Notice2026-08778
Order Granting Conditional Exemptive Relief Pursuant to Section 36(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) From Rule Filing Requirements Under Section 19(b) of the Exchange Act and Requirements Under Section 6(b) of the Exchange Act for Order and Execution Management Systems Offered by an Affiliate of the Cboe Exchange, Inc. (“Cboe” or “Exchange”) or Pursuant to a Contract With the Exchange
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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
May 6, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 87 (Wednesday, May 6, 2026)</title>
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[Federal Register Volume 91, Number 87 (Wednesday, May 6, 2026)]
[Notices]
[Pages 24631-24633]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-08778]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105351]
Order Granting Conditional Exemptive Relief Pursuant to Section
36(a)(1) of the Securities Exchange Act of 1934 (``Exchange Act'') From
Rule Filing Requirements Under Section 19(b) of the Exchange Act and
Requirements Under Section 6(b) of the Exchange Act for Order and
Execution Management Systems Offered by an Affiliate of the Cboe
Exchange, Inc. (``Cboe'' or ``Exchange'') or Pursuant to a Contract
With the Exchange
May 1, 2026.
I. Introduction
On March 24, 2026, the Exchange submitted a request for exemptive
relief pursuant to section 36(a)(1) of the Exchange Act \1\ from the
requirement to file proposed rule changes under section 19(b) of the
Exchange Act \2\ and the requirements under section 6(b) of the
Exchange Act \3\ with respect to order and execution management systems
(``OEMS'') offered by an Exchange affiliate or pursuant to a
contractual relationship with the Exchange (``Exchange Affiliated
OEMSs''), subject to certain conditions.\4\
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\1\ 15 U.S.C. 78mm(a)(1).
\2\ 15 U.S.C. 78s(b).
\3\ 15 U.S.C. 78f(b).
\4\ See Letter from Patrick Sexton, Chief Regulatory Officer,
Cboe Exchange Inc., dated March 24, 2026 (``Exemption Request'').
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According to the Exchange, an OEMS is a software product that
market participants may install on their computer systems and use to
enter and route orders for execution and manage such executions.\5\ For
example, Cboe Silexx, LLC, a Cboe affiliate, offers an OEMS, Silexx.\6\
Silexx is a ``facility'' of the Exchange as that term is defined in
section 3(a)(2) of the Exchange.\7\ As a facility of the Exchange, it
must satisfy the regulatory requirements applicable to a national
securities exchange, including certain rule filing requirements under
section 19(b) and the requirements under section 6(b) of the Exchange
Act.\8\ In compliance with these requirements, the Exchange has filed
numerous proposed rule changes on behalf of Silexx.\9\ Use of Silexx by
Cboe members is voluntary; members may also use an OEMS supported by a
third-party to enter and route orders for execution to the Exchange and
manage such executions.\10\
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\5\ See Exemption Request at 1-2.
\6\ See Exemption Request at n.4; See also Securities Exchange
Act Release No. 82088 (Nov. 15, 2017), 82 FR 55443 (Nov. 21, 2017)
(SR-CBOE-2017-068) (describing the functionality and adopting fees
for the use of Silexx).
\7\ See Securities Exchange Act Release No. 101491 (Oct. 31,
2024), 89 FR 88080 (Nov. 6, 2024). Section 3(a)(2) of the Exchange
Act states: The term ``facility'' when used with respect to an
exchange includes its premises, tangible or intangible property
whether on the property or not, any right to use of such premises or
property or any service thereof for the purpose of effecting or
reporting a transaction on an exchange (including, among other
things, any system of communication to or from the exchange, by
ticker or otherwise, maintained by or with the consent of the
exchange), and any right of the exchange to the use of any property
or service. 15 U.S.C. 78c(a)(2).
\8\ 15 U.S.C. 78s(b) and 78f(b).
\9\ See, e.g., Securities Exchange Act Release Nos. 83266 (May
14, 2018), 83 FR 23310 (May 18, 2018) (SR-CBOE-2018-035); 87028
(Sept. 19, 2019), 84 FR 50529 (Sept. 25, 2019) (SR-CBOE-2025-061);
89285 (July 10, 2020), 85 FR 43284 (July 16, 2020) (SR-CBOE-2020-
062); 90929 (Jan. 14, 2021), 86 FR 6705 (Jan. 22, 2021) (SR-CBOE-
2021-002); 99111 (Dec. 7, 2023), 88 FR 86411 (Dec. 13, 2023 (SR-
CBOE-2023-064).
\10\ See Exemption Request at 5-6.
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For the reasons discussed below, the Securities and Exchange
Commission (the ``Commission'' or the ``SEC'') has determined to grant
conditional exemptive relief pursuant to its authority under section
36(a)(1) of the Exchange Act \11\ to the Exchange for Exchange
Affiliated OEMSs from the rule filing requirements under section 19(b)
of the Exchange Act and the requirements under section 6(b) of the
Exchange Act.\12\
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\11\ 15 U.S.C. 78mm(a)(1).
\12\ 15 U.S.C. 78s(b) and 78f(b).
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II. Description and Discussion of Exemption Request
In its Exemption Request, Cboe states that Exchange Affiliated
OEMSs are at a ``substantial competitive disadvantage'' as compared to
OEMSs offered by third-parties that are not affiliated with the
Exchange due to the regulatory requirements they must comply with as a
result of their status as facilities.\13\ In particular, the Exchange
states that the rule filing process hinders Exchange-Affiliated OEMSs'
ability to dynamically adjust their fee schedules to compete in the
market and allows competitors to proactively react to material changes
to the Exchange-Affiliated OEMS even prior to any change being
implemented.\14\ The Exchange further states that facility status thus
stifles innovation and competition among OEMSs.\15\ To level the
regulatory playing field among OEMSs, the Exchange has requested that
the Commission grant exemptive relief to Exchange Affiliated OEMSs from
the rule filing requirements under section 19(b) of the Exchange Act
and the requirements under section 6(b) of the Exchange Act, provided
the Exchange satisfies the following conditions (``Exemption
Conditions''):
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\13\ See Exemption Request at 4.
\14\ See id. at 4-5.
\15\ See id. at 5.
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1. Voluntary Use of Exchange-Affiliated OEMS. The use of the
Exchange-Affiliated OEMS is voluntary (i.e., solely within the
discretion of an Exchange member or other user of the OEMS) and not
required for an Exchange member to access the Exchange (i.e., the OEMS
is a nonexclusive means of access to the Exchange).\16\
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\16\ See id. at 6.
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2. Same Terms for Exchange Connection. There will be no differences
between how third-party and Exchange-Affiliated OEMSs may connect to
the Exchange. The ports, terms and conditions, and fees related to
connecting to the Exchange will be the same for any user of a third-
party OEMS and any user of an Exchange-Affiliated OEMS. Such
connectivity requirements and fees will be set forth in the Exchange's
Rules, technical specifications, and Fees Schedule.\17\
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\17\ See id.
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3. Any Exchange-Affiliated OEMS is not a Registered Broker-Dealer.
The Exchange-Affiliated OEMS (or the entity that owns the Exchange-
Affiliated OEMS) is not a registered broker-dealer.\18\
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\18\ See id.
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4. Routing Orders to the Exchange via OEMSs. For any order
ultimately routed to the Exchange via an Exchange-Affiliated OEMS, the
users of such OEMS and their brokers are solely responsible for routing
decisions (i.e., the Exchange is not involved in such routing
decisions). All orders received by the Exchange from a third-party or
Exchange-Affiliated OEMS shall be processed by the Exchange in the same
manner and pursuant to the Exchange's rules (i.e., orders sent by users
of third-party OEMSs shall not be disadvantaged and orders sent by
Exchange-Affiliated OEMSs shall receive no preferential treatment on
the Exchange).\19\
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\19\ See id.
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5. Fees Charged by the Exchange and Exchange-Affiliated OEMS. Any
fees charged by the Exchange-Affiliated OEMS to a user thereof must not
take into consideration any of that user's Exchange activity or to
Exchange fees set forth on the Exchange's fees schedule.\20\
Correspondingly, any fees charged by an Exchange to a member thereof
must not take into consideration that member's activity on the
Exchange-
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Affiliated OEMS. Similarly, the Exchange will no longer provide rebates
to users of an Exchange-Affiliated OEMS whether on the Exchange floor
or otherwise.\21\
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\20\ The Exchange notes that fees charged by an Exchange-
Affiliated OEMS may be competitively established and may vary among
users of such Exchange-Affiliated OEMS. See id. at n.19.
\21\ See id. at 6-7.
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6. Use of Exchange Services on Same Terms. Users of third-party
OEMSs and Exchange-Affiliated OEMSs will have use of the Exchange
facilities and services (e.g., Exchange market data) in the same manner
pursuant to the same terms, conditions, and fees as set forth in the
Exchange's Rules, technical specifications, and Fees Schedule.\22\
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\22\ See id. at 7.
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7. Procedures and Internal Controls. The Exchange has established
and maintains procedures and internal controls reasonably designed to
prevent the Exchange-Affiliated OEMS from receiving any advantage or
benefit as a result of its affiliation/relationship with the Exchange,
including the provision of Exchange information to the entity or
personnel operating the Exchange-Affiliated OEMS regarding updates to
the Exchange trading system (such as technical specifications) until
such information is available generally to similarly situated market
participants.\23\
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\23\ See id.
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The Exchange states that these conditions address the objectives of
section 19(b) and section 6 of the Exchange Act.\24\ In particular, the
Exchange states the Exemption Conditions are just and equitable because
they do not mandate the use of any particular OEMS, whether an
Exchange-Affiliated OEMS or third-party OEMS, and access to the
Exchange will be the same regardless of the OEMS used by a user or
trading permit holder (``TPH'').\25\ The Exchange states that the
proposed exemption requires the equitable allocation of Exchange fees
irrespective of the OEMS used by a user or TPH, and also requires that
any fees charged by an Exchange-Affiliated OEMS be unrelated to a
user's activity on the Exchange.\26\ The Exchange states that, for
example, the determination of an Exchange-Affiliated OEMS to charge a
reduced fee to its users based on higher volumes executed on the
Exchange would be inconsistent with the Exemption Conditions and would
require a rule filing.\27\ The Exchange states that, correspondingly,
any fees charged by the Exchange to a TPH must be unrelated to the
member's activity on the Exchange-Affiliated OEMS, and vice versa.\28\
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\24\ See id. at 5.
\25\ Id.
\26\ Id.
\27\ Id. at n.18.
\28\ Id. at 5.
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The Exchange states that the Exemption Conditions also remove
impediments to and perfect a free and open market by eliminating any
potential for benefits to be realized as a result of the affiliation
between the Exchange and the Exchange-Affiliated OEMS.\29\ The Exchange
states that the Exemption Conditions also require that third-party
OEMSs and Exchange-Affiliated OEMSs have use of the Exchange facilities
and services in the same manner pursuant to the same terms, conditions,
and fees, and that orders sent to the Exchange by third-party OEMSs and
Exchange-Affiliated OEMSs are treated in the same manner.\30\ The
Exchange states that the Exemption Conditions prevent unfair
discrimination and impose no burden on competition as any user or TPH
may use any OEMS for order handling and accessing the Exchange on equal
terms.\31\ The Exchange states that the proposed exemption is designed
to level the playing field between Exchange-Affiliated OEMSs and third-
party OEMSs and promotes competition, which ultimately benefits
investors.\32\ The Exchange states that proposed exemption specifically
states that third-party OEMSs shall not be disadvantaged vis-[agrave]-
vis users of Exchange-Affiliated OEMSs.\33\ The Exchange states that
while the proposed exemption would exempt Exchange-Affiliated OEMSs
from Sections 19(b) and 6(b) of the Exchange Act, the Commission would
retain jurisdiction over such OEMSs which would allow it to seek books
and records as necessary to affirm compliance with the Exemptive
Conditions.\34\
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\29\ Id.
\30\ Id.
\31\ Id. at 5-6.
\32\ Id. at 6.
\33\ Id.
\34\ Id.
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III. Exemptive Relief Under Section 36
Section 36(a)(1) of the Exchange Act grants the Commission the
authority to ``conditionally or unconditionally exempt any person,
security, or transaction . . . from any provision or provisions of [the
Exchange Act] or of any rule or regulation thereunder, to the extent
that such exemption is necessary or appropriate in the public interest,
and is consistent with the protection of investors.'' \35\ The
conditional exemptive relief granted herein is appropriate in the
public interest and consistent with the protection of investors because
the conditions are reasonably designed to ensure that an Exchange
Affiliated OEMS operates in a manner that is consistent with the
Exchange Act, the Commission will retain the ability to oversee the
Exchange and Exchange Affiliated OEMS, and this relief will promote
competition in the market for OEMS services.\36\
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\35\ 15 U.S.C. 78mm(a)(1).
\36\ See id.
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The Exemption Conditions described above help ensure that neither
the Exchange nor an Exchange Affiliated OEMS operate in a manner that
(i) would impose a burden on competition not necessary or appropriate
in furtherance of the purposes of the Exchange Act,\37\ (ii) would
unfairly discriminate between customers, issuers, brokers, or
dealers,\38\ or (iii) would result in an unequitable allocation of
reasonable dues, fees, and other charges among the Exchange's members
and issuers and other persons using its facilities.\39\ Because an
Exchange Affiliated OEMS that operates within the terms of the
Exemption Conditions and its users would operate on equal terms vis-
[agrave]-vis the Exchange as third-party OEMSs and their users, it is
appropriate to treat such an Exchange Affiliated OEMS similarly to
third-party OEMSs with respect to the requirements of section 19(b) and
section 6(b) of the Exchange Act. An exemption, subject to the
Exemption Conditions, from the requirements of section 19(b) and
section 6(b) of the Exchange Act concerning operation of an Exchange
Affiliated OEMS may also help foster competition, innovation, and
access in the market for OEMS products and services.
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\37\ 15 U.S.C. 78f(b)(8).
\38\ 15 U.S.C.78s(b)(5).
\39\ 15 U.S.C. 78s(b)(4).
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While the Commission is granting certain exemptive relief to
Exchange Affiliated OEMSs that comply with the Exemption Conditions,
Exchange Affiliated OEMSs that are ``facilities'' of the Exchange as
defined in Section 3(a)(2) of the Exchange Act,\40\ like Silexx, remain
subject to all other requirements applicable to the facilities a
national securities exchange under the Exchange Act and the rules and
regulations thereunder. For example, the Exchange and such Exchange
Affiliated OEMS are subject to the provisions in section 17(a) of the
Exchange Act,\41\ and the rules and
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regulations thereunder relating to books and records requirements.\42\
Similarly, the Exchange and such Exchange Affiliated OEMS are subject
to section 17(b) of the Exchange Act, and the rules and regulations
thereunder that require a national securities exchange to make itself
available to inspection and examination by the Commission.\43\
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\40\ See supra note 7 for definition of facility under the
Exchange Act.
\41\ Section 17(a) of the Exchange states, ``every national
securities exchange . . . shall make and keep for prescribed periods
such records, furnish such copies thereof, and make and disseminate
such reports as the Commission, by rule, prescribes as necessary or
appropriate in the public interest, for the protection of investors,
or otherwise in furtherance of the purposes of this chapter.'' 15
U.S.C. 78q(a).
\42\ Exchange Act Rule 17a-1 requires a national securities
exchange (and by extension a facility thereof) to: (i) keep and
preserve at least one copy of all documents, including all
correspondence, memoranda, papers, books, notices, accounts, and
other such records as shall be made or received by it in the course
of its business as such and in the conduct of its self-regulatory
activity; (ii) keep all such documents for a period of not less than
five years, the first two years in an easily accessible place,
subject to the destruction and disposition provisions of Rule 17a-6;
and (iii) upon request of any representative of the Commission,
promptly furnish to the possession of such representative copies of
any documents required to be kept and preserved by it pursuant to
paragraphs (a) and (b) of the Rule. See 17 CFR 240.17a-6.
\43\ 15 U.S.C. 78q(b).
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For the reasons discussed herein, the Commission determines that
the conditional exemptive relief granted herein satisfies the standard
of section 36(a)(1) of the Exchange Act.
Accordingly, it is ordered, pursuant to section 36(a)(1) of the
Exchange Act, that the Exchange is exempt from the rule filing
requirements under section 19(b) of the Exchange Act \44\ and the
related requirements under section 6(b) of the Exchange Act that would
have been applicable to the rules filed under section 19(b) \45\ with
respect to an Exchange Affiliated OEMS if the Exemption Conditions are
met.
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\44\ 15 U.S.C. 78s(b)
\45\ 15 U.S.C. 78f(b).
By the Commission.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2026-08778 Filed 5-5-26; 8:45 am]
BILLING CODE 8011-01-P
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