Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Options Regulatory Fee (“ORF”)

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<title>Federal Register, Volume 91 Issue 167 (Monday, August 31, 2026)</title>
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[Federal Register Volume 91, Number 167 (Monday, August 31, 2026)]
[Notices]
[Pages 55925-55927]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17662]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106188; File No. SR-CBOE-2026-072]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Options Regulatory Fee (``ORF'')

August 26, 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, 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 its Fees Schedule relating to the Options Regulatory Fee 
(``ORF''). 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/cone/">https://www.cboe.com/us/options/regulation/rule_filings/cone/</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
    On December 12, 2025, the Exchange adopted a new methodology for 
the assessment and collection of an On-Exchange ORF whereby ORF is 
assessed by the Exchange only for options transactions that occur on 
the Exchange \3\ that clear in the customer \4\ range at The Options 
Clearing Corporation (``OCC'').\5\ In its filing, the Exchange set 
forth a July 1, 2026 implementation date for the new methodology. The 
Exchange proposes to increase ORF from $0.0023 per contract side under 
the current method that assesses ORF to all customer range transactions 
regardless of the Exchange on which it occurs to $0.01248 per contract 
side under the new method that assesses ORF to all customer range 
transactions that occur on the Exchange only, effective July 1, 
2026.\6\ The Exchange is also proposing nonsubstantive changes to the 
fees schedule to clarify its description of ORF and delete outdated 
language (as further described below).\7\
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    \3\ The Exchange notes ORF also applies to Customer-range 
transactions executed during Global Trading Hours.
    \4\ ORF is assessed by the Exchange and collected via OCC on 
behalf of the Exchange on executions for the account of Public 
Customers, including Professionals, and Broker-Dealers including 
Foreign Broker-Dealers. These market participants clear in the ``C'' 
range at OCC. On the Exchange, a ``Public Customer'' means a person 
that is not a broker or dealer in securities and includes both 
Priority Customers and Professionals. A ``Priority Customer'' means 
a person or entity that is a Public Customer and is not a 
Professional. A ``Professional'' is any person or entity that (a) is 
not a broker or dealer in securities, and (b) places more than 390 
orders in listed options per day on average during a calendar month 
for its own beneficial account(s). Executions for the account of an 
OCC clearing member firm proprietary account, joint back office 
account clearing in the Firm range, or account of a market maker 
clearing in the Market Maker range are not charged an ORF.
    \5\ See Securities Exchange Act Release No. 104417 (December 17, 
2025), 90 FR 59899 (December 22, 2025) (SR-CBOE-2025-086).
    \6\ Today, ORF is assessed by the Exchange to each Trading 
Permit Holder (``TPH'') for options transactions cleared by the TPH 
that are cleared by the OCC in the customer range, regardless of the 
exchange on which the transaction occurs. In other words, the 
Exchange imposes the ORF on all customer-range transactions cleared 
by a TPH, even if the transactions do not take place on the 
Exchange.
    \7\ The Exchange initially filed the proposed rule change on 
June 29, 2026 (SR-CBOE-2026-058). On August 13, 2026, the Exchange 
withdrew that filing and submitted this proposal.
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    Beginning July 1, 2026, ORF is assessed by the Exchange to each 
Trading Permit Holder (``TPH'') on each side of a transaction for 
options transactions cleared by OCC in the customer range for 
executions that occur on the Exchange. The ORF is collected by OCC on 
behalf of the Exchange from the Clearing Trading Permit Holder 
(``CTPH'') that was the clearing firm for the transaction or a non-TPH 
that was the clearing firm, where a CTPH was the executing clearing 
firm for the transaction and a TPH was the executing firm for the 
transaction.\8\
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    \8\ The current language in the fees schedule states ORF is 
collected by OCC on behalf of the Exchange from the CTPH or a non-
CTPH on each side of the transaction that ultimately clears the 
transaction. The Exchange proposes to revise this language as set 
forth above. The Exchange believes the proposed language provides 
additional clarity regarding how ORF is collected, but has no impact 
on that process. The proposed rule change also deletes the language 
regarding the reimbursement of routing brokers for linkage 
transactions, as that is no longer applicable given ORF applies only 
to on-Exchange transactions.
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    Revenues generated from ORF, when combined with all of the 
Exchange's other regulatory fees and fines, are designed to recover a 
material portion of the regulatory costs to the Exchange of the 
supervision and regulation of TPH customer options business, including 
performing routine surveillances, investigations, examinations, 
financial monitoring, and policy, rulemaking, interpretive, and 
enforcement activities.

[[Page 55926]]

Regulatory costs include direct regulatory expenses \9\ and certain 
indirect expenses in support of the regulatory function.\10\ Indirect 
expenses are estimated to be approximately 43% of the Exchange's total 
regulatory costs for 2026. Thus, direct expenses are estimated to be 
approximately 57% of total regulatory costs for 2026. In addition, it 
is the Exchange's practice that revenue generated from ORF not exceed 
75% of total regulatory costs. These expectations are estimated, 
preliminary and may change. There can be no assurance that our final 
costs for 2026 will not differ materially from these expectations and 
prior practice; however, the Exchange believes that revenue generated 
from ORF, when combined with all of the Exchange's other regulatory 
fees and fines, will cover a material portion, but not all, of the 
Exchange's regulatory costs.
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    \9\ Direct expenses include in-house and third-party service 
provider costs to support the day-to-day regulatory work such as 
surveillances, investigations, and examinations.
    \10\ Indirect expenses include support from areas such as human 
resources, legal, compliance, information technology, facilities and 
accounting.
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    The Exchange monitors its regulatory costs and revenues at a 
minimum on a semi-annual basis. If the Exchange determines regulatory 
revenues exceed or are insufficient to cover a material portion of its 
regulatory costs in a given year, the Exchange will adjust the ORF by 
submitting a fee change filing to the Securities and Exchange 
Commission (the ``Commission''). The Exchange also notifies TPHs of 
adjustments to the ORF via an Exchange Notice, including for the change 
being proposed herein.\11\ Based on the Exchange's review of regulatory 
costs and revenues in preparation for implementation of the new On-
Exchange ORF, the Exchange is proposing to increase the amount of ORF 
that will be collected by the Exchange from $0.0023 per contract side 
on all customer range transactions regardless of the Exchange on which 
the transaction executed to $0.01248 per contract side for only those 
transactions that execute on the Exchange and clear in the customer 
range.
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    \11\ See Exchange Notice, C2026052000 ``Cboe Options Exchanges 
Regulatory Fee Update Effective July 1, 2026'' (May 20, 2026).
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    The Exchange will continue to monitor the amount of revenue 
collected from the ORF to ensure that it, in combination with its other 
regulatory fees and fines, does not exceed the Exchange's total 
regulatory costs.
    The Exchange also proposes to delete the provision stating that the 
Exchange uses reports from OCC when assessing and collecting the ORF. 
The Exchange currently uses its own reports when assessing and 
collecting the ORF, so the current language is outdated.
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.\12\ Specifically, the 
Exchange believes the proposed rule change is consistent with Section 
6(b)(4) of the Act,\13\ which provides that Exchange rules may provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its TPHs and other persons using its facilities. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \14\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4).
    \14\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed fee change is reasonable because 
it would permit the Exchange to collect revenue from the ORF, in 
combination with other regulatory fees and fines, in a manner that 
would help offset, but not exceed, the Exchange's total regulatory 
costs. As discussed, the Exchange has designed the ORF to generate 
revenues that would be less than or equal to 75% of the Exchange's 
regulatory costs, which is consistent with the practice across the 
options industry and the view of the Commission that regulatory fees be 
used for regulatory purposes and not to support the Exchange's business 
side. The Exchange determined to modify the ORF rate in conjunction 
with implementation of the On-Exchange ORF,\15\ a new methodology for 
assessment and collection of ORF, and after its review of its 
regulatory costs and regulatory revenues, which includes revenues from 
ORF and other regulatory fees and fines. When taking into account 
recent options volume, coupled with the anticipated regulatory fees and 
anticipated reductions in other regulatory fees, the Exchange believes 
it's reasonable to increase the ORF rate from $0.0023 per contract side 
on all customer range transactions regardless of the Exchange on which 
the transaction executed to $0.01248 per contract side for only those 
transactions that execute on the Exchange and clear in the customer 
range. Particularly, the proposed change is reasonable as it would 
offset the anticipated increased regulatory costs, while still not 
exceeding 75% of the Exchange's total regulatory costs.
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    \15\ See Securities Exchange Act Release No. 104417 (December 
17, 2025), 90 FR 59899 (December 22, 2025) (SR-CBOE-2025-086).
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    As noted above, the Exchange will also continue to monitor on at 
least a semi-annual basis the amount of revenue collected from the ORF, 
even as amended, to ensure that it, in combination with its other 
regulatory fees and fines, does not exceed the Exchange's total 
regulatory costs. If the Exchange determines regulatory revenues would 
exceed its regulatory costs in a given year, the Exchange will reduce 
the ORF by submitting a fee change filing to the Commission.\16\
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    \16\ Consistent with Rule 2.2 (Regulatory Revenue), the Exchange 
notes that should excess ORF revenue be collected prior to any 
reduction in an ORF rate, such excess revenue will not be used for 
nonregulatory purposes.
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    The Exchange also believes the proposed change is reasonable, 
equitable and not unfairly discriminatory in that it is charged to all 
Exchange transactions that clear in the customer range at the OCC. The 
Exchange believes On-Exchange ORF it is fair and reasonable to assess a 
specific fee to those TPHs that require more Exchange regulatory 
services based on the amount of customer options business they conduct. 
Over recent years, options trading volume has increased with a growing 
percentage of the volume applicable to customer transactions. Customers 
trading on the Exchange (through a TPH) benefit from the protections of 
a robust regulatory program, including the maintenance of fair and 
orderly markets and protections against fraud and other manipulation. 
The Exchange believes it is equitable and not unfairly discriminatory 
to assess a regulatory fee to transactions that clear in the customer 
range to cover regulatory costs, but not to transactions clearing in 
the Firm or Market Maker range because CTPHs and Market Maker TPHs (who 
clear in the Firm and Market Maker range, respectively), as those 
market participants are generally subject to other Exchange fees, fines 
and obligations. For example, CTPHs and Market Maker TPHs are required 
to pay Exchange application fees, permit fees, and connectivity fees, 
amongst others. In addition, all fines issued by the Exchange for 
regulatory infractions are assessed only to TPHs and would be applied 
to regulatory revenues. As with today's ORF, the Exchange expects that 
CTPHs from whom On-Exchange ORF is collected will pass through the fee 
to their customers (as the Exchange understands occurs today). In 
addition, Market Makers are subject to various quoting and other 
obligations so that

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they provide stable and liquid markets, which benefit all market 
participants including customers. Excluding Market Maker transactions 
from On-Exchange ORF will allow Market Makers to manage their costs 
more effectively thus enabling them to better allocate resources toward 
technology, risk management, and capacity to ensure continued liquidity 
provision.
    In addition to the overall increase in customer-range activity, 
regulating customer trading activity is much more labor intensive and 
requires greater expenditure of human and technical resources than 
regulating non-customer trading activity, which tends to be more 
automated and less labor-intensive. For example, there are costs 
associated with main office and branch office examinations (e.g., staff 
and travel expenses), as well as investigations into customer 
complaints and the terminations of registered persons. As a result, the 
costs associated with administering the customer component of the 
Exchange's overall regulatory program are materially higher than the 
costs associated with administering the non-customer component (e.g., 
TPH proprietary transactions) of its regulatory program.\17\ While the 
Exchange notes that it has broad regulatory responsibilities with 
respect to its TPHs' activities, irrespective of where their 
transactions take place, the Exchange believes it is reasonable to 
assess the proposed fee to only those transactions occurring on the 
Exchange.
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    \17\ If the Exchange changes its method of funding regulation or 
if circumstances otherwise change in the future, the Exchange may 
decide to modify the ORF or assess a separate regulatory fee on TPH 
proprietary transactions if the Exchange deems it advisable.
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    The Exchange also believes the proposed rule change is equitable 
and not unfairly discriminatory because the On-Exchange ORF model more 
narrowly tailors the fee to products and transactions with a direct 
connection to the Exchange. Today, a customer transaction may be 
assessed an ORF from every options exchange totaling as much as $0.023 
per transaction per side.\18\ While the Exchange's proposed ORF rate 
under the On-Exchange ORF model of $0.01248 is higher than its current 
ORF rate of $0.0023 under the current model, beginning July 1, 2026, 
the Exchange understands all U.S. options exchanges will implement a 
similar on-exchange model, and ORF rates may decrease for individual 
transactions overall because the proposed On-Exchange ORF will avoid 
overlapping ORFs that would otherwise be assessed by the Exchange and 
other options exchanges that also assess an ORF. Beginning July 1, 
2026, transactions that would clear in the customer range occurring on 
other exchanges would no longer be subject to an ORF assessed by the 
Exchange.
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    \18\ As of June 1, 2026.
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    The Exchange believes the proposed nonsubstantive changes to the 
rule text will protect investors and the public interest, as it 
provides additional clarity regarding how ORF is collected and deletes 
outdated language, but has no impact on that process and thus will have 
no impact on 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 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 ORF applies to all customer activity on the Exchange, thereby 
raising regulatory revenue to offset regulatory expenses. It also 
supplements the regulatory revenue derived from non-customer activity. 
The Exchange notes, however, the proposed change is not designed to 
address any competitive issues. Indeed, this proposal does not create 
an unnecessary or inappropriate intermarket burden on competition 
because it is a regulatory fee that supports regulation in furtherance 
of the purposes of the Act. The Exchange is obligated to ensure that 
the amount of regulatory revenue collected from the ORF, in combination 
with its other regulatory fees and fines, does not exceed regulatory 
costs.
    The proposed nonsubstantive changes have no impact on competition.

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 written 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 \19\ and paragraph (f) of Rule 19b-4 \20\ 
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 shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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#96e4e3faf3bbf5f9fbfbf3f8e2e5d6e5f3f5b8f1f9e0"><span class="__cf_email__" data-cfemail="97e5e2fbf2baf4f8fafaf2f9e3e4d7e4f2f4b9f0f8e1">[email&#160;protected]</span></a>. Please include 
file number SR-CBOE-2026-072 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-2026-072. 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-CBOE-2026-072 and should be submitted on 
or before September 21, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-17662 Filed 8-28-26; 8:45 am]
BILLING CODE 8011-01-P


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