Notice2026-07687
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule With Respect to Certain Standard Transaction Fees, Floor Broker Permit Fees, the SPX and VIX Floor Broker Trading Surcharges, the Floor Broker ADV Discount, Market-Maker Tier Appointment Fees, Floor Jacket Stipends, and SPXW Excessive Complex Instrument Creation Charges
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 21, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 76 (Tuesday, April 21, 2026)</title>
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[Federal Register Volume 91, Number 76 (Tuesday, April 21, 2026)]
[Notices]
[Pages 21345-21355]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07687]
[[Page 21345]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105254; File No. SR-CBOE-2026-031]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule With Respect to Certain Standard Transaction Fees,
Floor Broker Permit Fees, the SPX and VIX Floor Broker Trading
Surcharges, the Floor Broker ADV Discount, Market-Maker Tier
Appointment Fees, Floor Jacket Stipends, and SPXW Excessive Complex
Instrument Creation Charges
April 16, 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 Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') 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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend certain standard transaction fees, amend Floor Broker permit
fees, amend the SPX and VIX Floor Broker trading surcharges, amend the
Floor Broker ADV discount, amend Market-Maker tier appointment fees,
adopt two floor jacket stipends, and adopt SPXW excessive complex
instrument creation charges. 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/options/regulation/rule_filings/bzx/">https://www.cboe.com/us/options/regulation/rule_filings/bzx/</a>), and at the principal office of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fees Schedule, effective April
1, 2026.
Standard Transaction Fee Changes
XSP, MRUT, and DJX
The Exchange proposes to apply certain fee codes currently
applicable to transactions in Mini-SPX Index options (``XSP'') to
transactions in each of Mini-Russell 2000 Index options (``MRUT'') and
options on the Dow Jones Industrial Average (``DJX''). Specifically,
the proposed rule change amends certain fees for XSP in the Rate Table
for All Products Excluding Underlying Symbol List A, as follows: \3\
---------------------------------------------------------------------------
\3\ As part of the proposed changes, the Exchange proposes to
amend Footnote 9 to reflect the changes to fee code XC and CC
described herein.
---------------------------------------------------------------------------
<bullet> Amends fee code XC, appended to all Customer (capacity
``C'') orders in XSP that are for less than 10 contracts and provides a
rebate of $0.30 per contract, to apply to all Customer (capacity ``C'')
orders in XSP, MRUT, or DJX that are for less than 10 contracts.
<bullet> Amends fee code CC, appended to all Customer (capacity
``C'') orders in XSP that are for greater than or equal to 10 contracts
and assesses a fee of $0.07 per contract, to apply to all Customer
(capacity ``C'') orders in XSP, MRUT, or DJX that are for greater than
or equal to 10 contracts.
<bullet> Amends fee code XN, appended to all Clearing Trading
Permit Holders (``TPHs'') (capacity ``F''), Non-Clearing TPH Affiliates
(capacity ``L''), Broker-Dealer (capacity ``B''), Joint Back-Office
(capacity ``J''), Non-TPH Market-Maker (capacity ``N''), and
Professional (capacity ``U'') (collectively, ``Non-Market Maker, Non-
Customer'') orders in XSP that are executed manually (i.e., open
outcry) and assesses a fee of $0.30 per contract, to apply to all Non-
Market Maker, Non-Customer orders in XSP, MRUT, or DJX that are
executed manually (i.e., open outcry).
<bullet> Amends fee code XF, appended to all Non-Market Maker, Non-
Customer orders in XSP contra to a customer or contra to a non-customer
that add liquidity and that are executed electronically and assesses a
fee of $0.30 per contract, to apply to all Non-Market Maker, Non-
Customer orders in XSP, MRUT, or DJX contra to a customer or contra to
a non-customer that add liquidity and that are executed electronically.
<bullet> Amends fee code XB, appended to all Non-Market Maker, Non-
Customer orders in XSP contra to a non-customer that remove liquidity
and assesses a fee of $0.50 per contract, to apply to all Non-Market
Maker, Non-Customer orders in XSP, MRUT, or DJX contra to a non-
customer that remove liquidity.
<bullet> Amends fee code MP, appended to all Market-Maker (capacity
``M'') orders in XSP that are executed manually (i.e., open outcry) and
assesses a fee of $0.15 per contract, to apply to all Market-Maker
(capacity ``M'') orders in XSP, MRUT, or DJX that are executed manually
(i.e., open outcry).
<bullet> Amends fee code MC, appended to all Market-Maker (capacity
``M'') orders in XSP that are contra customer and that are executed
electronically and assesses a fee of $0.15 per contract, to apply to
all Market-Maker (capacity ``M'') orders in XSP, MRUT, or DJX that are
contra customer and that are executed electronically.
<bullet> Amends fee code MX, appended to all Market-Maker (capacity
``M'') orders in XSP contra to non-customers that add liquidity and
that are executed electronically and assesses a fee of $0.09 per
contract, to apply to all Market-Maker (capacity ``M'') orders in XSP,
MRUT, or DJX contra to non-customers that add liquidity and that are
executed electronically.
<bullet> Amends fee code MY, appended to all Market-Maker (capacity
``M'') in XSP contra to non-customers that remove liquidity and
assesses a fee of $0.50 per contract, to apply to all Market-Maker
(capacity ``M'') in XSP, MRUT, or DJX contra to non-customers that
remove liquidity.
As part of the proposed changes, the Exchange proposes to delete
the following fee codes, which are currently appended to MRUT orders.
Specifically, the Exchange proposes to delete:
<bullet> Fee code CQ, appended to Customer orders in MRUT and
assesses a fee of $0.02 per contract.
<bullet> Fee code FM, appended to Clearing TPH (capacity ``F'') and
Non-Clearing TPH Affiliates (capacity ``L'') orders in MRUT and
assesses a fee of $0.02 per contract.
<bullet> Fee code MM, appended to Market-Maker (capacity ``M'')
orders in MRUT and assesses a fee of $0.03 per contract.
<bullet> Fee code BM, appended to Broker-Dealer (capacity ``B''),
Joint Back-Office
[[Page 21346]]
(capacity ``J''), Non-TPH Market-Maker (capacity ``N''), and
Professional (capacity ``U'') orders in MRUT and assesses a fee of
$0.04 per contract.
As part of the proposed changes, the Exchange proposes to add DJX
to Liquidity Provider Sliding Scale \4\ and Liquidity Provider Sliding
Scale Adjustment Program (as described within Footnote 44).
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\4\ The Exchange also proposes to amend Footnote 10 to reflect
inclusion of DJX in the Liquidity Provider Sliding Scale program.
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SPESG and SPEQX
The Exchange proposes to adopt certain fees related to transactions
in S&P 500 Scored & Screened Index options (``SPESG'') and S&P 500
Equal Weight Index options (SPEQX''). Specifically, the proposed rule
change adopts certain fees for SPESG and SPEQX in the Rate Table for
All Products Excluding Underlying Symbol List A, as follows:
<bullet> Adopts fee code G1, appended to Customer (capacity ``C'')
orders in SPESG and SPEQX options and assesses a fee of $0.10 per
contract.
<bullet> Adopts fee code G2, appended to all Market-Maker (capacity
``M'') orders in SPESG and SPEQX that are executed manually (i.e., open
outcry) and assesses a fee of $0.15 per contract.
<bullet> Adopts fee code G3, appended to Market-Maker (capacity
``M'') orders in SPESG and SPEQX contra to non-customers that remove
liquidity and that are executed electronically and assesses a fee of
$0.50 per contract.
<bullet> Adopts fee code G4, appended to all Market-Maker (capacity
``M'') orders in SPESG and SPEQX contra to non-customers that add
liquidity and that are executed electronically and provides a rebate of
$0.25 per contract.
<bullet> Adopts fee code G5, appended to all Market-Maker (capacity
``M'') orders in SPESG and SPEQX contra to customers and that are
executed electronically and assesses a fee of $0.15 per contract.
<bullet> Adopts fee code G6, appended to Non-Market Maker, Non-
Customer orders in SPESG and SPEQX that are executed manually (i.e., in
open outcry) and assesses a fee of $0.20 per contract.
<bullet> Adopts fee code G7, appended to Non-Market Maker, Non-
Customer orders in SPESG and SPEQX contra to a customer or contra to a
non-customer that add liquidity, and that are executed electronically,
and assesses a fee of $0.20 per contract.
As part of the proposed changes, the Exchange proposes to delete
the below fee codes, which are currently appended to certain SPEQX
orders. Specifically, the Exchange proposes to delete:
<bullet> Fee code E1, appended to Customer orders in SPEQX and
assesses a fee of $0.05 per contract.
<bullet> Fee code E2, appended to Non-Customer orders in SPEQX and
assesses a fee of $0.25.
As part of the proposed changes, the Exchange also proposes to
amend the below fee codes, which are currently appended to certain
SPESG orders. Specifically, the Exchange proposes to amend:
<bullet> Fee code CS, appended to Customer (capacity ``C'') premium
orders for less than $1.00 in SPW (including SPXW) and SPESG and
assesses a fee of $0.36 per contract, to apply to Customer (capacity
``C'') premium orders for less than $1.00 in SPW (including SPXW).
<bullet> Fee code CT, appended to Customer (capacity ``C'') premium
orders for greater than or equal to $1.00 in SPX (including SPXW) and
SPESG and assesses a fee of $0.40 per contract, to apply to Customer
(capacity ``C'') premium orders for greater than or equal to $1.00 in
SPX (including SPXW).
<bullet> Fee code BT, appended to Broker-Dealer (capacity ``B''),
Joint Back-Office (capacity ``J''), Non-TPH Market-Maker (capacity
``N''), and Professional (capacity ``U'') orders in SPX (including
SPXW) and SPESG and assesses a fee of $0.42 per contract, to apply only
to Broker-Dealer (capacity ``B''), Joint Back-Office (capacity ``J''),
Non-TPH Market-Maker (capacity ``N''), and Professional (capacity
``U'') orders in SPX (including SPXW).
<bullet> Fee code MS, appended to Market-Maker (capacity ``M'')
orders in SPX (including SPXW) and SPESG and assesses a fee of $0.28
per contract, to apply only to Market-Maker (capacity ``M'') orders in
SPX (including SPXW).
<bullet> Fee code FH, assesses a fee of $0.26.per contract and is
appended to Broker-Dealer (capacity ``B''), Joint Back-Office (capacity
``J''), Non-TPH Market-Maker (capacity ``N''), and Professional
(capacity ``U'') orders in Underlying Symbol List A, under which SPESG
is currently listed and to which the Exchange proposes to remove
SPESG.\5\
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\5\ As part of the proposed change, the Exchange also proposes
to amend Footnote 34 to remove SPESG from Underlying Symbol List A.
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The Exchange also proposes to exclude SPESG from certain surcharges
applicable to certain Non-Market-Maker orders. Specifically, the
Exchange proposes to exclude SPESG from the Execution Surcharge ($0.21
per contract), AIM Response Surcharge ($0.05 per contract), AIM Contra
Surcharge ($0.10 per contract), and the AIM Agency/Primary Surcharge
($0.10 per contract).\6\ The Exchange proposes to list SPESG to the
FLEX Surcharge Fee under ``Rate Table--All Products Excluding
Underlying Symbol List A'', which assesses a charge of $0.10 per
contract (capped at $250 per trade).\7\
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\6\ The Exchange also proposes to amend Footnote 12 appended to
the Execution Surcharge, AIM Response Surcharge, AIM Contra
Surcharge, and the AIM Agency/Primary Surcharge, to remove reference
to SPESG, and to amend Footnote 21 appended to the Execution
Surcharge to remove reference to SPESG.
\7\ Currently, SPESG falls under the FLEX Surcharge Fee under
Rate Table--Underlying Symbol List A, which assesses the same charge
of $0.10 per contract (capped at $250 per trade); thus there is no
substantive change to the fee assessed as a result of this change.
---------------------------------------------------------------------------
As a result of the removal of SPESG from Underlying Symbol List A,
the Exchange also proposes to update certain fee program descriptions
set forth within the Fees Schedule to specifically reference SPESG.
Specifically, the Exchange proposes to amend the SPX/SPXW Liquidity
Provider Sliding Scale,\8\ Liquidity Provider Sliding Scale, Liquidity
Provider Sliding Scale Adjustment Table, Volume Incentive Program,
Break-up Credits, Marketing Fees, Floor Broker Sliding Scale Rebate
Program, Floor Broker Slide Scale Supplemental Rebate Program, Order
Router Subsidy Program (``ORS''), Complex Order Router Subsidy Program
(``CORS''), Floor Brokerage Fees, and the Floor Brokerage Fees Discount
Scale to list SPESG as program exclusions.\9\ These are not substantive
changes, as SPESG was previously excluded via its inclusion in
Underlying Symbol List A.
---------------------------------------------------------------------------
\8\ As part of the proposed change, the Exchange proposes to
amend Footnote 33 to reflect the changes to the SPX/SPXW Liquidity
Provider Sliding Scale.
\9\ As part of the proposed changes, the Exchange proposes to
amend Footnotes 6, 10, 11, 22, 29, 30, 35, 36, and 44, to include
SPESG. The Exchange notes that SPESG was previously included in such
footnotes via inclusion in Underlying Symbol List A; as a result of
the change to remove SPESG from Underlying Symbol List A, the
Exchange now proposes to separately list SPESG within these
footnotes.
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CBTX
The Exchange proposes to amend and adopt certain fees related to
transactions in Cboe Bitcoin U.S. ETF Index options (``CBTX'').
Specifically, the proposed rule change amends and adopts certain fees
for CBTX in the Rate Table for All Products Excluding Underlying Symbol
List A, as follows:
<bullet> Amends fee code B2, currently appended to all Market-Maker
(capacity ``M''), Clearing TPHs (capacity ``F''), Non-Clearing TPH
Affiliates (capacity ``L''), Broker-Dealer (capacity ``B''), Joint
Back-Office (capacity ``J''), Non-TPH Market-Maker (capacity ``N''),
and
[[Page 21347]]
Professional (capacity ``U'') (collectively, ``Non-Customer'') orders
in CBTX and assesses a fee of $1.00 per contract, to apply to all Non-
Customer orders in CBTX that are executed manually (i.e., open outcry).
<bullet> Adopts fee code B3, appended to all Non-Customer orders in
CBTX contra to non-customers that remove liquidity and that are
executed electronically and assesses a fee of $1.00 per contract.
<bullet> Adopts fee code B4, appended to all Market-Maker (capacity
``M'') orders in CBTX contra to non-customers that add liquidity and
that are executed electronically and provides a rebate of $0.75 per
contract.
<bullet> Adopts fee code B5, appended to all Non-Customer orders in
CBTX contra to customers and all Non-Customer, Non-Market Maker orders
in CBTX contra to non-customers that add liquidity, and that are
executed electronically and assesses a fee of $1.00 per contract.
MBTX
The Exchange proposes to amend and adopt certain fees related to
transactions in Cboe Mini Bitcoin U.S. ETF Index options (``MBTX'').
Specifically, the proposed rule change amends and adopts certain fees
for MBTX in the Rate Table for All Products Excluding Underlying Symbol
List A, as follows:
<bullet> Amends fee code M2, currently appended to all Non-Customer
orders in CBTX and assesses a fee of $0.50 per contract, to apply to
all Non-Customer orders in MBTX that are executed manually (i.e., open
outcry).
<bullet> Adopts fee code M3, appended to all Non-Customer orders in
MBTX contra to non-customers that remove liquidity and that are
executed electronically and assesses a fee of $1.00 per contract.
<bullet> Adopts fee code M4, appended to all Market-Maker (capacity
``M'') orders in MBTX contra to non-customers that add liquidity and
that are executed electronically and provides a rebate of $0.50 per
contract.
<bullet> Adopts fee code M5, appended to all Non-Customer orders in
MBTX contra to customers and all Non-Customer, Non-Market Maker orders
in MBTX contra to non-customers that add liquidity, and that are
executed electronically and assesses a fee of $0.50 per contract.
LMM Program Updates
The Exchange propose to eliminate the MRUT, RTH SPESG, RTH MBTX/
MBTXW, RTH CBTX/CBTXW, and RTH SPEQX LMM Incentive Programs (the ``LMM
Incentive Programs''), set forth in the Fees Schedule. By way of
background, each LMM Incentive Program provides a rebate to TPHs with
LMM appointments to the respective incentive program that meet certain
quoting standards in the applicable series in a month. Meeting or
exceeding the quoting standards in each of the LMM Incentive Program
products to receive the applicable rebate is optional for an LMM
appointed to a program. Rather, an LMM appointed to an incentive
program is eligible to receive the corresponding rebate if it satisfies
the applicable quoting standards.
The Exchange is not required to offer these LMM Incentive Programs
and no longer desires to do so, as of April 1, 2026. As such, the
Exchange proposes deleting each of the LMM Incentive Program details
set forth in the Fees Schedule.
Floor Fee Changes
Floor Broker Permit Fee Change
By way of background, a Floor Broker Permit (``FB Permit'')
entitles the holder to act as a Floor Broker on the floor of the
exchange. The Exchange currently maintains a Floor Trading Permit
Sliding Scale, which allows Floor Brokers to pay reduced rates for a
higher quantity of FB Permits. Particularly, Floor Brokers pay $7,500
for the first FB Permit, $5,700 per permit for the 2nd and 3rd FB
Permits, $4,500 per permit for the 4th and 5th FB permits and $3,200
for each additional FB Permit thereafter. The Exchange now proposes to
eliminate the current fee structure and introduce a flat per-permit FB
Permit fee structure. Specifically, the Exchange proposes to assess a
fee of $750 per FB Permit.\10\ The Exchange believes the proposed
change may incentivize new market participants to become Floor Brokers
on the Exchange and help offset initial costs of operation as Floor
Brokers. The Exchange also notes the proposed structure is consistent
with the flat per-permit rates charged by another Exchange to Floor
Broker participants.\11\
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\10\ As part of the proposed changes, the Exchange proposes to
remove language regarding reduced Floor Broker Permit fees for any
new TPH or existing TPH that has not held an active Floor Broker
Permit in at least 12 months, as such discount will no longer be
available.
\11\ See NYSE American Options Fees Schedule, Section III
(Monthly Trading Permit, Rights, Floor Access and Premium Product
Fees).
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Floor Broker Trading Surcharge
The Exchange proposes to amend its Floor Broker Trading Surcharge
Program for SPX and VIX. Currently, the Exchange assesses a monthly fee
of $3,000 per month for any Floor Broker TPH that executes more than
20,000 SPX (including SPXW) contracts during the month (``FB SPX
Surcharge'') and a monthly fee of $3,000 per month for any Floor Broker
TPH that executes more than 20,000 VIX contracts during the month (``FB
VIX Surcharge''). First, the Exchange proposes to amend the Floor
Broker Trading Surcharge Program to assess a monthly fee for any Floor
Broker TPH that executes more than 1,000 SPX (including SPXW) or 1,000
VIX contracts during the month. Further, the Exchange proposes to amend
its Floor Broker Trading Surcharge Program to establish a tiered
structure, wherein Floor Broker TPHs will be assessed applicable FB SPX
and VIX Surcharges based on their quantity of FB Permits. The proposed
structure is as follows for SPX/SPXW:
------------------------------------------------------------------------
Floor trading permit
Criteria quantity Monthly fee
------------------------------------------------------------------------
FB Trading Permit Holder 1..................... $7,500
executes >=1,000 contracts in
SPX/SPXW.
2 to 3................ 6,750
4 to 5................ 4,000
6 to 10............... 2,500
>10................... 2,000
------------------------------------------------------------------------
The proposed structure is as follows for VIX:
[[Page 21348]]
------------------------------------------------------------------------
Floor trading permit
Criteria quantity Monthly fee
------------------------------------------------------------------------
FB Trading Permit Holder 1..................... $3,000
executes >=1,000 contracts in
VIX.
2 to 5................ 2,500
>5.................... 2,000
------------------------------------------------------------------------
For each of the FB SPX Surcharge and the FB VIX Surcharge, the
volume executed by all Floor Brokers associated with a particular Floor
Broker Trading Permit in a given month, will be aggregated for purposes
of determining if the Floor Broker Trading Surcharge will be charged.
Floor Broker ADV Discount Change
Next, the Exchange proposes to modify \12\ its discount for Floor
Broker Trading Permit fees. Currently, as set forth in the Floor Broker
ADV Discount table, any Floor Broker that executes a certain average of
Customer (capacity ``C'') open-outcry contracts per day over the course
of a calendar month in all underlying symbols, will receive a rebate on
that TPH's Floor Broker Trading Permit Fees.\13\ Such rebate amount is
a percentage of the TPH's FB Permit total costs; the criteria and
corresponding percentage rebates are noted below.
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\12\ As part of the proposed change, the Exchange proposes to
remove outdated language referring to discounts applicable in June
2020.
\13\ The Floor Broker ADV Discount will be available for all
Floor Broker Trading Permits held by affiliated TPHs and TPH
organizations.
------------------------------------------------------------------------
Floor broker
Floor broker ADV discount tier ADV permit rebate
(%)
------------------------------------------------------------------------
1................................. 0 to 99,999......... 0
2................................. 100,000 to 174,999.. 15
3................................. >174,999............ 25
------------------------------------------------------------------------
The Exchange proposes to modify the discount so TPHs will also
receive the applicable discount on their Floor Broker Trading Surcharge
fees (both SPX and VIX).
Market-Maker Tier Appointment Fee Changes
The Exchange proposes to amend its Market-Maker Tier Appointment
Fees for VIX and RUT. Currently, these fees are assessed to any Market-
Maker TPH that has the respective VIX or RUT appointment at any time
during a calendar month and trades a specified number of contracts. The
Exchange assesses separate Tier Appointment Fees for each type of
Market-Maker Trading Permit (i.e., Market-Maker Floor Permit and
Market-Maker Electronic Access Permit (``EAP'')). Specifically, as it
relates to Market-Maker Floor Permits, the $2,000 per month VIX Tier
Appointment is assessed to any Market-Maker TPH that executes at least
1,000 contracts in VIX and the $1,000 per month RUT Tier Appointment is
assessed to any Market-Maker TPH that executes at least 1,000 contracts
in RUT; both are applied per Market-Maker Floor Permit. As it relates
to Market-Maker EAP, the $2,000 per month VIX Tier Appointment is
assessed to any Market-Maker TPH that executes at least 1,000 contracts
in VIX and the $1,000 per month RUT Tier Appointment is assessed to any
Market-Maker TPH that executes at least 1,000 contracts in RUT; both
are applied per TPH.
The Exchange proposes to amend the Tier Appointment Fee amounts.
Specifically, the Exchange proposes to increase the VIX Tier
Appointment fee to $2,500 (for both Market-Maker Floor Permits and
Market-Maker EAP) and to increase the RUT Tier Appointment Fee to
$1,500 (for both Market-Maker Floor Permits and Market-Maker EAP).
Floor Jacket Stipends
The Exchange proposes to adopt two stipends to assist with the cost
of floor jackets. Specifically, the Exchange proposes to adopt a $275
stipend for new trading floor jackets, to be issued every three years,
and a $100 stipend for the cleaning of trading jackets, to be issued
annually. The Exchange will provide the initial stipends to all active
floor badge holders as of April 1, 2026, with subsequent stipends
issued according to the established issuance schedule, based on
applicable frequency. Floor participants who receive their badge after
a scheduled issuance date will receive both stipends upon badge
activation and will then follow the established issuance schedule for
subsequent stipends.
SPXW Excessive Complex Instrument Creation Charges
Next, the Exchange proposes to amend its Fees Schedule to adopt
SPXW Excessive Complex Instrument Creation Charges (the ``Excessive CIC
Fee'').
The proposed Excessive CIC Fee is calculated as follows: (i) a
TPH's (and its Affiliate's, if applicable) daily number of complex
instrument \14\ creations \15\ are added together to determine the
Daily Charge based on the below Table 1 and (ii) the Daily Charge is
then multiplied by the Daily Multiplier, based on the ratio of the
TPH's SPXW Complex Instruments Traded to SPXW Complex Instruments
Created in SPXW, shown in the below Table 2.
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\14\ For purposes of the SPXW Excessive Complex Instrument
Creation Charges, a ``complex instrument'' shall have the same
meaning as ``complex strategy'' as defined in Cboe Options Rule
5.33. See proposed Footnote 54, which the Exchange proposes to
append to the Excessive CIC Fee table.
\15\ Complex instruments created through the daily reloading of
Good-til-Cancel (``GTC'') orders are included in a TPH's complex
instrument creation total for that trading day. See proposed
Footnote 54. For example, if a TPH's GTC reload produces 13,000
complex instrument creations and the TPH creates an additional
19,000 complex instruments during the same session, the TPH's total
for that day would be 32,000 complex instrument creations.
Table 1
------------------------------------------------------------------------
SPXW complex
Tier instrument creations Daily charge
------------------------------------------------------------------------
Tier 1............................ <20,000............. $0
[[Page 21349]]
Tier 2............................ >=20,000 <=29,999... 500
Tier 3............................ >=30,000 <=34,999... 2,000
Tier 4............................ >=35,000............ 4,000
------------------------------------------------------------------------
Table 2
------------------------------------------------------------------------
SPXW complex
instruments traded/ Daily
Tier SPXW complex multiplier
instruments created
------------------------------------------------------------------------
Tier 1............................ >=0% <15%........... 2.00
Tier 2............................ >=15% <30%.......... 1.50
Tier 3............................ >=30% <50%.......... 1.00
Tier 4............................ >=50% <70%.......... 0.50
Tier 5............................ >=70%............... 0.00
------------------------------------------------------------------------
The proposed Excessive CIC Fee will apply during all Exchange
trading sessions.\16\ A TPH's volume in its complex instrument creation
activity as well as its complex executed volume will be combined with
any of its Affiliates.\17\ The Excessive CIC Fee will be calculated on
a daily basis and will be assessed to TPHs at the end of the month.
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\16\ The Exchange proposes to append reference to Footnotes 37
and 42 to the Excessive CIC Fee table, to denote that, in addition
to Regular Trading Hours, the fee applies during Global Trading
Hours (``GTH'') and Curb, respectively.
\17\ See proposed Footnote 54, which provides in relevant part,
that the Exchange will aggregate the complex instrument creations
and executed SPXW complex volume of affiliated TPHs for purposes of
the determining SPXW Excessive Complex Instrument Creation Charges
if there is at least 75% common ownership between the firms as
reflected on each firm's Form BD, Schedule A.
---------------------------------------------------------------------------
The Exchange notes that market participants with incrementally
higher numbers of complex instrument creations have the potential
residual effect of exhausting System resources, bandwidth, and
capacity. Higher numbers of complex instrument creations may therefore,
in turn, create latency and impact other market participants' ability
to receive timely executions.
In fact, the Exchange has recently seen an unprecedented increase
in complex instruments creations in SPXW, specifically. The potential
for significant price improvement through Legging has created
incentives for market participants, particularly Professional and
Public Customers, to routinely rest complex orders across thousands of
instrument combinations in the Complex Order Book (``COB'') with
minimal genuine trading intent. Rather, these participants seek to
trade in an opportunistic manner with a Customer order that is received
inside the best bid or offer (``BBO''), exploiting the Legging process
with speculative behavior. This behavior does not contribute
meaningfully to price discovery or liquidity provision, but instead
creates operational burdens, reduces system latency, and degrades
market quality. As a result, the Exchange has noticed increased strain
on its System, particularly, as it relates to activity in SPXW. With
this in mind, the Exchange has proposed this fee specifically for
activity in SPXW in order to encourage more efficient behavior among
its TPHs as it relates to their complex instrument creation activity.
The proposed fee structure has multiple thresholds, and the
proposed fees are incrementally greater at complex instrument creation
amounts because the potential impact on Exchange Systems, bandwidth and
capacity becomes greater with increased complex instrument creations.
The proposal contemplates that a TPH would have to exceed 20,000
complex instrument creations before that market participant would be
charged a fee under the proposed respective tiers. The Exchange
believes that it is in the interests of all market participants who
access the Exchange to not allow other market participants to exhaust
System resources, but to encourage efficient usage of network and
System capacity. The Exchange also believes this proposal (and in
particular the proposed fee amounts associated with higher complex
instrument creation amounts without adequate executed volume) will
reduce the incentive for market participants to engage in excessive
complex instrument creation activity that will encourage such activity
to be submitted in good faith for legitimate purposes.
The Exchange also represents that the proposed fees are not
intended to raise revenue; rather, as noted above, it is intended to
encourage efficient behavior so that market participants do not exhaust
System resources. This is demonstrated by the Exchange (i) targeting
the offending behavior and (ii) limiting this to only be for SPXW
(where the Exchange is noticing inefficient use of the System).
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.\18\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \19\ 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) \20\ 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) of the Act,\21\ which
requires that Exchange rules provide for the equitable allocation of
reasonable
[[Page 21350]]
dues, fees, and other charges among its TPHs and other persons using
its facilities.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(5).
\20\ Id.
\21\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
Standard Transaction Fee Changes
XSP, MRUT, and DJX
The Exchange believes that the proposal to apply certain XSP
transaction fee codes to transactions in MRUT and DJX is reasonable,
equitable and not unfairly discriminatory. Similar to XSP, MRUT and DJX
are index options traded on the Exchange, based on a broad-market
index, and they attract a similar mix of market participants and order
types. Applying a unified fee structure across these products aligns
the fee structure for similar products and simplifies the Fees
Schedule. The proposal will result in slightly different fees for MRUT
and DJX orders. For example, the current MRUT codes assess fees ranging
from $0.02 to $0.04 per contract and current DJX codes (assessed under
``All Other Index Products'') assess fees ranging from $0.07 to $1.05,
whereas the corresponding XSP codes assess fees generally ranging from
$0.07 to $0.50 per contract, and include a customer rebate of $0.30 per
contract for orders under 10 contracts. However, aligning MRUT and DJX
with XSP fees creates a fee structure in which the fees assessed for
MRUT and DJX transactions are consistent with the rates applicable to a
comparable, similarly situated product, and better reflect the value of
the Exchange's services and the costs associated with facilitating such
transactions.
The Exchange believes that the proposed fees for orders in MRUT and
DJX are equitable and not unfairly discriminatory because the proposed
fees will apply automatically and uniformly to all orders in MRUT and
DJX, as applicable by capacity. All fee amounts applicable to Customers
will be applied equally to all Customers, i.e., all Customer orders
will be assessed the same amount. All fee amounts applicable to Market-
Makers will be applied equally to all Market-Makers, i.e., all Market
Maker orders will be assessed the same amount. Similarly, the Exchange
notes that the fee amounts for each separate type of other market
participant will be assessed equally to all such market participants,
i.e., all Non-Customer and Non-Market-Maker orders will be assessed the
same amount.
The Exchange further believes it is reasonable to delete fee codes
which currently apply to MRUT orders, as such codes are inapplicable as
a result of the proposed fee change. Additionally, the addition of DJX
to the Liquidity Provider Sliding Scale and Liquidity Provider Sliding
Scale Adjustment tables extends to DJX the same incentive structure
already available to MRUT and XSP, further aligning the fee structure
for the three index products and providing Market-Makers in DJX the
opportunity to benefit from the same tiered pricing framework as those
in MRUT and XSP.
SPESG and SPEQX
The Exchange believes that the proposal to amend fee codes for
transactions in SPEQX and SPESG is reasonable, equitable and not
unfairly discriminatory. The proposed fees, in general, have minor
distinctions based on execution method, capacity of the contra-party,
and orders that add liquidity and those that remove liquidity, similar
to other fees with the Fees Schedule.\22\ Further, other exchanges
offer varying fees based on whether an order adds or removes
liquidity.\23\
---------------------------------------------------------------------------
\22\ See Cboe Fees Schedule, ``Rate Table--All Products
Excluding Underlying Symbol List A.''
\23\ See EDGX Options Fees Schedule and BZX Options Fees
Schedule.
---------------------------------------------------------------------------
The Exchange believes it is reasonable to provide a rebate for
Market-Maker orders in SPESG and SPEQX that are contra to a non-
customer and add liquidity, and are executed electronically, as such
changes are designed to incentivize an increase in non-customer
liquidity-adding volume in SPESG and SPEQX on the Exchange. The
Exchange believes that incentivizing more non-customer orders in SPESG
and SPEQX will create more trading opportunities, which, in turn
attracts Market-Makers. A resulting increase in Market-Maker activity
facilitates tighter spreads, which may lead to additional increase of
order flow in SPESG and SPEQX from other market participants, further
contributing to a deeper, more liquid market to the benefit of all
market participants by creating a more robust and well-balanced market
ecosystem.
Additionally, the Exchange believes that it is equitable and not
unfairly discriminatory to assess lower fees to Market-Makers (i.e.,
for all manual Market-Maker orders in SPESG and SPEQX and for all
Market-Maker orders in SPESG and SPEQX contra to customers and that are
executed electronically) as compared to other market participants other
than Customers because Market-Makers, unlike other market participants,
take on a number of obligations, including quoting obligations, that
other market participants do not have. Further, these lower fees
offered to Market-Makers are intended to incent Market-Makers to quote
and trade more on the Exchange, thereby providing more trading
opportunities for all market participants.
The Exchange believes assessing a higher fee for SPESG and SPEQX
orders contra a non-customer that remove liquidity and are executed
electronically is reasonable because it provides an incentive to
maintain non-customer liquidity at the Exchange, thereby promoting
price discovery and enhancing order execution opportunities for all
TPHs.
The Exchange also believes the proposed changes to the fee
structure for Non-Customer, Non-Market Maker orders in SPESG and SPEQX
are reasonable. As noted above, it is not novel to charge different
fees based on capacity of contra-party, and other exchanges offer
varying fees based on whether an order adds or removes liquidity.\24\
The Exchange believes assessing higher fees in general for Non-
Customer, Non-Market Maker orders is reasonable, equitable, and non-
discriminatory because, as noted above, the obligations and
circumstances between market participants differ. The Exchange believes
assessing a lower fee for Non-Customer, Non-Market Maker SPESG and
SPEQX orders contra to a customer or contra to a non-customer that add
liquidity and are executed electronically is reasonable because it
provides an incentive to add liquidity at the Exchange, including in
customer volume, thereby promoting price discovery and enhancing order
execution opportunities for all TPHs.
---------------------------------------------------------------------------
\24\ See EDGX Options Fees Schedule and BZX Options Fees
Schedule.
---------------------------------------------------------------------------
The Exchange believes the proposed fee for Customer SPESG and SPEQX
orders is reasonable, as it is slightly higher than the fee currently
assessed for SPEQX orders yet lower than the proposed Non-Customer,
Non-Market Maker SPESG and SPEQX orders. Further, the fee is within the
range of similar market participant fees associated with other index
products.\25\
---------------------------------------------------------------------------
\25\ See Cboe Fees Schedule, ``Rate Table--All Products
Excluding Underlying Symbol List A.''
---------------------------------------------------------------------------
The Exchange believes that the proposed fees for Customer, Market-
Maker, and Non-Customer, Non-Market Maker orders in SPESG and SPEQX are
equitable and not unfairly discriminatory because the proposed fees
will apply automatically and uniformly to all Customer, Market-Maker,
and Non-Customer, Non-Market
[[Page 21351]]
Maker orders in SPESG and SPEQX, as applicable, based on capacity.
The Exchange further believes it is reasonable to delete fee codes
which currently apply to SPEQX orders, as such codes are inapplicable
as a result of the proposed fee change. Additionally, the Exchange
believes it is reasonable to amend the fee codes that are currently
appended to certain SPESG orders, to remove SPESG from such fee codes,
as such fee codes will no longer be applicable to SPESG orders as a
result of the proposed fee change.
The Exchange believes it is reasonable to exclude SPESG from the
Execution Surcharge, AIM Response Surcharge, AIM Contra Surcharge, and
AIM Agency/Primary Surcharge applicable to certain Non-Market-Maker
orders. As part of the proposed changes. These changes are designed to
further align the fee structure of SPESG with the fee structure of
SPEQX. The Exchange also believes it is reasonable to exclude volume in
SPESG from the SPX/SPXW Liquidity Provider Sliding Scale, Liquidity
Provider Sliding Scale, Liquidity Provider Sliding Scale Adjustment
Table, Volume Incentive Program, Break-up Credits, Marketing Fees,
Floor Broker Sliding Scale Rebate Program, Floor Broker Slide Scale
Supplemental Rebate Program, ORS/CORS, Floor Brokerage Fees, and the
Floor Brokerage Fees Discount Scale. As noted above, these are not
substantive changes, as SPESG was previously excluded via its inclusion
in Underlying Symbol List A. Further, the Exchange believes it is
reasonable to list SPESG in the FLEX Surcharge fee under Rate Table--
Excluding Symbol List A, as SPESG is no longer listed within Underlying
Symbol List A.
CBTX and MBTX
The Exchange believes that the proposal to amend fee codes for
transactions in CBTX and MBTX is reasonable, equitable and not unfairly
discriminatory. The proposed fees, in general, remain in line or
slightly higher than current fees, with minor distinctions based on
execution method, capacity of the contra-party, and orders that add
liquidity and those that remove liquidity, similar to other fees with
the Fees Schedule.\26\ Further, other exchanges offer varying fees
based on whether an order adds or removes liquidity.\27\ Moreover, the
Exchange believes that it is reasonable to assess lower fees for MBTX
options orders (as compared to CBTX options orders), because of the
relation between MBTX options and CBTX options, wherein MBTX options
overlie an index with 1/10th the value of the index that underlies CBTX
options.
---------------------------------------------------------------------------
\26\ See Cboe Fees Schedule, ``Rate Table--All Products
Excluding Underlying Symbol List A.''
\27\ See EDGX Options Fees Schedule and BZX Options Fees
Schedule.
---------------------------------------------------------------------------
The Exchange believes it is reasonable to provide a rebate for
Market-Maker orders in CBTX and MBTX that are contra to a non-customer
and add liquidity, and are executed electronically, as such changes are
designed to incentivize an increase in non-customer liquidity-adding
volume in CBTX and MBTX on the Exchange. The Exchange believes that
incentivizing more non-customer orders in CBTX and MBTX will create
more trading opportunities, which, in turn attracts Market-Makers. A
resulting increase in Market-Maker activity facilitates tighter
spreads, which may lead to additional increase of order flow in CBTX
and MBTX from other market participants, further contributing to a
deeper, more liquid market to the benefit of all market participants by
creating a more robust and well-balanced market ecosystem.
The Exchange believes assessing a higher fee for CBTX and MBTX
orders contra a non-customer that remove liquidity and are executed
electronically is reasonable because it provides an incentive to
maintain non-customer liquidity at the Exchange, thereby promoting
price discovery and enhancing order execution opportunities for all
TPHs.
The Exchange believes that the proposed fees for Market-Maker, Non-
Customer, and Non-Customer, Non-Market Maker orders in CBTX and MBTX
are equitable and not unfairly discriminatory because the proposed fees
will apply automatically and uniformly to all Market-Maker, Non-
Customer, and Non-Customer, Non-Market Maker orders in CBTX and MBTX,
as applicable, based on capacity.
LMM Program Updates
Finally, the Exchange believes the proposed change to eliminate the
LMM Incentive Programs is reasonable, equitable and not unfairly
discriminatory. As noted above, the Exchange is not required to offer
these LMM Incentive Programs and no longer desires to do so. The
proposed change is reasonable, as the Exchange wishes to reallocate
resources to its other pricing programs, as well as to developing other
pricing programs that may benefit market participants.
The Exchange believes the proposed change is equitable and is not
unfairly discriminatory, as the proposed change applies to all Market-
Makers equally. While no Market-Maker will be or continue to be
eligible for the eliminated LMM Incentive Programs, all Market-Makers
remain eligible to participate in the Exchange's other pricing
programs, including other LMM Incentive Programs offered by the
Exchange.
Floor Fee Changes
Floor Broker Permit Fee Change
The Exchange believes that the proposed fee change related to FB
Permits is reasonable, equitable and not unfairly discriminatory. As
noted above, the proposed structure is consistent with the flat per-
permit rates charged by another Exchange to Floor Broker
participants.\28\ The Exchange believes the proposed change is
reasonable as it may incentivize new market participants to become
Floor Brokers on the Exchange and help offset initial costs associated
with becoming a Floor Broker. The Exchange believes the proposed
discount is equitable and not unfairly discriminatory because the
change will apply to all Floor Brokers who currently hold a FB Permit
or any new Floor Brokers who will hold a FB Permit. The Exchange
further believes the lower rate is reasonable, as Floor Brokers serve
an important function in facilitating the execution of orders via open
outcry, which as a price-improvement mechanism, the Exchange wishes to
encourage and support. Further, the proposed change is designed to
further encourage the execution of orders via open outcry, which should
increase volume, which would benefit all market participants.
---------------------------------------------------------------------------
\28\ See NYSE American Options Fees Schedule, Section III
(Monthly Trading Permit, Rights, Floor Access and Premium Product
Fees).
---------------------------------------------------------------------------
Floor Broker Trading Surcharge
The Exchange believes its proposed change to amend its Floor Broker
Trading Surcharge Program for SPX and VIX is reasonable, equitable and
not unfairly discriminatory. First, the Exchange believes it is
reasonable to lower the volume threshold at which the FB SPX Surcharge
and FB VIX Surcharge are triggered, from 20,000 contracts per month to
1,000 contracts per month for each surcharge, as the Exchange believes
the revised threshold better aligns the surcharge with the Exchange's
costs of supporting floor-based trading activity across a broader range
of active Floor Broker TPHs.
The Exchange further believes it is reasonable to establish a
tiered fee structure for the FB SPX Surcharge and FB VIX Surcharge
based on the number of Floor Broker Trading Permits held by
[[Page 21352]]
a TPH. Under the proposed structure, Floor Broker TPHs holding a
greater number of permits are assessed a lower per-permit monthly
surcharge, while those holding fewer permits are assessed a higher
surcharge. The Exchange believes this tiered approach is reasonable
because Floor Broker TPHs that hold more permits have a larger presence
and potential related costs in the floor-based trading operations on
the Exchange. Further, the changes may incentivize expanded
participation in the Exchange's floor trading environment, which
promotes liquidity to the benefit of all participants.
The Exchange believes the proposed tiered structure is equitable
and not unfairly discriminatory. All Floor Broker TPHs are subject to
the same tiered schedule and are assessed fees based on the number of
permits they hold and their trading volume in VIX or SPX. The Exchange
also notes that the proposed rates for SPX and VIX reflect the trading
characteristics of each product, with SPX and SPXW generally having
greater volumes and therefore utilizing greater floor resources.
Floor Broker ADV Discount Change
The Exchange believes its proposal to modify its discount for Floor
Broker Trading Permit fees is reasonable, equitable, and not unfairly
discriminatory. The Exchange believes it is reasonable to extend the
Floor Broker ADV Discount to apply to the FB SPX Surcharge and the FB
VIX Surcharge as well as Floor Broker Trading Permit fees. The ADV
Discount is designed to encourage the execution of Customer orders in
all classes via open outcry, which may increase volume, which would
benefit all market participants (including Floor Brokers who do not hit
the ADV thresholds) trading via open outcry. TPHs that meet the
applicable ADV thresholds and thus qualify for the 15% or 25% rebate
are among the most active participants on the Exchange's trading floor.
The Exchange believes it is equitable and consistent with the purpose
of the discount program to extend its benefits to the FB SPX Surcharge
and FB VIX Surcharge, as these surcharges represent part of the overall
fees assessed to Floor Broker TPHs in connection with their floor-based
trading activity.
The Exchange believes the proposed changes are equitable and not
unfairly discriminatory. The ADV Discount tiers and applicable rebate
percentages remain unchanged; the proposed modification simply broadens
the scope of fees to which the existing discount applies. All Floor
Broker TPHs are eligible to receive the Floor Broker Trading Permit and
FB SPX and VIX Trading Surcharges fees rebates under Program.
Market-Maker Tier Appointment Fee Changes
The Exchange proposes its proposal to amend its Market-Maker Tier
Appointment Fees for VIX and RUT is reasonable, equitable, and not
unfairly discriminatory. The Exchange believes the increase from $2,000
to $2,500 for VIX and from $1,000 to $1,500 for RUT reflect the
increased value that the Market-Markers receive from holding an
appointment in these products in light of the continued growth and
increased volumes of VIX and RUT options trading on the Exchange. The
Exchange believes the proposed fees better align with the Exchange's
current fee structure and the overall value of services and trading
platform (in open outcry or electronic trading) that the Exchange
provides to Market-Maker TPHs holding these appointments. The Exchange
believes the fee increases are modest and proportionate relative to the
current rates (i.e., a 25% increase for VIX and a 50% increase for
RUT). The Exchange notes that it operates in a competitive environment
in which Market-Maker TPHs may evaluate the costs and benefits of
maintaining appointments in particular products.
Further, the Exchange believes the proposed changes are equitable
and not unfairly discriminatory. The increased Market-Maker Tier
Appointment Fees apply uniformly to all Market-Maker TPHs with a VIX or
RUT appointment who meet the 1,000-contract execution threshold.
Floor Jacket Stipends
The Exchange believes the proposed change to adopt two stipends to
assist with the cost of floor jackets is reasonable, equitable, and not
unfairly discriminatory.
The Exchange believes such change is reasonable, as trading floor
jackets are now required to be worn by floor participants at all times
when on the Exchange's floor trading. The Exchange believes that
providing financial assistance for the purchase and maintenance of
these required jackets is a reasonable way of off-setting costs
incurred by its floor trading community.
The Exchange believes the proposed stipends are equitable and not
unfairly discriminatory. Both stipends will be provided to all active
floor badge holders on a uniform basis. Further, floor participants who
receive their badge after a scheduled issuance date will receive both
stipends upon badge activation and will thereafter follow the
established issuance schedule for subsequent stipends, ensuring that
all floor participants, whether existing or new, are treated similarly.
Further, the Exchange believes the proposed stipend amounts are
reasonable. The $275 jacket stipend and $100 cleaning stipend are
modest in amount and designed to provide meaningful assistance with the
actual costs floor participants incur in connection with these required
items.
Excessive CIC Fee Change
The Exchange believes the proposed Excessive CIC Fee will 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. The Exchange notes that the proposed fee structure is
designed to protect the Exchange's matching engines from being
adversely impacted from excessive complex instrument creations. The
Exchange believes it is reasonable, equitable and not unfairly
discriminatory to assess higher fees when a TPH has higher complex
instrument creation activity relative to the ratio of the TPH's SPXW
Complex Instruments Traded to SPXW Complex Instruments Created in SPXW
because the potential impact on Exchange Systems, bandwidth and
capacity becomes greater with increased complex instrument creations.
The Exchange believes the proposed fee amounts are reasonable as the
Exchange believes them to be commensurate with the proposed thresholds.
Particularly, the proposed fee amounts that correspond to higher
complex instrument creation amounts are designed to incentivize TPHs to
reduce excessive complex instrument creation activity that the Exchange
believes can be detrimental to all market participants at the levels
outlined and encourage such activity to be made in good faith and for
legitimate purposes.
The Exchange believes the proposed fees are reasonable as TPHs that
do not exceed the high SPXW complex instrument creation amount of
20,000 will not be charged any fee under the proposed tiers. As noted
above, the Exchange believes that it is in the interests of all TPHs
and market participants who access the Exchange to not allow TPHs to
exhaust System resources, but to encourage efficient usage of network
and System capacity. The Exchange therefore also believes that the
proposed fees appropriately reflect the benefits to different firms of
being able to engage in complex instrument creation and also believes
the proposed fee is one method of facilitating the Commission's goal of
[[Page 21353]]
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.'' \29\
---------------------------------------------------------------------------
\29\ See Securities Exchange Act Release No. 73639 (November 19,
2014), 79 FR 72251 (December 5, 2014) (File No. S7-01-13)
(Regulation SCI Adopting Release).
---------------------------------------------------------------------------
The Exchange believes adopting the proposed Excessive CIC Fee is
reasonable as unfettered usage of System capacity and network resource
consumption can have a detrimental effect on all market participants
who access and use the Exchange. As discussed above, high complex
instrument creations may adversely impact System resources, bandwidth,
and capacity which may, in turn, create latency and impact other market
participants' ability to receive timely executions. The Exchange
believes the proposed fee is therefore reasonable as they are designed
to focus on activity that is truly disproportionate while fairly
allocating fees to disincentivize the adverse behavior.
Further, the Exchange believes that the proposed Excessive CIC Fee
is equitable and not unfairly discriminatory because it will be
assessed uniformly to similarly situated users in that all TPHs that
exceed the thresholds in connection with the Excessive CIC Fee will be
assessed the proposed rates. As noted above, the Exchange believes the
proposed thresholds are appropriately high rates and have been set out
given market behaviors recently observed. The Exchange also believes it
is equitable and not unfairly discriminatory to aggregate a TPH's order
flow with its Affiliate to prevent TPHs from shifting their order flow
and trading activity to their Affiliate in order to circumvent the
proposed fees.
The Exchange believes it is equitable and not unfairly
discriminatory to assess incrementally higher fees to TPHs that have
higher complex instrument creation activity relative to the ratio of
the TPH's SPXW Complex Instruments Traded to SPXW Complex Instruments
Created in SPXW because the potential impact on Exchange Systems,
bandwidth and capacity becomes greater higher complex instrument
creation activity.
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 TPHs do not exhaust System
resources. Specifically, the Exchange is limiting this to the offending
behavior and to the specific asset class effected.
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.
Standard Transaction Fee Changes
The Exchange does not believe that the proposed rule changes
related to standard transaction fees for XSP, MRUT, DJX, SPESG, SPEQX,
CBTX, or MBTX will impose any burden on intramarket competition that is
not necessary or appropriate in furtherance of the purposes of the Act
because the fee amounts for each separate type of market participants
will be assessed equally to all such market participants. While
different fees are assessed to different market participants in some
circumstances, the obligations and circumstances between these market
participants differ, as discussed above. For example, Market-Makers
have quoting obligations that are not applicable to other market
participants. Further, the proposed fees structures are intended to
encourage more trading of XSP, MRUT, DJX, SPESG, SPEQX, CBTX, and MBTX,
which bring liquidity to the Exchange and benefits all market
participants.
The Exchange does not believe that the proposed rule changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed fees assessed apply to Exchange proprietary products, which
are traded exclusively on the Exchange.
LMM Program Updates
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
change to eliminate the LMM Incentive Programs applies to all Market-
Makers equally. While no Market-Maker will be or continue to be
eligible for the eliminated LMM Incentive Programs, all Market-Makers
remain eligible to participate in the Exchange's other pricing
programs, including other LMM Incentive Programs offered by the
Exchange.
The Exchange also does not believe that the proposed changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the Act. Further, in regard to the
proposed changes to the the LMM Incentive Programs, the Exchange does
not believe the proposed rule change will impose any burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as the proposed changes apply
only to programs applicable to transactions in products that are
currently exclusively listed on the Exchange.
Floor Fee Changes
The Exchange does not believe that the proposed rule change related
to Floor Broker Permit fees will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because, while it is limited to Floor Brokers,
Floor Brokers serve an important function in facilitating the execution
of orders via open outcry, which as a price-improvement mechanism, the
Exchange wishes to encourage and support. Further, the proposed change
is designed to encourage more Floor Brokers which may further encourage
more execution of orders via open outcry, which should increase volume,
which would benefit all market participants trading via open outcry.
Further, the Exchange does not believe the proposed changes related
to the Floor Broker Trading Surcharge will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed amendments apply
uniformly to all Floor Broker TPHs that meet the applicable criteria.
Further, while the tiered structure provides lower per-permit surcharge
rates to TPHs holding a greater number of permits, the Exchange
believes this tiered approach is reasonable because Floor Broker TPHs
that hold more permits have a larger presence and potential related
costs in the floor-based trading operations on the Exchange. Further,
the changes may incentivize expanded participation in the Exchange's
floor trading environment, which promotes liquidity to the benefit of
all participants.
The Exchange does not believe the proposed changes related to the
Floor Broker ADV Discount will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. All Floor Broker TPHs are eligible to receive the
Floor Broker Trading Permit and FB SPX and VIX Trading Surcharges fees
rebates under Program As noted above, the ADV Discount is
[[Page 21354]]
designed to encourage the execution of Customer orders in all classes
via open outcry, which may increase volume, which would benefit all
market participants (including Floor Brokers who do not hit the ADV
thresholds) trading via open outcry, and TPHs that meet the applicable
ADV thresholds and thus qualify for the 15% or 25% rebate are active
participants on the Exchange's trading floor. Thus, the Exchange
believes that it is consistent with the purpose of the discount program
to extend its benefits to the FB SPX Surcharge and FB VIX Surcharge, as
these surcharges represent part of the overall fees assessed to Floor
Broker TPHs in connection with their floor-based trading activity.
The Exchange does not believe the proposed changes related to the
Market-Maker Tier Appointment Fees for VIX and RUT will impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The increased Market-Maker
Tier Appointment Fees apply uniformly to all Market-Maker TPHs with a
VIX or RUT appointment who meet the 1,000-contract execution threshold.
The Exchange believes the fee increases are modest and proportionate
relative to the current rates and notes that it operates in a
competitive environment in which Market-Maker TPHs may evaluate the
costs and benefits of maintaining appointments in particular products.
The Exchange does not believe the proposed changes to adopt two
stipends to assist with the cost of floor jackets will impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Both stipends will be
provided to all active floor badge holders on a uniform basis. Further,
floor participants who receive their badge after a scheduled issuance
date will receive both stipends upon badge activation and will
thereafter follow the established issuance schedule for subsequent
stipends, ensuring that all floor participants are treated similarly.
The Exchange does not believe that the proposed floor fee changes
will impose an unnecessary or inappropriate burden on intermarket
competition because they only apply to Cboe Options. To the extent that
the changes prove attractive to market participants on other options
exchanges, or its results prove attractive to market participants on
other exchanges, such market participants may elect to become Floor
Brokers or market participants at the Exchange.
Excessive CIC Fee Change
The Exchange does not believe that the proposed rule change to
adopt the Excessive CIC Fee 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
TPHs. Particularly, the proposed Excessive CIC Fee applies uniformly to
all TPH, in that any TPH who exceeds the 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 burden on competition. Rather, the proposal seeks to reduce
incentives for market participants to rest speculative SPXW complex
orders in the COB. The Exchange expects such a reduction in non-bona
fide order activity would decrease the total number of complex
instruments the Exchange's matching engines must track and process,
enhancing overall system performance. Such improved system efficiency
benefits all market participants through more efficient order handling
and reduced latency. Accordingly, the Exchange believes that the
proposed Excessive CIC Fee does not favor certain categories of market
participants in a manner that would impose a burden on competition.
Finally, the Exchange believes the proposed rule change to adopt
the Excessive CIC Fee does not impose any burden on intermarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because the proposed rule change applies only to a
product exclusively listed on the Exchange. As noted above, the
Exchange is limiting this to the offending behavior and to the specific
asset class effected. The fee is not intended to raise revenue for the
Exchange; rather, it is intended to encourage efficient behavior so
that TPHs do not exhaust System resources. The Exchange, along with
other exchanges, have adopted various fee programs intended to
disincentivize trading behaviors that may exhaust system resources,
bandwidth, and capacity.\30\
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\30\ See, e.g., Exchange Fees Schedule, ``SPXW Excessive Mass
Cancels and Purge Charges.'' See also 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 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>; and 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); and Securities Exchange Act Release
No. 97262 (March 29, 2023), 88 FR 22509 (April 13, 2023) (SR-
CboeEDGX-2023-023) (adopting fees applicable to Market Makers based
on the number of orders (including modification messages) entered
compared to the number of orders traded in a calendar month).
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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 \31\ and paragraph (f) of Rule 19b-4 \32\
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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\31\ 15 U.S.C. 78s(b)(3)(A).
\32\ 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#8cfef9e0e9a1efe3e1e1e9e2f8ffccffe9efa2ebe3fa"><span class="__cf_email__" data-cfemail="7002051c155d131f1d1d151e0403300315135e171f06">[email protected]</span></a>. Please include
file number SR-CBOE-2026-031 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-2026-031. This file
[[Page 21355]]
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-2026-031 and should be submitted on
or before May 12, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07687 Filed 4-20-26; 8:45 am]
BILLING CODE 8011-01-P
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