Notice2026-18110
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fee Schedule To Implement an Exchange Order Entry Protocol Migration Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 4, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 171 (Friday, September 4, 2026)</title>
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[Federal Register Volume 91, Number 171 (Friday, September 4, 2026)]
[Notices]
[Pages 56928-56931]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-18110]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106252; File No. SR-CboeBZX-2026-069]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
its Fee Schedule To Implement an Exchange Order Entry Protocol
Migration Program
September 1, 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 August 20, 2026 Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been
[[Page 56929]]
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 fee schedule to implement an Exchange Order Entry
Protocol Migration Program. 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to introduce the
Exchange's Order Entry Protocol Migration Program (the, ``Program'').
As described in further detail below, the Program is intended to
provide Members,\3\ subject to certain conditions, fee credits for
logical ports that Members establish solely for use as a back-up
connection during an Exchange initiated order entry protocol migration;
e.g., migrating from BOEv2 \4\ logical ports to BOEv3 logical ports.
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\3\ The term ``Member'' shall mean 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, partnership, 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 Rule 1.5(n).
\4\ The term BOE refers to Cboe Binary Order Entry (``BOE''),
which is a proprietary order entry protocol. See ``Cboe Titanium
U.S. Options BOEv3 Specification,'' available at <a href="https://www.cboe.com/document/tech-spec/content/technical-specifications/cboe-titanium-u.s.-options-boev3-specification">https://www.cboe.com/document/tech-spec/content/technical-specifications/cboe-titanium-u.s.-options-boev3-specification</a>.
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Specifically, the proposed Program would provide that during an
Exchange initiated order entry protocol migration (``Migration'') a
Member may establish a logical port to serve solely as a backup
connection (``Redundant Logical Port'') during the Member's migration
from a prior logical port protocol to the current logical port protocol
(``New Logical Port''). The Redundant Logical Port may only be used for
Exchange issues directly related to the Migration that prevent the
Member from using their New Logical Port, thereby requiring the Member
to instead use their Redundant Logical Port to enter orders and/or
quotes into the System.\5\ A Member shall be eligible for a credit of
the monthly logical port fee(s) that would otherwise be assessed for
such Redundant Logical Port, provided that: (i) the Member notifies the
Exchange's Trade Desk, in a manner specified by the Exchange, that the
Redundant Logical Port being established is intended to serve only as a
backup connection during a Migration; (ii) the Redundant Logical Port
is canceled by the Member within 30 calendar days of the Member
designating such logical port as a Redundant Logical Port; (iii) any
orders and/or quotes entered by the Member into the Redundant Logical
Port must be due to an Exchange issue directly related to the
Migration; and (iv) within 30 days following such cancelation, the
Member submits to the Exchange's Trade Desk a request for a credit of
the fees assessed by the Exchange for the Redundant Logical Port.
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\5\ See rule 21.1(a), definition of ``System.''
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Following receipt of the credit request, the Exchange will review
the Redundant Logical Port's order and quote usage for the period
during which the Redundant Logical Port was designated as such and
confirm the Member's compliance with (i)-(iv), above. If the Member
satisfies these requirements the Exchange will apply a credit for the
fees assessed for the Redundant Logical Port to the Member's invoice
for the billing cycle following the Exchange's confirmation.
The Exchange is implementing the Program to credit logical port
fees back to Members where their establishment of a Redundant Logical
Port was solely for the purpose of creating backup logical ports to be
used in the event a Member's New Logical Port, through no fault of
their own, is not available for use, thereby preventing their access to
the Exchange. In this regard, by creating Redundant Logical Ports,
Members can responsibly ensure that they will maintain access to the
Exchange even in the event where their New Logical Ports, which were
created only because of an Exchange initiated order entry protocol
migration, are not available for use because of an Exchange issue
(e.g., through clerical or ministerial error, a Member's New Logical
Port was not created by the Exchange). In such a scenario, the Exchange
does not believe it appropriate to assess Members logical port fees for
Redundant Logical Port fees that are, absent an Exchange issue, not
being utilized and instead are being created by Members to responsibly
ensure they always maintain access to the Exchange.
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.\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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
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The Exchange believes it is reasonable to provide a credit of the
applicable monthly logical port fees only where a Member establishes a
Redundant Logical Port in connection with Migration. In this
circumstance, the Member is adopting a New Logical Port not as a matter
of its own business discretion, but solely because the Exchange has
elected to migrate to an
[[Page 56930]]
updated order entry protocol. The Redundant Logical Port that a Member
maintains during such a transition is therefore directly attributable
to an Exchange driven change and exists solely to preserve the Member's
continued access to the Exchange in the event the Member's New Logical
Port, through no fault of the Member, does not function as intended due
to an Exchange Migration issue. By contrast, the Exchange does not
believe it would be reasonable or appropriate to extend the credit to a
logical port that a Member establishes in connection with a Member
initiated change, because in that case the additional connection
reflects the Member's own operational preferences and business
decisions (e.g., migrating from FIX ports to BOE ports) rather than a
transition necessitated by the Exchange. Limiting the credit to a
Migration thus appropriately ties the fee credit to the specific
circumstance the Program is designed to address, namely, the
operational burden placed on Members as a direct result of the
Exchange's decision to migrate to a new order entry protocol.
The Exchange further believes that the 30-calendar day period
during which a Member may maintain a Redundant Logical Port and remain
eligible for the credit is reasonable. A migration to a new order entry
protocol presents operational risk for Members, and the 30-calendar day
overlap period affords Members an adequate opportunity to establish,
test, and gain confidence in the operation of their New Logical Port
before decommissioning the logical port that supported the prior
protocol. Permitting this limited period of overlap reduces the risk
that a Member will prematurely cancel a functioning connection and
thereby jeopardize its access to the Exchange during a critical
transition. At the same time, the Exchange believes 30-calendar days is
an appropriately tailored period that is long enough to allow Members
to develop confidence in the New Logical Port, while ensuring that the
credit remains tied to the migration and is not used to subsidize a
Member's maintenance of duplicative connectivity on an indefinite
basis. The Exchange also believes that measuring this period in
calendar days, rather than business days, promotes clarity and ease of
administration for both Members and the Exchange as it removes the need
to have to account for holidays and weekends.
The Exchange also believes the proposed Program is reasonable
because it is designed to alleviate the migration related costs that
Members would otherwise incur solely as a result of an Exchange
initiated order entry protocol migration and to promote Member
confidence throughout the Migration process. Absent the Program, a
Member that responsibly establishes a Redundant Logical Port to
preserve its access to the Exchange during a Migration would be
assessed the full monthly logical port fee for a connection that,
absent an Exchange Migration related issue, it would not otherwise use.
By crediting such fees, the Program removes a financial disincentive to
maintaining a backup connection and encourages Members to take
reasonable measures to ensure continuity of access during the
transition. The Exchange believes that relieving Members of these
costs, which arise only because of an Exchange initiated change,
supports a more orderly Migration process, reduces operational risk to
Members and the market, and thereby removes impediments to and perfects
the mechanism of a free and open market and a national market system,
consistent with Section 6(b)(5) of the Act.
The Exchange also believes the proposed rule change is consistent
with Section 6(b)(4) of the Act,\9\ which requires that Exchange rules
provide for the equitable allocation of reasonable dues, fees, and
other charges among its Members and other persons using its facilities.
The Exchange believes the proposed Program provides for an equitable
allocation of reasonable fees because the credit is available to all
Members on the same terms and is governed by the same objective
conditions set forth in (i) through (iv) above. Any Member that
establishes a Redundant Logical Port during an Exchange Migration, and
that satisfies those conditions, is eligible for the same credit of the
monthly logical port fees that would otherwise be assessed for such
Redundant Logical Port. The Exchange believes it is equitable to
allocate the cost of a Redundant Logical Port from Members in this
limited circumstance because the underlying connection is established
only in response to an Exchange initiated change and, absent an
Exchange Migration related issue, is not used by the Member to enter
orders and quotes into the System.
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\9\ 15 U.S.C. 78f(b)(4).
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For substantially the same reasons, the Exchange believes the
proposed Program is equitable and not unfairly discriminatory in
accordance with Section 6(b)(5) of the Act. The Program applies
uniformly to all similarly situated Members, as any Member that
establishes a Redundant Logical Port in connection with an Exchange
Migration and satisfies conditions (i) through (iv) is eligible for the
credit on the same basis, regardless of the type or size of the Member.
The credit is not available on a discretionary or selective basis;
rather, it is applied according to the objective, transparent criteria
set forth in the proposed rule text, following the Exchange's review of
the Redundant Logical Port's order and quote usage and confirmation of
the Member's compliance with those criteria. Because the availability
of the credit turns solely on the objective circumstances of an
Exchange Migration and the Member's compliance with uniform conditions,
the Exchange believes the proposed Program does not permit unfair
discrimination between customers, issuers, brokers, or dealers.
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. The proposed rule change
does not impose any burden on intramarket competition as the Redundant
Logical Port credit is available to all Members and Trading Permit
Holders (``TPHs'') \10\ on each of the BZX's affiliated exchanges--BYX
Exchange, Incorporated, EDGA Exchange, Inc., EDGX Exchange, Inc., Cboe
Exchange, Inc., and C2 Exchange, Inc. (together with BZX Options, the
``Affiliated Exchanges''). Additionally, as noted above, the Redundant
Logical Port fee credit is uniformly to all Members and TPHs, across
each of the Affiliated Exchanges, on the same terms and under the same
objective conditions set forth in (i) through (iv) above. The Program
applies uniformly to all similarly situated Members and TPHs,
regardless of the type or size of the
[[Page 56931]]
Member or TPH, and is not available on a discretionary or selective
basis.
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\10\ The terms ``Trading Permit Holder'' and ``TPH'' have the
meaning set forth in the Bylaws.'' See Cboe Exchange, Inc., Rule 1.1
Definitions; see also Bylaws of the Cboe Exchange, Inc., Section 1.1
Definitions, ``The term ``Trading Permit Holder'' means any
individual, corporation, partnership, limited liability company or
other entity authorized by the Rules that holds a Trading Permit. If
a Trading Permit Holder is an individual, the Trading Permit Holder
may also be referred to as an ``individual Trading Permit Holder.''
If a Trading Permit Holder is not an individual, the Trading Permit
Holder may also be referred to as a ``TPH organization.'' A Trading
Permit Holder is a ``member'' solely for purposes of the Act;
however, one's status as a Trading Permit Holder does not confer on
that Person any ownership interest in the Exchange; see also Rule
1.1 of the C2 Exchange, Inc, ``The terms ``Trading Permit Holder''
or ``TPH'' mean an Exchange-recognized holder of a Trading Permit. A
Trading Permit Holder is deemed a ``member'' under the Exchange
Act.''
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Although the Program relates to logical ports established in
connection with an Exchange initiated order entry protocol migration,
it does not favor any particular type of market participant because any
TPH that establishes a Redundant Logical Port during an Exchange
initiated migration and satisfies conditions (i) through (iv) is
eligible for the same credit. Accordingly, the Exchange believes the
proposed Program is equitable and not unfairly discriminatory.
Furthermore, the proposed rule change does not impose any burden on
intermarket competition. The Program is limited to fees and credits for
Redundant Logical Ports that TPHs establish solely because of an
Exchange initiated order entry protocol migration, and it does not
disadvantage other exchanges. To the extent the Program makes BZX
Options more attractive or favorable by reducing migration-related
costs and supporting continuity of TPH access to the Exchange, it will
help to foster competition among exchanges.
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 foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \11\ and paragraph (f) of Rule 19b 4 \12\
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 will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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#b0c2c5dcd59dd3dfddddd5dec4c3f0c3d5d39ed7dfc6"><span class="__cf_email__" data-cfemail="4735322b226a24282a2a222933340734222469202831">[email protected]</span></a>. Please include
file number SR-CboeBZX-2026-069 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-2026-069. 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-2026-069 and should be submitted
on or before September 25, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-18110 Filed 9-3-26; 8:45 am]
BILLING CODE 8011-01-P
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