Notice2026-18112
Self-Regulatory Organizations; Cboe C2 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 56923-56925]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-18112]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-106256; File No. SR-C2-2026-023]
Self-Regulatory Organizations; Cboe C2 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 C2 Exchange, Inc. (the ``Exchange'' or ``C2'')
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 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 C2 Exchange, Inc. (the ``Exchange'' or ``C2'') 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/options/regulation/rule_filings/ctwo/">https://www.cboe.com/us/options/regulation/rule_filings/ctwo/</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 Trading Permit Holders (``TPHs''),\3\ subject to certain
conditions, fee credits for logical ports that TPHs 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 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. See Rule 1.1.
\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 TPH
may establish a logical port to serve solely as a backup connection
(``Redundant Logical Port'') during the TPH'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 TPH
from using their New Logical Port, thereby requiring the TPH to instead
use their Redundant Logical Port to enter orders and/or quotes into the
System.\5\ A TPH shall be eligible for a credit of the monthly logical
port fee(s) that would otherwise be assessed for such Redundant Logical
Port,
[[Page 56924]]
provided that: (i) the TPH 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 TPH
within 30 calendar days of the TPH designating such logical port as a
Redundant Logical Port; (iii) any orders and/or quotes entered by the
TPH 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 TPH 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\ The term ``System'' means the automated trading system the
Exchange uses for the trading of option contracts. See Rule 1.1.
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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 TPH's compliance with (i)-(iv), above. If the TPH satisfies
these requirements the Exchange will apply a credit for the fees
assessed for the Redundant Logical Port to the TPH's invoice for the
billing cycle following the Exchange's confirmation.
The Exchange is implementing the Program to credit logical port
fees back to TPHs 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 TPH'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, TPHs 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 TPH's New Logical Port was not created
by the Exchange). In such a scenario, the Exchange does not believe it
appropriate to assess TPHs logical port fees for Redundant Logical Port
fees that are, absent an Exchange issue, not being utilized and instead
are being created by TPHs 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 TPH establishes a
Redundant Logical Port in connection with Migration. In this
circumstance, the TPH 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 updated order entry protocol. The Redundant
Logical Port that a TPH maintains during such a transition is therefore
directly attributable to an Exchange driven change and exists solely to
preserve the TPH's continued access to the Exchange in the event the
TPH's New Logical Port, through no fault of the TPH, 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 TPH establishes in
connection with a TPH initiated change, because in that case the
additional connection reflects the TPH'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 TPHs 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 TPH 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 TPH, and the 30-calendar day
overlap period affords TPHs 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 TPH
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 TPHs 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 TPH'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
TPHs 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
TPHs would otherwise incur solely as a result of an Exchange initiated
order entry protocol migration and to promote TPH confidence throughout
the Migration process. Absent the Program, a TPH 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 TPHs to take reasonable measures to ensure continuity of
access during the transition. The Exchange believes that relieving TPHs
of these costs, which arise only because of an Exchange initiated
change, supports a more orderly Migration process, reduces operational
risk to TPHs 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 TPHs and other persons using its
[[Page 56925]]
facilities. The Exchange believes the proposed Program provides for an
equitable allocation of reasonable fees because the credit is available
to all TPHs on the same terms and is governed by the same objective
conditions set forth in (i) through (iv) above. Any TPH 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 TPHs 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 TPH 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 TPHs, as any TPH 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 TPH. 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
TPH's compliance with those criteria. Because the availability of the
credit turns solely on the objective circumstances of an Exchange
Migration and the TPH'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 TPHs and Members \10\ on each
of the C2's affiliated exchanges--BYX Exchange, Inc., BZX Exchange,
Inc. EDGA Exchange, Inc., EDGX Exchange, Inc., and Cboe Exchange, Inc.,
(together with C2, 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
TPHs and Members, regardless of the type or size of the TPH or Member
and is not available on a discretionary or selective basis.
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\10\ See definition of ``Member,'' BZX, BYX, EDGX, and EDGA
Rules 1.5(n).
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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 C2 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#84f6f1e8e1a9e7ebe9e9e1eaf0f7c4f7e1e7aae3ebf2"><span class="__cf_email__" data-cfemail="a5d7d0c9c088c6cac8c8c0cbd1d6e5d6c0c68bc2cad3">[email protected]</span></a>. Please include
file number SR-C2-2026-023 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-C2-2026-023. 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-C2-2026-023 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. 2026-18112 Filed 9-3-26; 8:45 am]
BILLING CODE 8011-01-P
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