Self-Regulatory Organizations; Cboe BZX 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 55930-55933]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17665]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106191; File No. SR-CboeBZX-2026-066]


Self-Regulatory Organizations; Cboe BZX 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 BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX 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/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
    On December 2, 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 that clear in the customer \3\ range at The Options Clearing 
Corporation (``OCC'').\4\ In its filing, the Exchange set forth a July 
1, 2026 implementation date for the new methodology. The Exchange 
proposes to increase ORF from $0.0002 per contract side under the 
current method that assesses ORF to all customer range transactions 
regardless of the Exchange on which it occurs to $0.00476 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.\5\ 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).\6\
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    \3\ 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 not a broker or dealer in securities or 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.
    \4\ See Securities Exchange Act Release No. 104403 (December 18 
[sic], 2025), 90 FR 59247 (December 18, 2025) (SR-CboeBZX-2025-157).
    \5\ Today, ORF is assessed by the Exchange to each Member for 
options transactions cleared by the Member 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 Member, even if the 
transactions do not take place on the Exchange.
    \6\ The Exchange initially filed the proposed rule change on 
June 29, 2026 (SR-CboeBZX-2026-056). 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 
Member 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 
Member that was the clearing firm for the transaction or a non-Member 
that was the clearing firm, where a Clearing Member was the executing 
clearing firm for the transaction and a Member was the executing firm 
for the transaction.\7\
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    \7\ The current language in the fees schedule states ORF is 
collected by OCC on behalf of the Exchange from the Clearing Member 
or a non-Clearing Member 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 longe 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 Member customer options business, 
including performing routine surveillances, investigations, 
examinations, financial monitoring, and policy, rulemaking, 
interpretive, and enforcement activities. Regulatory costs include 
direct regulatory expenses \8\ and certain indirect expenses in support 
of the regulatory function.\9\ Indirect expenses are estimated to be 
approximately 29% of the Exchange's total regulatory costs for 2026. 
Thus, direct expenses are estimated to be approximately 71% 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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    \8\ 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.
    \9\ 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 Members of 
adjustments to the ORF via an Exchange Notice, including for the change 
being proposed herein.\10\ 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 $0.0002 per contract side 
on all customer range transactions regardless of the Exchange on which 
the transaction executed to $0.00476 per contract side for only those 
transactions that execute on the Exchange and clear in the customer 
range.
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    \10\ 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. Additionally, 
the Exchange proposes to delete the provision requiring Members

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to provide the Exchange with a complete list of its OCC clearing 
numbers and keep such information up to date with the Exchange. The 
Exchange currently receives from OCC on a daily basis Members' OCC 
clearing numbers, so the Exchange no longer needs Members to separately 
provide the Exchange with this information.
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.\11\ Specifically, the 
Exchange believes the proposed rule change is consistent with Section 
6(b)(4) of the Act,\12\ which provides that Exchange rules may provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its Members and other persons using its facilities. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \13\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 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,\14\ 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 $0.0002 per contract side 
on all customer range transactions regardless of the Exchange on which 
the transaction executed to $0.00476 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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    \14\ See Securities Exchange Act Release No. 104403 (December 
15, 2025), 90 FR 59247 (December 18, 2025) (SR-CboeBZX-2025-157).
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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.\15\
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    \15\ Consistent with Rule 15.2 (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 Members 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 Member) 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 Clearing Members and Market 
Maker Members (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, Clearing 
Members and Market Maker Members 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 Members and would be applied to 
regulatory revenues. As with today's ORF, the Exchange expects that 
Clearing Members 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 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., 
Member proprietary transactions) of its regulatory program.\16\ While 
the Exchange notes that it has broad regulatory responsibilities with 
respect to its Members' 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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    \16\ 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 
Member 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.\17\ While the Exchange's proposed ORF rate 
under the On-Exchange ORF model of $0.00476 is higher than its

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current ORF rate of $0.0002 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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    \17\ 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 \18\ and paragraph (f) of Rule 19b-4 \19\ 
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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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 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#097b7c656c246a6664646c677d7a497a6c6a276e667f"><span class="__cf_email__" data-cfemail="addfd8c1c880cec2c0c0c8c3d9deeddec8ce83cac2db">[email&#160;protected]</span></a>. Please include 
file number SR-CboeBZX-2026-066 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-CboeBZX-2026-066. 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-CboeBZX-2026-066 and should be submitted 
on or before September 21, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-17665 Filed 8-28-26; 8:45 am]
BILLING CODE 8011-01-P


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