Notice2026-07137
Self-Regulatory Organizations; Cboe Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Adopt VIX Future-Option Orders
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
April 14, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 71 (Tuesday, April 14, 2026)</title>
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[Federal Register Volume 91, Number 71 (Tuesday, April 14, 2026)]
[Notices]
[Pages 19245-19246]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07137]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105188; File No. SR-CBOE-2026-004]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To Adopt VIX Future-Option Orders
April 9, 2026.
I. Introduction
On January 5, 2026, Cboe Exchange, Inc. (``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'' or the ``Exchange Act''),\1\
and Rule 19b-4 thereunder,\2\ a proposal to amend its rules to permit
future-option orders comprised of Cboe Volatility Index (``VIX'')
options and VIX futures (``VX futures'') (``VIX future-option
orders''). The proposed rule change was published for comment in the
Federal Register on January 16, 2026.\3\ On February 19, 2026, pursuant
to Section 19(b)(2) of the Exchange Act,\4\ the Commission designated a
longer period within which to approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether to disapprove the proposed rule change.\5\ The
Commission received no comments regarding the proposed rule change.
This order institutes proceedings under Section 19(b)(2)(B) of the
Exchange Act \6\ to determine whether to approve or disapprove the
proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 104588 (Jan. 13,
2026), 91 FR 2209 (``Notice'').
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 104865 (Feb. 19,
2026), 91 FR 8928 (Feb. 24, 2026). The Commission designated April
16, 2026, as the date by which it shall approve, disapprove, or
institute proceedings to determine whether to disapprove the
proposed rule change.
\6\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change
As described more fully in the Notice,\7\ the Exchange proposes to
amend its rules to permit VIX future-option orders. VIX future-option
orders are comprised of VIX options, which trade on Cboe, and VX
futures, which trade on Cboe Futures Exchange, LLC (``CFE'').\8\ The
Exchange states that, currently, investors seeking to execute hedging
or investment strategies involving VIX options and VX futures must
enter into separate VIX option and VX futures transactions on Cboe and
CFE, respectively, a process that creates a risk that only one of the
orders will execute, which could leave an investor with an unhedged
position, as well as a risk that market conditions may change during
the time that it takes to execute both transactions, which could make
the package execute in an unfavorable manner.\9\ The Exchange states
that the proposal would adopt a mechanism to facilitate the execution
of these cross-product transactions in a simple, efficient process that
reduces these execution and price risks.\10\ The Exchange states that
the proposal will allow the entire package to be priced together and
will result in an execution only if both the options and futures
components are able to trade.\11\
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\7\ See supra note 3.
\8\ See Notice, 91 FR at 2209.
\9\ See id. at 2209, 2213.
\10\ See id. at 2209.
\11\ See id. at 2213.
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Under the proposal, when a User that is also a member of CFE
submits a VIX future-option order to Cboe, Cboe will communicate the VX
future component of the order to CFE on behalf of the User.\12\ If the
User is not also a member of CFE, the User must designate a specific
futures commission merchant (``FCM'') or introducing broker (``IB'')
with which the User has entered into an agreement pursuant to proposed
Exchange Rule 5.33, Interpretation and Policy .05, that has
connectivity to electronically communicate the VX futures component of
the order to CFE.\13\ If a VIX future-option order can execute upon
entry, following a Complex Order Auction, or after evaluation while
resting in the Complex Order Book pursuant to Exchange Rule 5.33(i),
the System executes the option component(s) of the order, but does not
immediately send the User a trade execution report, and automatically
communicates the VX future component(s) to CFE or the designated FCM/
IB, as applicable, for execution on CFE.\14\ If the System receives an
execution report for the VX future component(s) from CFE or the
designated FCM/IB, as applicable, the Exchange sends the User the trade
execution report for the VIX future-option order, including the
execution information for the VX future and VIX option components.\15\
If the System receives a report from CFE or the designated FCM/IB, as
applicable, that the VX future component(s) cannot execute, the
Exchange nullifies the VIX option component(s) trade and notifies the
User of the reason for the nullification.\16\
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\12\ See id. at 2210. A ``User'' is any Trading Permit Holder or
Sponsored User who is authorized to obtain access to the System
pursuant to Exchange Rule 5.5. See Cboe Rule 1.1 (definition of
``User''). The ``System'' is the Exchange's hybrid trading platform
that integrates electronic and open outcry trading of option
contracts on the Exchange, and includes any connectivity to the
foregoing trading platform that is administered by or on behalf of
the Exchange, such as a communications hub. See Cboe Rule 1.1
(definition of ``System'').
\13\ See Notice, 91 FR at 2210.
\14\ See id. at 2211.
\15\ See id.
\16\ See id.
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Under the proposal, the price(s) of the VX future leg(s) of a VIX
future-option order are set upon order entry.\17\ The Exchange states
that price competition for a VIX future-option order exposed on the
Exchange will occur with respect to the option leg(s), and that the
package execution price will reflect the net price of the option leg(s)
and the specified price(s) of the future leg(s).\18\
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\17\ See id.
\18\ See id.
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The Exchange states that activity related to the execution of the
options components of VIX future-option orders will be subject to
Commission jurisdiction, and activity related to the execution of the
futures components of VIX future-option orders will be subject to the
jurisdiction of the Commodity Futures Trading Commission
(``CFTC'').\19\ The Exchange further states that each of the Exchange
and CFE will regulate conduct relating to VIX future-option orders and
trades with respect to compliance with its rules, including bringing
disciplinary actions for violations of its rules. The Exchange states
that the Exchange and CFE have an existing information sharing
agreement that encompasses
[[Page 19246]]
information relating to VIX future-option orders and trades, and that
this agreement would allow for the sharing of information between the
Exchange and CFE to permit the Exchange and CFE to have access to all
order, trade, regulatory, and other data relating to these orders and
trades.\20\ In addition, the Exchange states that its current rules
prohibiting market manipulation and fraudulent, noncompetitive, and
disruptive trading practices will apply to VIX future-option orders.
The Exchange states that the Cboe Regulatory Division will incorporate
information it receives from CFE into its surveillance procedures to
monitor trading of VIX future-option orders, including to detect any
manipulative trading activity.\21\
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\19\ See id. at 2212. The Exchange states that on September 9,
2025, CFE submitted to the CFTC a rule certification filing to adopt
rules regarding VIX future-option orders, which filing became
effective ten business days following such filing date. The Exchange
states that CFE stated in its filing that it would not implement the
functionality until the Exchange amended its rules to permit VIX
future-option orders. See Cboe Futures Exchange, LLC Rule
Certification Submission Number CFE-2025-021 (September 9, 2025),
available at <a href="https://www.cftc.gov/sites/default/files/filings/orgrules/25/09/rules09092530095.pdf">https://www.cftc.gov/sites/default/files/filings/orgrules/25/09/rules09092530095.pdf</a>. See id. at footnote 27.
\20\ See Notice, 91 FR at 2212.
\21\ See id. at 2213.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-CBOE-
2026-004 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act \22\ to determine whether the proposed
rule change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide comments
on the proposed rule change to inform the Commission's analysis of
whether to approve or disapprove the proposal.
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\22\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Exchange Act,\23\ the
Commission is providing notice of the grounds for disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis of, and input from commenters with respect to, the
consistency of the proposal with Section 6(b)(5) of the Act,\24\ which
requires, among other things, that the rules of a national securities
exchange be designed to prevent fraudulent and manipulative acts and
practices, promote just and equitable principles of trade, protect
investors and the public interest; and not be designed to regulate by
virtue of any authority conferred by the Exchange Act matters not
related to the purposes of the Exchange Act or the administration of
the exchange.
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\23\ Id.
\24\ 15 U.S.C. 78f(b)(5).
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The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice,\25\ in addition to any other comments they may wish to
submit about the proposed rule change. In particular, the Commission
seeks comment on whether the proposal to permit VIX future-option
orders includes sufficient analysis to support a conclusion that the
proposal is consistent with the requirements of Section 6(b)(5) of the
Act,\26\ including the requirements that the rules of a national
securities exchange be designed to prevent fraudulent and manipulative
acts and practices, promote just and equitable principles of trade,
protect investors and the public interest; and not be designed to
regulate by virtue of any authority conferred by the Exchange Act
matters not related to the purposes of the Exchange Act or the
administration of the exchange.
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\25\ See supra note 3.
\26\ 15 U.S.C. 78f(b)(5).
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IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their data, views, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposed rule change
is consistent with the Act, and the rules and regulations thereunder.
Although there do not appear to be any issues relevant to approval or
disapproval that would be facilitated by an oral presentation of data,
views, and arguments, the Commission will consider, pursuant to Rule
19b-4 under the Act,\27\ any request for an opportunity to make an oral
presentation.\28\
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\27\ 17 CFR 240.19b-4.
\28\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants to
the Commission flexibility to determine what type of proceeding--
either oral or notice and opportunity for written comments--is
appropriate for consideration of a particular proposal by a self-
regulatory organization. See Securities Acts Amendments of 1975,
Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75,
94th Cong., 1st Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by May 5, 2026. Any person who wishes to file a rebuttal
to any other person's submission must file that rebuttal by May 19,
2026.
Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#c4b6b1a8a1e9a7aba9a9a1aab0b784b7a1a7eaa3abb2"><span class="__cf_email__" data-cfemail="c4b6b1a8a1e9a7aba9a9a1aab0b784b7a1a7eaa3abb2">[email protected]</span></a>. Please include
file number SR-CBOE-2026-004 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-CBOE-2026-004. 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-CBOE-2026-004 and should be submitted by
May 5, 2026. Rebuttal comments should be submitted by May 19, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07137 Filed 4-13-26; 8:45 am]
BILLING CODE 8011-01-P
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