchange finds it
appropriate to leave the ADO Tiers as they stand at this time.
Specifically, a Market Maker may still submit up to 2,000,000 average
daily orders per calendar month without incurring any ADO fees. In the
event that the average number of orders per trading day during a
calendar month exceeds, 2,000,000, each incremental usage of up to
1,000 average daily orders will incur an additional ADO fee as set
forth in the table below. Moreover, as initially proposed, a Member's
ADO will still be aggregated together with any affiliated Member
sharing at least 75% common ownership.
[[Page 18931]]
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Tier 1 Tier 2 Tier 3 Tier 4 Tier 5
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ADO Fee Rate per 1,000 ADO........... lt;2,000,000 >=2,000,001 >=2,500,001 >=3,000,001 >=3,500,001
------------------------------------------------------------------------------------------------------------------
$0.00 $1.00 $1.50 $2.00 $2.50
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The Exchange notes that market participants with incrementally
higher ADO or ADQ are likely to require more of the Exchange's Trading
System resources, bandwidth, and capacity. In this regard, the Exchange
believes it appropriate to charge additional fees to Members that
utilize more of the Exchange's Trading System's resources, particularly
when their ADO or ADQ rates reach levels as high as 3.5 million orders
or 3 billion quotations. This is demonstrated by the fact that, as
noted previously, almost all firms fall into the lower Tier 1 for ADO
and, the majority of firms fall into Tier 1 for ADQ. Using the new
thresholds and firm messaging rates in December, only 10% of Market
Makers fell into Tier 4 and no Market Makers fell into Tier 5.
Moreover, at elevated order entry and quoting rates, it is feasible
that at some point, such Member activity could create System latency
and potentially impact other Members' ability to receive timelier
executions. While the Exchange and its Members have yet to experience
Exchange Trading System latency due to high order and quotation rates,
the Exchange believes its proposed ADQ and ADO rates are designed to
strike an appropriate balance between permitting high rates of order
and quoting activity at levels that do not incur a fee, and assessing
fees for order and quoting activity at levels that get so high that
they could begin to impact System capacity. Indeed, the proposed fee
structure has multiple thresholds, and the proposed fees are
incrementally greater at higher ADO and ADQ rates, and the Exchange
believes this framework accurately and fairly reflects such rationale.
The Exchange also represents that the proposed fees are not
intended to raise profits. While the Exchange's proposal assesses
additional fees to Members that utilize a greater share of the
Exchange's Trading System resources, the Exchange notes that a Member
would have to exceed the high ADO rate of 2,000,000 and a Market Maker
would have to exceed the high ADQ rate of 500,000,000 before that
market participant would be charged a fee under the proposed respective
tiers. Moreover, the Exchange's proposal will double the upper bound of
ADQ Tier 1, and increase the upper bounds of Tiers 2-4, thereby
enabling Market Makers to quote at increased levels before they are
placed in progressively higher Tiers. The Exchange also notes that it
provides Members with daily reports, free of charge, which details
their order and trade activity in order for those firms to be fully
aware of all order and trade activity they (and their affiliates) are
sending to the Exchange. This will allow Members to monitor their
behavior and determine whether it is approaching any of the ADO or ADQ
thresholds that trigger the proposed fees. Lastly, the Exchange notes
that other exchanges have adopted various fee programs that assess
incrementally higher fees to Members that have incrementally higher
order and/or quoting trading activity for similar reasons.\10\
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\10\ See, e.g., Securities Exchange Act Release No. 60102 (June
11, 2009), 74 FR 29251 (June 19, 2009) (SR-NYSEArca-2009-50)
(adopting fees applicable to Members based on the number of orders
entered compared to the number of executions received in a calendar
month). It appears that Nasdaq similarly assesses a penalty charge
to its members that exceed certain ``weighted order-to-trade
ratios''. See Price List--Trading Connectivity, NASDAQ, available at
<a href="https://www.nasdaqtrader.com/trader.aspx?id=pricelisttrading2">https://www.nasdaqtrader.com/trader.aspx?id=pricelisttrading2</a>. See
also Securities Exchange Act Release No. 91406 (March 25, 2021), 86
FR 16795 (March 31, 2023) (SR-EMERALD-2021-10) (adopting an
``Excessive Quoting Fee'' to ensure that Market Makers do not over
utilize the exchange's System by sending messages to the MIAX
Emerald, to the detriment of all other Members of the exchange).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\11\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \12\ 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) \13\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes the proposed rule
change is consistent with Section 6(b)(4) \14\ of the Act, which
requires that Exchange rules 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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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ Id.
\14\ 15 U.S.C. 78f(b)(4).
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The Exchange believes the proposed ADO and ADQ fees are reasonable
as Members that do not exceed the high thresholds of 2,000,000 ADO and
500,000,000 ADQ will not be charged any fee under the proposed tiers.
Importantly, the ADQ thresholds are also designed to ensure Market
Makers' quoting activity, which acts as an important source of
liquidity, is not impeded by the proposal.\15\ In this regard, the
Exchange further notes that its proposed ADQ Tiers and additional fees
are designed to enable Market Makers to quote at increasingly higher
levels before moving between Tiers and being assessed higher fees.
Specifically, the Exchange notes that it has doubled the upper bound of
Tier 1 (250M to 500M), enabling Market Makers to enter quotations at
even higher rates and not be assessed a fee. Moreover, the Exchange has
increased the upper bounds of Tier 2, Tier 3, and Tier 4, such that
Market Makers can quote at even higher rates (compared to the prior
Tiers) in each of these Tiers, before being assessed progressively
higher fees. Overall, the Exchange believes this proposed framework
will not hinder market quality, but rather potentially encourage even
greater levels of quoting activity, while also appropriately charging
those Market Makers that utilize more of the System's resources.
Specifically, the Exchange notes the following regarding its proposed
ADQ Tiers:
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\15\ Since the implementation of the proposal on September 3,
2024, the Exchange notes that it has not received any feedback from
Market Maker participants that the proposal has impeded their
ability to meet their quoting obligations.
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[[Page 18932]]
<bullet> Tier 1: The upper bound of Tier 1 doubled, from 250M to
500M. In effect, Market Makers will now be able to quote at levels 2x
greater than they can under current Tier 1, without being charged a
fee.
<bullet> Tier 2: The upper bound of Tier 2 increased from 500M, to
1BN. In effect, Market Makers will now be able to quote up to 2x the
level they are currently able to under existing Tier 2--for a fee of
$0.05--before falling into Tier 3 and being charged the higher fee of
$0.075.
<bullet> Tier 3: The upper bound of Tier 3 increased from 1BN, to
1.5BN. In effect, Market Makers will now be able to quote up to 1.5x
the level they are currently able to under existing Tier 3--for a fee
of $0.075--before falling into Tier 4 and being charged the higher
additional fee of $0.125.
<bullet> Tier 4: The upper bound of Tier 4 decreased from 3.5BN to
3 BN. However, the Exchange notes that a Market Maker quoting up to 3B
in ADQ is ultimately charged the same fee ($12,500) under the prior
structure and the proposed structure.
<bullet> Tier 5: Market Maker quoting activity falls into Tier 5 at
quoting levels 500M less than under the current Tier 5--i.e., above 3BN
vs. above 3.5BN. While the threshold has been lowered for Tier 5 from
3,500,000,001 to 3,000,000,001, the Exchange does not believe this is
significant. This is demonstrated by the fact that in using the revised
Tier 5 threshold in conjunction with the activity in 2025, no
additional firms would have fallen into Tier 5.
Accordingly, the Exchange believes the proposed Tiers and
additional fees are designed to foster broader participation by Market
Makers before they are assessed higher additional fees, thereby
improving market quality and fostering better execution quality.
As noted above, the Exchange also believes it is reasonable,
equitable and not unfairly discriminatory to assess higher fees when a
Member has higher ADO and ADQ rates because these Members utilize a
greater proportion of the Exchange's Trading System resources, and as
such, the Exchange believes that Members who choose to enter orders or
quote at the very high ADQ and ADO rates established by the Exchange
should reasonably expect to be charged more. Moreover, the Exchange
provides all Members with free reports to help them monitor their ADO
and ADQ activity, and Members can use such information to adjust their
ADO and ADQ levels accordingly. In this regard, the Exchange believes
that all Members are afforded equal opportunity to adjust their
Exchange activity accordingly.
While the Exchange's Trading System resources have yet to be
negatively impacted by Members' elevated ADO and/or ADQ rates, the
Exchange nevertheless believes that it is in the interests of all
Members, and market participants who access the Exchange, to charge
additional fees to Members that utilize a greater proportion of the
Exchanges resources, so as deter ADO and ADQ rates from continually
increasing and ultimately, at some point, negatively impacting the
Exchange's capacity. In this regard, the Exchange believes that the
proposed fees are one method of facilitating the Commission's goal of
ensuring that critical market infrastructure has ``levels of capacity,
integrity, resiliency, availability, and security adequate to maintain
their operational capability and promote the maintenance of fair and
orderly markets.'' \16\
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\16\ See Securities Exchange Act Release No. 73639 (November 19,
2014), 79 FR 72252 (December 5, 2014) (File No. S7-01-13)
(Regulation SCI Adopting Release).
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Moreover, the Exchange believes that the proposed ADO and ADQ fees
are equitable and not unfairly discriminatory because they will be
assessed uniformly to similarly situated users in that all Members that
exceed the thresholds in connection with ADO and ADQ will be assessed
the proposed ADO and ADQ rates. Regarding ADO and ADQ, no market
participant is assessed any fees unless it exceeds the proposed
thresholds. The Exchange also believes it is equitable and not unfairly
discriminatory to assess incrementally higher fees to Members that have
higher ADO and ADQ rates because the potential impact on exchange
systems, bandwidth and capacity becomes greater with increased ADO and
ADQ.
Furthermore, the Exchange believes it is equitable and not unfairly
discriminatory to aggregate Members trading activity with any
affiliated Member sharing at least 75% common ownership \17\ in order
to prevent members from shifting their order flow or quoting activity
to other affiliates in order to circumvent the ADO and ADQ thresholds.
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\17\ The Exchange notes that its usage of 75% of common
ownership is standard practice and utilized by the Exchange's
affiliated exchanges. For instance, Cboe EDGX Exchange, Inc. options
Market Maker Order-to-Trade Ratio fees provide that Order-to-Trade
Ratio fees will apply only to participants registered as Market
Makers on EDGX Options. The Order-to-Trade ratio will be calculated
monthly based on the total number of orders (including messages to
modify orders) submitted to EDGX Options, regardless of capacity,
divided by the total number of trades occurring on orders. The
calculation of the ration will not include quotes or trades
resulting from such quotes. A Market Maker's order flow will be
aggregated together with any affiliated Members sharing at least 75%
common ownership.'' See Cboe U.S. Options Fee Schedule, EDGX
Options, available at: <a href="https://www.cboe.com/us/options/membership/fee_schedule/edgx/">https://www.cboe.com/us/options/membership/fee_schedule/edgx/</a>; see also Nasdaq BX Options 7 Pricing Schedule,
``The term ``Common Ownership'' shall mean participants under 75%
common ownership or control . . .,'' available at: <a href="https://listingcenter.nasdaq.com/rulebook/bx/rules/bx-options-7">https://listingcenter.nasdaq.com/rulebook/bx/rules/bx-options-7</a>.
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The Exchange lastly believes that its proposal is reasonable,
equitably allocated and not unfairly discriminatory because it is not
intended to raise revenue for the Exchange; rather, it is intended to
encourage efficient behavior so that Members do not exhaust System
resources. Moreover, as noted above, competing options exchanges
similarly assess fees to deter Members from over utilizing their
respective systems by having excessive order and/or quoting trading
activity.\18\
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\18\ See supra note 11.
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Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily direct
order flow to competing venues if they deem fee levels at a particular
venue to be excessive or incentives to be insufficient. The Exchange is
only one of 18 options exchanges which market participants may direct
their order flow and/or participate on, and it represents a small
percentage of the overall market.\19\ When determining reasonable
prices, the Exchange must ensure these are competitive prices in order
to maintain market share, as uncompetitive pricing, or prices that
Members deem to be excessive, can lead Members to take their order flow
to other exchanges.
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\19\ See Cboe Global Markets, U.S. Options Market Volume
Summary, Month-to-Date (August 27, 2024), available at <a href="https://www.cboe.com/us/options/market_statistics/">https://www.cboe.com/us/options/market_statistics/</a> which reflects the
Exchange representing only 3.3% of total market share.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change to
adopt ADO and ADQ fees will impose any burden on intramarket
competition that is not necessary in furtherance of the purposes of the
Act because such fees will apply equally to all similarly situated
Members. Particularly, the proposed fees apply uniformly to all
Members, in that any Member who exceeds the ADO and/or ADQ Tier 1
thresholds will be subject to a fee under the proposed corresponding
tiers. The Exchange believes that the proposed change neither favors
nor penalizes one or more categories of market participants in a manner
that would impose an undue
[[Page 18933]]
burden on competition. Rather, the proposal seeks to benefit all market
participants by encouraging the efficient utilization of the Exchange's
network while taking into account the important liquidity provided by
its Members. As discussed above potential impact on exchange systems,
bandwidth, and capacity becomes greater with increased ADO and ADQ
rates. Accordingly, the Exchange believes that the proposed ADO and ADQ
fees do not favor certain categories of market participants in a manner
that would impose a burden on competition.
Next, the Exchange believes the proposed rule change does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market,
including competition for order flow. Market Participants have numerous
alternative venues that they may participate on, including 17 other
options exchanges (including 3 other Cboe-affiliated options
exchanges), as well as off-exchange venues, where competitive products
are available for trading. Indeed, participants can readily choose to
submit their order flow to other exchange and off-exchange venues if
they deem fee levels at those other venues to be more favorable.
Moreover, the Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. Specifically, in
Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \20\ The fact
that this market is competitive has also long been recognized by the
courts. In NetCoalition v. Securities and Exchange Commission, the D.C.
Circuit stated as follows: ``[n]o one disputes that competition for
order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S.
national market system, buyers and sellers of securities, and the
broker-dealers that act as their order-routing agents, have a wide
range of choices of where to route orders for execution'; [and] `no
exchange can afford to take its market share percentages for granted'
because `no exchange possesses a monopoly, regulatory or otherwise, in
the execution of order flow from broker dealers'. . . .''.\21\
Accordingly, the Exchange does not believe its proposed change imposes
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
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\20\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\21\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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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 \22\ and paragraph (f) of Rule 19b-4 \23\
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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\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 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#b2c0c7ded79fd1dddfdfd7dcc6c1f2c1d7d19cd5ddc4"><span class="__cf_email__" data-cfemail="057770696028666a6868606b7176457660662b626a73">[email protected]</span></a>. Please include
file number SR-CboeBZX-2026-023 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-2026-023. 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-2026-023 and should be submitted
on or before May 4, 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)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07039 Filed 4-10-26; 8:45 am]
BILLING CODE 8011-01-P
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