Notice2026-10669
Self-Regulatory Organizations; MX2 LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2.4, Mandatory Participation in Testing of Backup Systems
Primary source
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Published
May 29, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 103 (Friday, May 29, 2026)</title>
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[Federal Register Volume 91, Number 103 (Friday, May 29, 2026)]
[Notices]
[Pages 32146-32149]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-10669]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105555; File No. SR-MX2-2026-02]
Self-Regulatory Organizations; MX2 LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2.4,
Mandatory Participation in Testing of Backup Systems
May 26, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 20, 2026, MX2 LLC (``MX2'' or the ``Exchange'') filed with the
Securities and Exchange Commission (the ``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared by the Exchange. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 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
The Exchange is filing with the Commission a proposed rule change
to amend Rule 2.4, Mandatory Participation in Testing of Backup
Systems, to amend the manner in which the Exchange will designate
certain Options Members (as defined below) to participate in its
mandatory disaster recovery testing pursuant to Regulation SCI and MX2
Rule 2.4 for the first calendar year in which the Exchange is
operational. The text of the proposed rule change is provided in
Exhibit 5 and is available on the Exchange's website at <a href="https://info.memxtrading.com/regulation/rules-and-filings/">https://info.memxtrading.com/regulation/rules-and-filings/</a>.
II. Self-Regulatory Organization's Statement of the Purpose of, and the
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
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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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
In preparation for the launch of the Exchange's options market
(``MX2 Options''),\5\ the Exchange proposes to amend MX2 Rule 2.4,
Mandatory Participation in Testing of Backup Systems, to specify how
the Exchange will designate certain Options Members \6\ to participate
in mandatory disaster recovery pursuant to Regulation SCI and MX2 Rule
2.4 for the first year the Exchange is operational. Regulation SCI
requires MX2, as an SCI entity, to maintain business continuity and
disaster recovery plans that provide for resilient and geographically
diverse backup and recovery capabilities that are reasonably designed
to achieve two-hour resumption of critical SCI systems and next
business day resumption of other SCI systems following a wide-scale
disruption.\7\
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\5\ On September 30, 2025, the Commission approved SR-MX2-2025-
01, which proposed rules for the trading of options on the Exchange.
See Securities Exchange Act Release No. 104152 (September 30, 2025),
90 FR 47867 (October 2, 2025) (SR-MX2-2025-01). The Exchange plans
to launch MX2 Options in September of 2026.
\6\ As of May 12, 2026, eight (8) firms have filed paperwork
with the Exchange making them eligible for MX2 Options membership.
\7\ Securities Exchange Act Release No. 73639 (November 19,
2014), 79 FR 72252 (December 5, 2014).
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Regulation SCI and MX2 Rule 2.4 also require MX2 to designate
certain Members \8\ to participate in business continuity and disaster
recovery testing in a manner specified by MX2 and at a frequency of not
less than once every 12 months.\9\ Such testing is part of an industry-
wide test, which is next scheduled for October 24, 2026.
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\8\ The term ``Member'' refers to any registered broker or
dealer that has been admitted to membership in the Exchange. A
Member will have the status of a member of the Exchange as that term
is defined in Section 3(a)(3) of the Act. Membership may be granted
to a sole proprietor, corporation, limited liability company or
other organization which is a registered broker or dealer pursuant
to Section 15 of the Act, and which has been approved by the
Exchange. See MX2 Rule 1.5. The term ``Options Member'' means a
firm, or organization that is registered with the Exchange pursuant
to Chapter 17 of the Exchange's Rules for purposes of participating
in options trading on MX2 Options as an ``Options Order Entry Firm''
or ``Options Market Maker.'' See MX2 Rule 16.1.
\9\ MX2 Rule 2.4(a) and (b).
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MX2 Rule 2.4 governs mandatory participation in testing of the
Exchange's backup systems, and states that the Exchange will designate
Members that account for a specified percentage of executed volume on
MX2 as required to connect to the Exchange's backup systems and
participate in functional and performance testing of such system.\10\
MX2 Options, which is scheduled to launch in September 2026, is not
expecting to have sufficient trading data on which to base its Member
designation prior to the October 24, 2026 test. Additionally, the
Exchange originally planned that MX2 would launch an equities exchange
prior to launching an options exchange, and as such, current Rule
2.4(c) states that the Exchange, in the absence of trading data the
first year in which it is operational, should designate Members who
have a meaningful percentage of trading volumes in NMS stocks on other
equity exchanges for participation in the Exchange's testing of its
backup systems.
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\10\ Id.
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Given the Exchange's plans to launch an options exchange (rather
than an equities exchange) for the first year in which MX2 is
operational, the Exchange proposes to amend paragraph (c). Proposed
paragraph (c) would provide that for the first calendar year in which
the Exchange is operational, with respect to MX2 Options,
notwithstanding paragraph (b) which assigns the Exchange responsibility
of ``identifying Members that account for a meaningful percentage of
the Exchange's overall volume,'' the Exchange will instead designate at
least three Options Members who have a meaningful percentage of trading
volumes in options on other options exchanges. This would allow the
Exchange to identify Options Members for industry-wide disaster
recovery testing in the absence of metrics that will be used in
ordinary course to designate such firms.
MX2 believes that designating at least three Options Members who
are likely already to be participating in the industry-wide test by
virtue of their trading activities on MEMX Options and other exchanges
is likely to reduce the burdens associated with being designated for
disaster recovery testing by MX2 Options in absence of significant
trading volumes on the Exchange. Moreover, to reduce the burdens on
designated Options Members, the Exchange proposes, where possible, to
designate firms that have already established connections to its backup
systems. This is intended to address the ``notice'' requirements in the
existing Rule 2.4.\11\ The Exchange believes that designating three or
more such firms is reasonably designed to provide the minimum necessary
for the maintenance of fair and orderly markets in the event of the
activation of such plans.
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\11\ Pursuant to Rule 2.4(b), the Exchange will provide at least
six months prior notice to a Member that is designated for mandatory
testing. See MX2 Rule 2.4(b).
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MX2 intends to notify Options Members of their designation for
disaster recovery testing no later than September 10, 2026. With
respect to industry-wide disaster recovery testing in 2026 and beyond,
the Exchange will issue one or more regulatory circulars establishing
the standards to be used for determining which Options Members
contribute a meaningful percentage of the Exchange's overall volume and
thus are required to participate in functional and performance testing.
Such standards will be informed by the Exchange's actual market and
trading data, in accordance with MX2 Rule 2.4(b).
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\12\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\13\ in particular, in that it is designed to
prevent fraudulent and manipulative 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.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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MX2 believes that, in the absence of sufficient trading data on MX2
Options, its proposed methodology of designating Options Members who
have meaningful levels of trading activity on other exchanges and who
have established connectivity to the Exchange's backup systems is
consistent with the protection of investors and the public interest.
The Exchange further believes that the proposed rule change will ensure
that the Options Members necessary to ensure the maintenance of fair
and orderly markets in the event of the activation of the Exchange's
disaster recovery plans have been designated consistent with MX2 Rule
2.4 and Rule 1004 of Regulation SCI. Specifically, the proposal will
address the unique circumstances of industry-wide testing
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taking place within a short time of MX2 Options commencing operations.
The Exchange believes that the proposed rule change balances the
objectives of having Options Members participate in industry-wide
disaster recovery testing, including MX2 Options' backup systems, and
the burdens on such Options Members who, at the time of designation,
will not have traded on MX2 Options.
As set forth in the SCI Adopting Release, ``SROs have the
authority, and legal responsibility, under Section 6 of the Exchange
Act, to adopt and enforce rules (including rules to comply with
Regulation SCI's requirements relating to BC/DR testing) applicable to
their members or participants that are designed to, among other things,
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.'' \14\ The Exchange believes that this proposal is consistent
with such authority and legal responsibility.
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\14\ See supra note 7 at 72350.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes its proposed rule change would not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. To the contrary, the Exchange
believes that the proposed rule change promotes fair competition among
brokers and dealers and exchanges by ensuring the Exchange can
designate Options Members to participate in mandatory disaster recovery
testing pursuant to Regulation SCI for the first year in which the
Exchange is operational, rather than Equities Members, given that MX2
has chosen to launch an options exchange prior to an equities exchange.
The Exchange believes that designating three or more such firms is
reasonably designed to provide the minimum necessary for the
maintenance of fair and orderly markets in the event of the activation
of such plans, thereby promoting intermarket competition between
exchanges in furtherance of the principles of Section 11(a)(1) of the
Act.\15\ The Exchange notes that the proposed rule change is identical
to that proposed by MEMX for the year it launched MEMX Options.\16\
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\15\ 15 U.S.C. 78k-1(a)(1).
\16\ See Securities Exchange Act Release No. 89899 (September
16, 2020), 85 FR 59580 (September 22, 2020) (SR-MEMX-2020-07).
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With respect to intramarket competition, the proposed rule change
seeks to reduce the burdens on Members by only designating Options
Members who are likely already participating in the industry-wide test
by virtue of their trading activities on other exchanges. Under the
proposed rule change, the Exchange will designate firms that have
already established connections to the Exchange's backup systems.
Consequently, MX2 does not believe that the proposed rule change would
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the Act.
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\19\
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\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 17 CFR 240.19b-4(f)(6).
\19\ 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) \20\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\21\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\20\ 17 CFR 240.19b-4(f)(6).
\21\ 17 CFR 240.19b-4(f)(6)(iii).
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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) \22\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\22\ 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#6012150c054d030f0d0d050e1413201305034e070f16"><span class="__cf_email__" data-cfemail="2153544d440c424e4c4c444f5552615244420f464e57">[email protected]</span></a>. Please include
file number SR-MX2-2026-02 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-MX2-2026-02. 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-MX2-2026-02 and should be submitted on
or before June 22, 2026.
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-10669 Filed 5-28-26; 8:45 am]
BILLING CODE 8011-01-P
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