Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposal To Amend Rule 20.6 (Nullification and Adjustment of Options Transactions Including Obvious Errors) Regarding the Roster Requirements for the Obvious Error Panel

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<title>Federal Register, Volume 91 Issue 161 (Friday, August 21, 2026)</title>
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[Federal Register Volume 91, Number 161 (Friday, August 21, 2026)]
[Notices]
[Pages 54422-54424]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17063]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106157; File No. SR-MEMX-2026-27]


Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposal To Amend Rule 20.6 (Nullification 
and Adjustment of Options Transactions Including Obvious Errors) 
Regarding the Roster Requirements for the Obvious Error Panel

August 18, 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 August 13, 2026, MEMX LLC (``MEMX'' 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 Exchange Rule 20.6 (Nullification and Adjustment of Options 
Transactions including Obvious Errors) to eliminate the requirement 
regarding the maintenance of a minimum roster of representatives 
eligible to serve on the Exchange's Obvious Error Panel. 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 
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

[[Page 54423]]

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 Exchange Rule 20.6 (Nullification 
and Adjustment of Options Transactions including Obvious Errors) to 
simplify the representative requirement for the Obvious Error Panel. 
Specifically, as described below, the Exchange proposes to eliminate 
the requirement regarding the maintenance of a minimum roster of 
representatives eligible to serve on the Exchange's Obvious Error Panel 
to avoid an unnecessary administrative burden on the Exchange and its 
Options Members.
    Under Rule 20.6(l), an Options Member affected by a determination 
made under Rule 20.6 may request review by an Obvious Error Panel. 
Under Rule 20.6(l)(1), each Obvious Error Panel must be comprised of 
the Exchange's Chief Regulatory Officer (``CRO''), or a designee of the 
CRO; one representative of an Options Member engaged in market making 
(any such representative, a ``MM Representative''); and two 
representatives of Options Members that satisfy specified criteria 
designed to ensure that such representatives are not engaged 
principally in options market making (any such representative, a ``Non-
MM Representative'').
    Under current Rule 20.6(l)(2), the Exchange must designate at least 
ten MM Representatives and at least ten Non-MM Representatives to be 
called upon to serve on the Obvious Error Panel as needed. That rule 
further provides that an Obvious Error Panel may not include a person 
affiliated with a party to the trade in question and that, to the 
extent reasonably possible, the Exchange must call upon designated 
representatives to participate on panels on an equally frequent basis.
    The Exchange believes that the requirement to designate at least 
ten MM Representatives and at least ten Non-MM Representatives to be 
called upon to serve on the Obvious Error Panel is unnecessarily 
burdensome to both the Exchange and the representatives. The Exchange 
believes that a mandatory roster of twenty or more designated 
representatives is larger than necessary to administer the appeals 
process effectively and imposes avoidable administrative burdens on 
both the Exchange and its Options Members. Maintaining such a roster 
requires the Exchange to identify, solicit, qualify, designate, track, 
and periodically refresh a substantial number of representatives, even 
though only three industry representatives serve on a particular panel, 
and appeals occur only periodically and infrequently.
    The Exchange believes that Rule 20.6, as amended, will facilitate a 
more efficient administration of the appeal process while retaining the 
requirement of having both MM Representatives and Non-MM 
Representatives on the panel. The proposed amendment will streamline 
the appeal process by removing the unnecessary burden of maintaining an 
active list of at least twenty representatives to serve on an Obvious 
Error Panel. The Exchange does not believe it is necessary to designate 
such a large number of representatives because the composition of each 
Obvious Error Panel will remain unchanged, as each panel will continue 
to include one MM Representative and two Non-MM Representatives, in 
addition to the CRO or the CRO's designee. The Exchange believes this 
composition provides a proper balance of competing interests and helps 
ensure regulatory fairness when resolving trade disputes.
    The proposal will not alter the eligibility criteria for Non-MM 
Representatives. In addition, Rule 20.6(l)2) will retain the 
requirements that an Obvious Error Panel may not include a person 
affiliated with a party to the trade in question and that, to the 
extent reasonably possible, the Exchange must call upon designated 
representatives to participate on panels on an equally frequent basis. 
These provisions will continue to promote impartiality and equitable 
participation in the appeal process.
    The Exchange expects to continue designating a sufficient number of 
qualified MM Representatives and Non-MM Representatives to convene 
panels promptly, taking into account representative availability, 
potential conflicts, and the applicable review timeframes. Eliminating 
the fixed minimum roster size will provide the Exchange flexibility to 
maintain a roster appropriately sized to its operational needs without 
affecting the composition, independence, or substantive authority of 
the Obvious Error Panel.
    The Exchange notes that the proposed approach is consistent with 
the rules of other national securities exchanges.\5\
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    \5\ Nasdaq Options 3, Section 20(k)(1) provides that a Nasdaq 
Review Council panel will be comprised minimally of one 
representative of a member engaged in market making and two industry 
representatives not engaged in market making, and that no more than 
50% of the panel may be engaged in market making. The rule does not 
require Nasdaq to designate or maintain a minimum roster of 
potential panel representatives. Nasdaq ISE and Nasdaq MRX maintain 
materially similar panel-composition provisions in Options 3, 
Section 20(k)(1) of their respective rulebooks, likewise without 
imposing a minimum roster requirement.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\6\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \7\ 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) \8\ 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)(1) of the Act,\9\ 
which provides that the Exchange be organized and have the capacity to 
be able to carry out the purposes of the Act and to enforce compliance 
by the Exchange's Members and persons associated with its Members with 
the Act, the rules and regulations thereunder, and the rules of the 
Exchange.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
    \9\ 15 U.S.C. 78f(b)(1).
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    In particular, the Exchange believes the proposed amendment to 
eliminate the requirement regarding the maintenance of a minimum roster 
of representatives eligible to serve on the Exchange's Obvious Error 
Panel will make the administration of the appeal process more efficient 
by reducing an unnecessary numerical condition while preserving the 
provisions governing

[[Page 54424]]

panel composition, representative qualifications, conflicts of 
interest, review timing, and decisional authority. The required panel 
composition, the eligibility criteria for Non-MM Representative, and 
the prohibition on participation by a person affiliated with a party to 
the trade will remain unchanged. The Exchange believes these retained 
safeguards provide a proper balance of competing interests and protect 
investors and the public interest.
    The Exchange does not believe that requiring a roster of at least 
twenty designated representatives is necessary to ensure fair review. 
Rather, fairness is achieved through the composition of the panel that 
hears the appeal, the qualifications and independence of its 
representatives, and the substantive and procedural protections in Rule 
20.6. The proposed change also will serve to avoid wasting Options 
Member and Exchange resources on maintaining an excessive list of 
Options Member representatives.
    The Exchange further believes that the proposal's consistency with 
the rules of Nasdaq and its affiliated options exchanges supports the 
conclusion that the fixed roster requirement is not necessary to 
protect investors or ensure fair review. Those exchanges rely on panel-
composition safeguards similar to those that will remain in Rule 20.6, 
but do not require the maintenance of a roster of at least ten market-
maker and ten non-market-maker representatives.
    Finally, the proposal is not designed to permit unfair 
discrimination. Rather, the proposal relates only to the Exchange's 
administrative requirements for maintaining a roster of eligible 
representatives and will apply uniformly to all Options Members and all 
appeals under Rule 20.6. The Exchange will continue to maintain a 
roster of qualified representatives appropriately sized to its 
operational needs and will continue to select representatives in 
accordance with the rule's objective criteria and, to the extent 
reasonably possible, call upon designated representatives on an equally 
frequent basis.

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. This proposal does not 
create an unnecessary or inappropriate intramarket burden on 
competition because the proposed change will apply uniformly to all 
Members and will not affect any Member's ability to request or obtain 
review of an obvious error determination. Further, the proposal will 
not impact the fairness or impartiality of the appeal process. The 
Exchange will continue to appoint qualified individuals to serve on the 
Obvious Error Panel and to administer the appeals process in a fair and 
consistent manner, and all similarly situated parties will continue to 
have access to the same appeal procedures and protections under Rule 
20.6. The Exchange also does not believe the proposed rule change will 
impose any burden on intermarket competition because the proposal 
relates solely to the Exchange's internal administration of the Obvious 
Error Panel and does not affect the standards for determining whether a 
transaction is erroneous, the relief available for market participants, 
the rights or obligations of any Member, the Exchange's trading 
functionality or the ability of Members to compete on the Exchange or 
across markets.

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) of Act \10\ and Rule 19b-4(f)(6) \11\ thereunder. Because 
the foregoing proposed rule change (i) does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) by its terms, 
does not become operative for 30 days after the date of the filing, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of Act \12\ and Rule 19b-
4(f)(6) \13\ thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). 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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    At any time within 60 days of the filing of this 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.

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#3c4e495059115f5351515952484f7c4f595f125b534a"><span class="__cf_email__" data-cfemail="c0b2b5aca5eda3afadada5aeb4b380b3a5a3eea7afb6">[email&#160;protected]</span></a>. Please include 
file number SR-MEMX-2026-27 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-MEMX-2026-27. 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-MEMX-2026-27 and should be submitted on 
or before September 11, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-17063 Filed 8-20-26; 8:45 am]
BILLING CODE 8011-01-P


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