Notice2026-07261
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fee Schedule To Revise the Criteria of LMP Tiers 1 and 2
Primary source
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Published
April 15, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 72 (Wednesday, April 15, 2026)</title>
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[Federal Register Volume 91, Number 72 (Wednesday, April 15, 2026)]
[Notices]
[Pages 20195-20198]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07261]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105201; File No. SR-CboeBZX-2026-022]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
its Fee Schedule To Revise the Criteria of LMP Tiers 1 and 2
April 10, 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 April 1, 2026, Cboe BZX Exchange, Inc. (the ``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. (the ``Exchange'' or ``BZX'') proposes to
amend its Fee Schedule to revise the criteria of LMP Tiers 1 and 2. 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.
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.
[[Page 20196]]
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 its Fee Schedule applicable to its
equities trading platform (``BZX Equities'') to revise the criteria of
LMP Tiers 1 and 2. The Exchange proposes to implement these changes on
April 1, 2026.
The Exchange first 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. More specifically, the
Exchange is only one of 17 registered equities exchanges, as well as a
number of alternative trading systems and other off-exchange venues
that do not have similar self-regulatory responsibilities under the
Securities Exchange Act of 1934 (the ``Act''), to which market
participants may direct their order flow. Based on publicly available
information,\3\ no single registered equities exchange has more than
13% of the market share. Thus, in such a low-concentrated and highly
competitive market, no single equities exchange possesses significant
pricing power in the execution of order flow. The Exchange in
particular operates a ``Maker-Taker'' model whereby it pays rebates to
members that add liquidity and assesses fees to those that remove
liquidity. The Exchange's Fee Schedule sets forth the standard rebates
and rates applied per share for orders that provide and remove
liquidity, respectively. Currently, for orders in securities priced at
or above $1.00, the Exchange provides a standard rebate of $0.00160 per
share for orders that add liquidity and assesses a fee of $0.0030 per
share for orders that remove liquidity.\4\ For orders in securities
priced below $1.00, the Exchange does not provide a rebate for orders
that add liquidity and assesses a fee of 0.30% of the total dollar
value for orders that remove liquidity.\5\ Additionally, in response to
the competitive environment, the Exchange also offers tiered pricing
which provides Members opportunities to qualify for higher rebates or
reduced fees where certain volume criteria and thresholds are met.
Tiered pricing provides an incremental incentive for Members to strive
for higher tier levels, which provides increasingly higher benefits or
discounts for satisfying increasingly more stringent criteria.
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\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (March 27, 2026), available at <a href="https://www.cboe.com/us/equities/market_statistics/">https://www.cboe.com/us/equities/market_statistics/</a>.
\4\ See BZX Equities Fee Schedule, Standard Rates.
\5\ Id.
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LMP Tiers
Under footnote 13 of the Fee Schedule, the Exchange offers two LMP
Tiers that each provide an additive rebate for orders yielding fee code
B \6\ where a Member is enrolled in a minimum number of LMP
Securities,\7\ achieves certain quoting criteria, and achieves certain
add volume-based criteria. The Exchange now proposes to revise LMP Tier
1 and LMP Tier 2 by removing the NBBO Size Time \8\ requirement. The
current criteria of LMP Tier 1 and LMP Tier 2 is as follows:
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\6\ Fee code B is appended to displayed orders that add
liquidity to BZX in Tape B securities.
\7\ ``LMP Securities'' means a list of securities included in
the Liquidity Management Program, the universe of which will be
determined by the Exchange and published in a circular distributed
to Members and on the Exchange's website. Such LMP Securities will
include all Cboe-listed ETPs and certain non-Cboe-listed ETPs for
which the Exchange wants to incentivize Members to provide enhanced
market quality. All Cboe-listed securities will be LMP Securities
immediately upon listing on the Exchange. The Exchange will not
remove a security from the list of LMP Securities without 30 days
prior notice.
\8\ ``NBBO Size Time'' means the percentage of time during
regular trading hours during which there are size-setting quotes at
the NBBO on the Exchange.
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<bullet> LMP Tier 1 provides an additive rebate of $0.0001 per
share in securities priced at or above $1.00 to qualifying orders
(i.e., orders yielding fee code B) where a Member is enrolled in at
least 50 BZX-listed LMP Securities, for which it meets the following
criteria for at least 50% of the trading days in the applicable month:
(1) Member has a NBBO Time \9\ >= 15% or a NBBO Size Time >= 25%; and
(2) Member has a Displayed Size Time >= 90%.
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\9\ ``NBBO Time'' means the percentage of time during regular
trading hours during which the Member maintains at least 100 shares
at each of the NBB and NBO. The Exchange notes that it proposes to
amend the definition of NBBO Time to mean the percentage of time
during regular trading hours during which the Member maintains at
least 1 round lot at each of the NBB or NBO.
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<bullet> LMP Tier 2 provides an additive rebate of $0.0002 per
share in securities priced at or above $1.00 to qualifying orders
(i.e., orders yielding fee code B) where (i) a Member is enrolled in at
least 100 BZX-listed LMP Securities, for which it meets the following
criteria for at least 50% of the trading days in the applicable month:
(1) Member has a NBBO Time >= 15% or a NBBO Size Time >= 25%; and (2)
Member has a Displayed Size Time >= 90%; and (ii) Member adds a Tape B
ADV \10\ >= 1.50% of the Tape B TCV.\11\
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\10\ ``ADV'' means average daily volume calculated as the number
of shares added or removed, combined, per day and is calculated on a
monthly basis.
\11\ ``TCV'' means total consolidated volume calculated as the
volume reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan for the month for which the
fees apply.
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The proposed criteria for LMP Tier 1 and LMP Tier 2 is as follows:
<bullet> LMP Tier 1 provides an additive rebate of $0.0001 per
share in securities priced at or above $1.00 to qualifying orders
(i.e., orders yielding fee code B) where a Member is enrolled in at
least 50 BZX-listed LMP Securities, for which it meets the following
criteria for at least 50% of the trading days in the applicable month:
(1) Member has a NBBO Time >= 15%; and (2) Member has a Displayed Size
Time >= 90%.
<bullet> LMP Tier 2 provides an additive rebate of $0.0002 per
share in securities priced at or above $1.00 to qualifying orders
(i.e., orders yielding fee code B) where (i) a Member is enrolled in at
least 100 BZX-listed LMP Securities, for which it meets the following
criteria for at least 50% of the trading days in the applicable month:
(1) Member has a NBBO Time >= 15%; and (2) Member has a Displayed Size
Time >= 90%; and (ii) Member adds a Tape B ADV >= 1.50% of the Tape B
TCV.
The proposed LMP Tier 1 and LMP Tier 2 will continue to provide an
additional opportunity to incentivize Members to earn an additive
rebate by promoting price discovery and market quality by quoting at
the NBBO for a significant portion of each day in securities of the
Member's choice. Increasing order flow to the Exchange may further
contribute to a deeper, more liquid market and provide even more
execution opportunities for active market participants. Incentivizing
an increase in displayed liquidity adding volume through additive
rebate opportunities encourages liquidity-adding Members on the
Exchange to increase transactions and take execution opportunities
provided by such increased liquidity, together providing for overall
enhanced price discovery and price improvement opportunities on the
Exchange. As such, increased overall order flow benefits all Members by
contributing towards a robust and well-balanced market ecosystem.
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
[[Page 20197]]
and, in particular, the requirements of Section 6(b) of the Act.\12\
Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \13\ 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) \14\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \15\
as it is designed to 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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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ Id.
\15\ 15 U.S.C. 78f(b)(4).
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As described above, the Exchange 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 believes that
its proposal to revise LMP Tier 1 and LMP Tier 2 reflects a competitive
pricing structure designed to incentivize market participants to direct
their order flow to the Exchange, which the Exchange believes would
enhance market quality to the benefit of all Members. Specifically, the
Exchange's proposal to revise LMP Tier 1 and LMP Tier 2 is not a
significant departure from existing criteria, is reasonably correlated
to the enhanced rebate offered by the Exchange and other competing
exchanges,\16\ and will continue to incentivize Members to submit order
flow to the Exchange. Additionally, the Exchange notes that relative
volume-based incentives and discounts have been widely adopted by
exchanges,\17\ including the Exchange,\18\ and are reasonable,
equitable and non-discriminatory because they are open to all Members
on an equal basis and provide additional benefits or discounts that are
reasonably related to (i) the value to an exchange's market quality and
(ii) associated higher levels of market activity, such as higher levels
of liquidity provision and/or growth patterns. Competing equity
exchanges offer similar tiered pricing structures, including schedules
or rebates and fees that apply based upon members achieving certain
volume and/or growth thresholds, as well as assess similar fees or
rebates for similar types of orders, to that of the Exchange.
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\16\ See MEMX Equities Fee Schedule, Additive Rebates, Tape A
Quoting and Tape C Quoting, available at <a href="https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/">https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/</a>.
\17\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
\18\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove
Volume Tiers.
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In particular, the Exchange believes its proposal to revise LMP
Tier 1 and LMP Tier 2 is reasonable because the proposed tiers will be
available to all Members and provide all Members with an opportunity to
receive an enhanced rebate. The Exchange further believes its proposal
to revise LMP Tier 1 and LMP Tier 2 will provide a reasonable means to
encourage liquidity adding displayed orders in Members' order flow to
the Exchange and to incentivize Members to continue to provide
liquidity adding volume to the Exchange by offering them an opportunity
to receive an additive rebate on qualifying orders. An overall increase
in activity would deepen the Exchange's liquidity pool, offer
additional cost savings, support the quality of price discovery,
promote market transparency and improve market quality, for all
investors.
The Exchange believes that its proposal to revise LMP Tier 1 and
LMP Tier 2 is reasonable as the proposed criteria does not represent a
significant departure from the criteria currently offered in the Fee
Schedule. The Exchange also believes that the proposal represents an
equitable allocation of fees and rebates and is not unfairly
discriminatory because all Members will be eligible for proposed LMP
Tier 1 and LMP Tier 2 and have the opportunity to meet the tiers'
criteria and receive the corresponding additive rebate if such criteria
is met. Without having a view of activity on other markets and off-
exchange venues, the Exchange has no way of knowing whether this
proposed rule change would definitely result in any Members qualifying
for proposed LMP Tier 1 or LMP Tier 2. While the Exchange has no way of
predicting with certainty how the proposed changes will impact Member
activity, based on the prior month's volume, the Exchange anticipates
that at least seven Members will be able to satisfy proposed LMP Tier 1
and no Members will be able to satisfy proposed LMP Tier 2. The
Exchange also notes that proposed changes will not adversely impact any
Member's ability to qualify for enhanced rebates offered under other
tiers. Should a Member not meet the proposed new criteria, the Member
will merely not receive that corresponding additive rebate.
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. Rather, as discussed above,
the Exchange believes that the proposed change would encourage the
submission of additional order flow to a public exchange, thereby
promoting market depth, execution incentives and enhanced execution
opportunities, as well as price discovery and transparency for all
Members. As a result, the Exchange believes that the proposed changes
further the Commission's goal in adopting Regulation NMS of fostering
competition among orders, which promotes ``more efficient pricing of
individual stocks for all types of orders, large and small.''
The Exchange believes the proposed rule changes do not impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Particularly, the proposed
revision to LMP Tier 1 and LMP Tier 2 does not impose an unnecessary
burden as all Members are eligible to receive the additive rebate under
proposed LMP Tier 1 and LMP Tier 2. The Exchange does not believe the
proposed changes burden competition, but rather, enhances competition
as it is intended to increase the competitiveness of BZX by amending
existing pricing incentives in order to attract order flow and
incentivize participants to increase their participation on the
Exchange, providing for additional execution opportunities for market
participants and improved price transparency. Greater overall order
flow, trading opportunities, and pricing transparency benefits all
market participants on the Exchange by enhancing market quality and
continuing to encourage Members to send orders, thereby contributing
towards a robust and well-balanced market ecosystem.
Next, the Exchange believes the proposed rule changes do not impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
operates in a highly competitive market. Members have
[[Page 20198]]
numerous alternative venues that they may participate on and direct
their order flow, including other equities exchanges, off-exchange
venues, and alternative trading systems. Additionally, the Exchange
represents a small percentage of the overall market. Based on publicly
available information, no single equities exchange has more than 13% of
the market share.\19\ Therefore, no exchange possesses significant
pricing power in the execution of order flow. Indeed, participants can
readily choose to send their orders 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 fee change
imposes any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
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\19\ Supra note 3.
\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#0173746d642c626e6c6c646f7572417264622f666e77"><span class="__cf_email__" data-cfemail="b0c2c5dcd59dd3dfddddd5dec4c3f0c3d5d39ed7dfc6">[email protected]</span></a>. Please include
file number SR-CboeBZX-2026-022 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-2026-022. 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-2026-022 and should be submitted
on or before May 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)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07261 Filed 4-14-26; 8:45 am]
BILLING CODE 8011-01-P
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