Notice2026-07821
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rules 21.19 and 21.21 To Permit Orders for the Accounts of Market-Makers With an Appointment in the Applicable Class To Be Solicited for the Initiating Order for a Simple AIM or Simple SAM Auction
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Published
April 22, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 77 (Wednesday, April 22, 2026)</title>
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[Federal Register Volume 91, Number 77 (Wednesday, April 22, 2026)]
[Notices]
[Pages 21550-21553]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07821]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105273; File No. SR-CboeEDGX-2026-021]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Rules 21.19 and 21.21 To Permit Orders for the Accounts of
Market-Makers With an Appointment in the Applicable Class To Be
Solicited for the Initiating Order for a Simple AIM or Simple SAM
Auction
April 20, 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 7, 2026, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend Rules 21.19 and 21.21 to permit orders for the accounts of
Market-Makers with an appointment in the applicable class on the
Exchange, in all classes, to be solicited for the Initiating Order
submitted for execution against an Agency Order into a simple AIM or
simple SAM Auction.
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.
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 Rules 21.19 (Automated Improvement
Mechanism (``AIM'' or ``AIM Auction'')) and 21.21 (``Solicitation
Auction Mechanism (``SAM'' or ``SAM Auction'')), to permit orders for
the accounts of Market-Makers with an appointment in the applicable
class on the Exchange, in all classes, to be solicited for the
Initiating Order \3\ submitted for execution against an Agency Order
into a simple AIM Auction pursuant to Rule 21.19 or a simple SAM
Auction pursuant to Rule 21.21.
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\3\ The ``Initiating Order'' is the order comprised of principal
interest or a solicited order(s) submitted to trade against the
order the submitting Member (the ``Initiating Member'') represents
as agent (the ``Agency Order'').
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By way of background, Rule 21.19 contains the requirements
applicable to the execution of certain customer orders (``Agency
Orders'') using AIM. An AIM Auction is an electronic auction intended
to provide an Agency Order with the opportunity to receive price
improvement (over the National Best Bid or Offer (``NBBO'')). Rule
21.21 contains the requirements applicable to the execution of Agency
Orders using SAM. Similarly, a SAM Auction is an electronic auction
intended to provide a larger-sized Agency Order with the opportunity to
receive price improvement over the NBBO. Upon submitting an Agency
Order into an AIM or SAM Auction, the initiating Member (``Initiating
Member'') must also submit a contra-side second order (``Initiating
Order'') for the same size as the Agency Order. The Initiating Order
guarantees that the Agency Order will receive an execution at no worse
than the auction price. Upon commencement of an auction, market
participants may submit responses to trade against the Agency Order.\4\
At the conclusion of an AIM Auction, depending on the contra-side
interest (including auction responses) available, the Initiating Order
may be allocated a certain percentage (or more) of the Agency Order.\5\
At the conclusion of a SAM Auction, depending on the contra-side
interest (including auction responses) available, the Initiating Order
may be allocated the entire Agency Order or none of the Agency
Order.\6\
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\4\ See Rules 21.19(c)(5) and 21.21(c)(5).
\5\ See Rule 21.19(e).
\6\ See Rule 21.21(e).
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Currently, the introductory paragraphs of Rules 21.19 and 21.21
prohibit orders for the account of any Market-Maker registered in the
applicable series on the Exchange to be solicited to execute against
the Agency Order in a simple AIM or simple SAM Auction, respectively.
While market participants other than appointed Market-Makers may
contribute liquidity to these crossing auctions as either contra orders
or responses, appointed Market-Makers, who are the primary source of
liquidity on the Exchange in their appointed classes, are limited in
the manner in which they may provide liquidity to these auctions. Given
that contra orders that comprise Initiating Orders may be allocated a
percentage of the Agency Order at the conclusion of the auctions, the
limited ability of appointed Market-Makers to participate in simple AIM
and simple SAM Auctions may reduce the
[[Page 21551]]
execution opportunities for these liquidity providers, which execution
opportunities are available to other market participants who may be
solicited or submit responses.
The Exchange believes that eliminating the prohibition against
appointed Market-Makers acting as contra in single-leg AIM and SAM
orders would enhance price improvement opportunities, particularly, in
the case of AIM Auctions, for retail and smaller Customer orders.
Allowing local appointed Market-Makers to be solicited as contras may
result in exposure of more small customer orders to potential price
improvement via auction processes. The Exchange notes that appointed
Market-Makers may be solicited as contras for complex AIM and SAM
Auctions, which function in a substantially similar manner as AIM and
SAM for simple orders.\7\ The Exchange further notes that Rule 18.4
prohibits Members from misusing material, nonpublic information (for
example, advanced knowledge of auctioned orders), so protections will
remain in place under the proposed rule change to address any potential
information leakage concerns.
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\7\ See Rules 21.22 and 21.23.
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Additionally, the restriction has become operationally outdated in
current market structure. As noted above, it is common practice that
AIM orders already involve the same Market-Maker firm acting as both
contra (via an away Market-Maker) and auction respondent (via an
appointed Market-Maker). Eliminating this restriction would reduce an
arbitrary and unnecessary burden allow Market-Maker firms to structure
more efficient auction processes, which may ultimately promote greater
competition among Market-Makers and provide Customers with enhanced
opportunities for price improvement.
The Exchange is proposing to amend Rules 21.19 and 21.21 to permit
orders for the accounts of Market-Makers with an appointment in the
applicable class to be solicited for the Initiating Order submitted for
execution against an Agency Order in all classes into a simple AIM
Auction pursuant to Rule 21.19 or a simple SAM Auction pursuant to Rule
21.21. The Exchange believes providing appointed Market-Makers with an
additional way to participate in electronic auctions will expand
available liquidity for these auctions, which may increase execution
and price improvement opportunities for customers' orders.
The Exchange notes the electronic crossing price improvement
auction of another options exchange currently permits orders for the
accounts of appointed market-makers to be solicited as the contra
orders for that auction.\8\ The Exchange also notes that a similar
proposal submitted by its affiliated exchange, Cboe Exchange, Inc.
(``Cboe Exchange'') was recently approved by the Securities and
Exchange Commission (the ``Commission'').\9\
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\8\ See NYSE American, Inc. (``American'') Rule 971.1NY and NYSE
Pillar Options FIX Gateway Protocol Specification, Section 5.2, New
Cross Order. See also <a href="https://www.nyse.com/markets/american-options/cube-customer-best-execution">https://www.nyse.com/markets/american-options/cube-customer-best-execution</a>.
\9\ See Securities Exchange Act Release No. 105049 (March 19,
2026), 91 FR 14057 (March 24, 2026) (SR-CBOE-2025-090) (``Cboe
Exchange Approval'').
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ 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) \12\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ Id.
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In particular, the Exchange believes the proposed rule change will
promote just and equitable principles of trade and remove impediments
to and perfect the mechanism of a free and open market and a national
market system because it will provide the primary liquidity providers
on the Exchange with an additional way to participate in electronic
auctions. Additionally, by permitting brokers to solicit primary
liquidity providers in a class for electronic auctions, the Exchange
believes brokers will be able to more efficiently locate liquidity to
fill their customer orders, particularly during times of volatility. As
a result, the Exchange believes the proposed rule change will likely
expand available liquidity for these auctions, which may create
additional execution and price improvement opportunities for customers
at all times, which ultimately benefits investors.
The Exchange believes the proposed rule change will promote
competition in AIM and SAM Auctions, including competition to initiate
AIM and SAM Auctions, which 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. The Exchange believes the
availability of this liquidity to Agency Orders will positively affect
the experience for Agency Orders and overall quality of the auctions.
Furthermore, the Exchange believes increasing the number of market
participants available to be solicited may increase competition to
provide Initiating Orders, which may lead to an AIM or SAM Auction
being initiated at a better price. More market participants competing
to provide Initiating Orders may lead to solicited parties providing
more aggressive initial prices. The Exchange believes the ability of
all market participants, including appointed Market-Makers that did not
submit an Initiating Order, to submit responses to an AIM or SAM
Auction will continue to provide competition for executions against
Agency Orders.
The Exchange believes any risk that appointed Market-Makers may
misuse the nonpublic information of an upcoming AIM or SAM Auction is
de minimis. Currently, that risk is present for non-appointed Market-
Makers, but the Exchange has not observed any trends of solicited
market participants separately submitting unrelated orders as a result
of knowledge of impending AIM or SAM Auctions. The Exchange notes Rule
21.19, Interpretation and Policy .02 prohibits a pattern or practice of
submitting orders or quotes for the purpose of disrupting or
manipulating AIM Auctions, and Rule 18.4 requires Members to establish,
maintain, and enforce written policies and procedures reasonably
designed to prevent the misuse of material, nonpublic information by
Members and their associated persons. Finally, the Exchange believes
the proposed rule change is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers because
it will be permit orders for accounts of appointed Market-Makers to be
solicited in the same manner as orders for the
[[Page 21552]]
accounts of all other market participants. Currently, all market
participants other than appointed Market-Makers may be solicited as the
contra and submit responses in AIM or SAM Auctions for all classes.
Given the additional costs and obligations associated with being an
appointed Market-Maker, the Exchange does not believe these Market-
Makers should have fewer execution opportunities with respect to volume
submitted for execution through AIM or SAM auctions and not for
electronic execution against interest in the book. The Exchange
believes the proposed rule change will provide all Market-Makers on the
Exchange with the same ability to participate in AIM and SAM Auctions
in all classes at all times, which may further increase execution and
price improvement opportunities for customers.
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. The Exchange does not
believe 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 because it provides the same execution
opportunities in AIM and SAM Auctions to appointed Market-Makers that
are currently available to all other market participants.
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 because it
relates to orders submitted into auction mechanisms on the Exchange.
Additionally, the Exchange notes that the proposal is identical to a
previously Commission-approved rule \13\ and that the rules of at least
one other options exchange permits orders for the accounts of appointed
market-makers to be solicited as contra orders for that exchange's
electronic crossing price improvement auction.\14\ The Exchange
believes the proposed rule change may improve price competition within
AIM and SAM Auctions, because the primary liquidity providers will be
able to increase participation in AIM and SAM Auctions.
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\13\ See Cboe Exchange Approval.
\14\ See NYSE American, Inc. (``American'') Rule 971.1NY and
NYSE Pillar Options FIX Gateway Protocol Specification, Section 5.2,
New Cross Order. See also <a href="https://www.nyse.com/markets/american-options/cube-customer-best-execution">https://www.nyse.com/markets/american-options/cube-customer-best-execution</a>.
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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
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to Section 19(b)(3)(A)(iii) of the Act \15\ and subparagraph
(f)(6) of Rule 19b-4 thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing. The Exchange
states that the proposed rule change is not novel and raises no unique
issues not previously considered by the Commission, as it is nearly
identical to a previously Commission-approved rule change.\19\ For that
reason, the Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission designates the proposed rule
change to be operative upon filing.\20\
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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
\19\ See Cboe Exchange Approval.
\20\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such 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 shall institute proceedings under
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 15 U.S.C. 78s(b)(2)(B).
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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#80f2f5ece5ade3efedede5eef4f3c0f3e5e3aee7eff6"><span class="__cf_email__" data-cfemail="f785829b92da94989a9a92998384b7849294d9909881">[email protected]</span></a>. Please include
file number SR-CboeEDGX-2026-021 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-CboeEDGX-2026-021. 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-CboeEDGX-2026-021 and should be
submitted on or before May 13, 2026.
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12) and (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07821 Filed 4-21-26; 8:45 am]
BILLING CODE 8011-01-P
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