Notice2026-17918
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order Granting Approval of Proposed Rule Change To Amend Rules Regarding Intermarket Sweep Orders
Primary source
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Published
September 2, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 169 (Wednesday, September 2, 2026)</title>
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[Federal Register Volume 91, Number 169 (Wednesday, September 2, 2026)]
[Notices]
[Pages 56486-56487]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17918]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106228; File No. SR-CboeBZX-2026-053]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order
Granting Approval of Proposed Rule Change To Amend Rules Regarding
Intermarket Sweep Orders
August 28, 2026.
I. Introduction
On June 5, 2026, Cboe BZX Exchange, Inc. (``Exchange'') filed with
the Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\
and Rule 19b-4 thereunder,\2\ a proposed rule change (a) to amend
Exchange Rule 11.9(d) to: (i) permit an Intermarket Sweep Order
(``ISO'') to be entered as a non-displayed order and (ii) to establish
the price level at which the System \3\ will consider an ISO available
for other orders to be entered and (b) to amend Exchange Rule
11.9(g)(4) to permit non-displayed orders to re-price to more
aggressive prices. The proposed rule change was published for comment
in the Federal Register on June 23, 2026.\4\ On July 23, 2026, pursuant
to Section 19(b)(2) of the Act,\5\ the Commission designated a longer
period within which to determine whether to disapprove the proposed
rule change.\6\ This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Exchange Rule 1.5(aa). The term ``System'' means the
electronic communications and trading facility designated by the
Board through which securities orders of Users are consolidated for
ranking, execution and, when applicable, routing away. See Exchange
Rule 1.5(cc). The term ``User'' means any Member or Sponsored
Participant who is authorized to obtain access to the System
pursuant to Exchange Rule 11.3.
\4\ See Securities Exchange Act Release No. 105711 (June 17,
2026), 91 FR 37464 (``Notice''). The Commission has not received any
comment letters on the proposed rule change.
\5\ 15 U.S.C. 78s(b)(2).
\6\ See Securities Exchange Act Release No. 105976, 91 FR 47292
(July 28, 2026).
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II. Description of the Proposal
As part of its suite of order types, the Exchange currently offers
Users the ability to enter ISOs, which are limit orders for a National
Market System stock (``NMS stock'') that meet the following
requirements: (i) when routed to a trading center, the limit order is
identified as an ISO; (ii) simultaneously with the routing of the limit
order identified as an ISO, one or more additional limit orders, as
necessary, are routed to execute against the full displayed size of any
protected bid, in the case of a limit order to sell, or the full
displayed size of any protected offer, in the case of a limit order to
buy, for the NMS stock with a price that is superior to the limit price
of the limit order as identified as an ISO (and these additional routed
orders also must be marked as ISOs).\7\ Currently, the Exchange does
not permit an ISO to be entered as a Non-Displayed Order.\8\
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\7\ See Notice, supra note 4, 91 at 37465. See also Regulation
NMS Rule 600(b)(47).
\8\ See Exchange Rule 11.9(c)(11). A ``Non-Displayed Order'' is
a market or limit order that is not displayed on the Exchange.
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The Exchange proposes to amend Exchange Rule 11.9(d) to: (i) permit
an Intermarket Sweep Order to be entered as a Non-Displayed Order and
(ii) to establish when the System will consider the limit price of an
ISO to be available for other orders to be entered or to re-price to
that price level. The Exchange also proposes to amend Exchange Rule
11.9(g)(4) to permit Non-Displayed Orders to re-price to more
aggressive prices.\9\
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\9\ See Notice, supra note 4, 91 at 37465.
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Intermarket Sweep Orders
The Exchange proposes to amend Exchange Rule 11.9(d) to permit an
ISO to be entered as a displayed order or as a Non-Displayed Order (a
``Non-Displayed ISO'').\10\ Additionally, the Exchange proposes to
introduce Exchange Rules 11.9(d)(1)-(3) that establish when the System
will consider the limit price of an ISO to be available for other
orders to be entered or to re-price to that price level. Proposed
Exchange Rule 11.9(d)(1) would provide that upon receipt of an ISO
during Regular Trading Hours,\11\ the System will consider the limit
price of the ISO to be available for new orders to be entered at that
price level.\12\ Resting orders would re-price to the limit price of
the ISO based on User instruction, unless the ISO is not itself
accepted at that price level or the ISO contains a Non-Displayed
instruction.\13\
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\10\ See id.
\11\ See Exchange Rule 1.5(w). The term ``Regular Trading
Hours'' means the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
\12\ See Notice, supra note 4, 91 FR at 37465.
\13\ See id.
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Proposed Exchange Rule 11.9(d)(2) would provide that upon receipt
of an ISO during the Early Trading Session,\14\ Pre-Opening
Session,\15\ or After Hours Trading Session,\16\ the System will not
consider the limit price of an ISO to be available for new orders to be
entered at that price, and resting orders will not re-price based on
the limit price of the ISO.\17\
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\14\ See Exchange Rule 1.5(ff). The term ``Early Trading
Session'' means the time between 4:00 a.m. and 8:00 a.m. Eastern
Time.
\15\ See Exchange Rule 1.5(r). The term ``Pre-Opening Session''
means the time between 8:00 a.m. and 9:30 a.m. Eastern Time.
\16\ See Exchange Rule 1.5(c). The term ``After Hours Trading
Session'' means the time between 4:00 p.m. and 8:00 p.m. Eastern
Time.
\17\ See Notice, supra note 4, 91 FR at 37466.
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Proposed Exchange Rule 11.9(d)(3) would provide that
notwithstanding subparagraphs (1) and (2), the System will consider the
limit price of an ISO entered during Regular Trading Hours to remain
available for new orders to be entered or resting orders to re-price
[[Page 56487]]
based on User instruction if such order remains eligible for execution
during the After Hours Trading Session.\18\ The System will not
consider the limit price of an ISO entered during the Early Trading
Session or Pre-Opening Session to be available for new orders to be
entered or resting orders to re-price based on User instruction if such
order remains eligible for execution during Regular Trading Hours or
during the After Hours Trading Session.\19\
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\18\ See id.
\19\ See id.
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Non-Displayed Order Sliding
The Exchange also proposes to amend Exchange Rule 11.9(g)(4)
(``Non-Displayed Order Sliding'') to permit Users to elect multiple
price sliding for Non-Displayed Orders. Currently, a Non-Displayed
Order containing a price slide instruction that crosses the Protected
Quotation of an away market will receive a new timestamp and will be
ranked by the System at the locking price and would not be re-priced by
the System unless it is again crossing a Protected Quotation of an away
market.\20\ The Exchange proposes to amend Exchange Rule 11.9(g)(4) to
allow a User to elect to have a Non-Displayed Order re-price each time
the NBBO changes and receive a new timestamp, permitting the order to
be ranked at a more aggressive price without crossing a Protected
Quotation of an external market. The proposal would also clarify that a
Non-Displayed Order will retain its original limit price irrespective
of the price at which such Non-Displayed Order is ranked.\21\
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\20\ See Notice, supra note 4, 91 FR at 37466. See also id., n.
26.
\21\ See Notice, supra note 4, 91 FR at 37467.
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III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the Act and rules and regulations thereunder
applicable to a national securities exchange.\22\ In particular, the
Commission finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\23\ which requires, among other things,
that the Exchange's rules be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, 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 and are not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\22\ 15 U.S.C. 78s.
\23\ 15 U.S.C. 78s(b)(5).
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Permitting ISOs to be submitted with a Non-Displayed instruction
will provide market participants with more flexibility in accomplishing
their trading strategies and will enable Users to more effectively
implement their trading strategies across market centers. Other
national securities exchanges currently offer this function.\24\ The
Exchange's proposed introduction of Rules 11.9(d)(1)-(3) would provide
clarity regarding the System's consideration of the limit price of an
ISO in different trading sessions. The Exchange's proposal to permit
orders with a Non-Displayed instruction to re-price multiple times
based on User instruction may allow more execution opportunities and
increased liquidity at prices consistent with prevailing market
conditions, which may promote more efficient price discovery.
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\24\ See Notice, supra note 4, 91 FR at 37465 (citing The Nasdaq
Stock Market LLC's Equity Rule 4, Rule 4702(b)(3)(C), which states
that a Non-Displayed Order may be designated as an ISO). See also
Nasdaq Texas, LLC's Equity Rule 4, Rule 4702(3)(C); Nasdaq PHLX
LLC's Equity Rule 4, Rule 3301A(b)(3)(C).
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For these reasons, the Commission finds the proposed rule change is
consistent with Section 6(b)(5) of the Act \25\ and the rules and
regulations thereunder applicable to a national securities exchange.
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\25\ 15 U.S.C. 78s(b)(5).
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IV. Conclusion
It is Therefore Ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\26\ that the proposed rule change (SR-CboeBZX-2026-053)
be, and hereby is, approved.
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\26\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-17918 Filed 9-1-26; 8:45 am]
BILLING CODE 8011-01-P
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