Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 22.6

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<title>Federal Register, Volume 91 Issue 192 (Tuesday, October 6, 2026)</title>
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[Federal Register Volume 91, Number 192 (Tuesday, October 6, 2026)]
[Notices]
[Pages 63614-63616]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20404]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106562; File No. SR-CboeBZX-2026-078]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Exchange Rule 22.6

October 1, 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 September 24, 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 and II 
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. (``BZX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (``Commission'' or ``SEC'') 
a proposed rule change to amend Exchange Rule 22.6 (Market Maker 
Quotations) to provide that the $5 maximum bid/ask differential will 
apply to options series expiring in 270 days or less, and a $15 maximum 
bid/ask differential will apply to options series expiring in more than 
270 days. 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
    The Exchange proposes to amend Rule 22.6(c) to add a time-to-
expiration tier to the existing bid/ask differential requirements for 
Market Maker quotes.
    The Exchange previously adopted bid/ask differential requirements 
for Market Maker quotes under Rule 22.6(c) in a recent rule filing.\3\ 
The Prior Filing established a single general maximum bid/ask 
differential of $5 regardless of the Market Maker's bid, applicable to 
all options series without regard to time to expiration. The Exchange 
now proposes to amend Rule 22.6(c) to conform to the approach in Cboe 
Options Rule 5.52(c), under which the $5 maximum bid/ask differential 
applies to options series expiring in 270 days or less, and a $15 
maximum applies to options series expiring in more than 270 days.
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    \3\ See Securities Exchange Act Release No. 106206 (August 27, 
2026) 91 FR 56250 (September 1, 2026) (SR-CboeBZX-2026-067) (Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Exchange Rule 22.6 (Market Maker Quotations) To Adopt Two-
Sided Quote Bid/Ask Differentials) (the ``Prior Filing'').
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    The use of time to expiration as a variable in bid/ask differential 
requirements is an established concept across options exchanges. Cboe 
Options Rule 5.52(c) uses a 270-day threshold, under which a $5 maximum 
bid/ask differential applies to options series expiring in 270 days or 
less, and a $15 maximum applies to options series expiring in more than 
270 days. Similarly, ISE Options 2, Section 4(b)(4) provides that bid/
ask differentials do not apply to options series until the time to 
expiration is less than nine months (approximately 270 days), and Phlx 
Options 4A, Section 12(b)(2)(i) similarly provides that bid/ask 
differential rules shall not apply to index long-term option series 
until the

[[Page 63615]]

time to expiration is less than twelve months.
    The Exchange believes the proposed general bid/ask differentials of 
$5 for options series expiring in 270 days or less and $15 for options 
series expiring in more than 270 days are reasonable and appropriate. 
The $5 differential for shorter-dated series is sufficiently wide to 
accommodate normal market conditions and volatility while preventing 
Market Makers from entering quotes that are so wide as to provide no 
meaningful liquidity. The wider $15 differential for longer-dated 
series (i.e., those with more than 270 days to expiration) accounts for 
the reduced liquidity, wider theoretical values, and greater 
uncertainty associated with long-term options.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\4\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \5\ 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) \6\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ Id.
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    The Exchange believes that adding a time-to-expiration tier to the 
existing bid/ask differential requirements promotes just and equitable 
principles of trade and removes impediments to and perfects the 
mechanism of a free and open market and a national market system. The 
amendment conforms to Cboe Options Rule 5.52(c), and will enhance the 
quality of markets on BZX Options by establishing bid/ask differential 
requirements calibrated to the differing liquidity characteristics and 
pricing uncertainty across options series with varying times to 
expiration. Specifically, by establishing a general maximum permissible 
width of $5 (for options series expiring in 270 days or less) and $15 
(for options series expiring in more than 270 days) between a Market 
Maker's bid and offer, the Exchange believes the proposal will improve 
market quality by providing investors with more meaningful execution 
opportunities and contributing to more efficient price discovery.
    As discussed above, the Exchange believes the proposed bid/ask 
differentials are reasonable and appropriate. The $5 differential for 
shorter-dated series accommodates normal market conditions while 
preventing excessively wide quotes. The wider $15 differential for 
longer-dated series accounts for the reduced liquidity, wider 
theoretical values, and greater uncertainty associated with long-term 
options. The use of time to expiration as a variable in bid/ask 
differential requirements is an established concept across options 
exchanges, including Cboe Options Rule 5.52(c), ISE Options 2, Section 
4(b)(4), and Phlx Options 4A, Section 12(b)(2)(i).
    The amended, tiered bid/ask differential requirements will apply 
uniformly to all Market Makers on BZX Options based on the applicable 
time to expiration. The proposal therefore does not permit unfair 
discrimination among Market Makers and applies the same $5 and $15 
maximums on the same basis to similarly situated options series. For 
the foregoing reasons, the Exchange believes the proposal is consistent 
with the Act.

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 Exchange does not 
believe that the proposed rule change will impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because the amended, tiered bid/
ask differential requirements will apply uniformly to all Market Makers 
on BZX Options. The $5 and $15 maximums will be determined by the same 
time-to-expiration framework for all Market Makers.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed time-to-expiration tier conforms to Cboe Options Rule 5.52(c) 
and is consistent with the quote width frameworks of other options 
exchanges, including ISE and Phlx. By adopting bid/ask differential 
requirements consistent with those of other options exchanges, Market 
Makers on the Exchange will be subject to comparable bid/ask 
differential requirements as market-makers on other markets.
    For the foregoing reasons, the Exchange does not believe the 
proposed rule change will impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.

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

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to Section 19(b)(3)(A)(iii) of the Act \7\ and subparagraph 
(f)(6) of Rule 19b-4 thereunder.\8\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of such 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 under 
Section 19(b)(2)(B) \9\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \9\ 15 U.S.C. 78s(b)(2)(B).

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[[Page 63616]]

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#f785829b92da94989a9a92998384b7849294d9909881"><span class="__cf_email__" data-cfemail="98eaedf4fdb5fbf7f5f5fdf6ecebd8ebfdfbb6fff7ee">[email&#160;protected]</span></a>. Please include 
file number SR-CboeBZX-2026-078 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-2026-078. 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-2026-078 and 
should be submitted on or before October 27, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-20404 Filed 10-5-26; 8:45 am]
BILLING CODE 8011-01-P


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