Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fee Schedule by Introducing Step-Up Tier 1

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<title>Federal Register, Volume 91 Issue 197 (Wednesday, October 14, 2026)</title>
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[Federal Register Volume 91, Number 197 (Wednesday, October 14, 2026)]
[Notices]
[Pages 65272-65275]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20924]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106640; File No. SR-CboeBZX-2026-084]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
its Fee Schedule by Introducing Step-Up Tier 1

October 8, 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 October 1, 2026, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the

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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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to 
amend its Fee Schedule by introducing Step-Up Tier 1 under footnote 2 
of its Fee Schedule. 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 its Fee Schedule applicable to its 
equities trading platform (``BZX Equities'') by introducing Step-Up 
Tier 1 under footnote 2 of its Fee Schedule. The Exchange proposes to 
implement these changes effective on October 1, 2026.
    The Exchange first notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of 17 registered equities exchanges, as well as a 
number of alternative trading systems and other off-exchange venues 
that do not have similar self-regulatory responsibilities under the 
Securities Exchange Act of 1934 (the ``Act''), to which market 
participants may direct their order flow. Based on publicly available 
information,\3\ no single registered equities exchange has more than 
15% of the market share. Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow.
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    \3\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (September 24, 2026), available at Cboe U.S. 
Equities Market Statistics [verbar] Cboe.
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    The Exchange in particular operates a ``Maker-Taker'' model whereby 
it pays rebates to members that add liquidity and assesses fees to 
those that remove liquidity. The Exchange's Fee Schedule sets forth the 
standard rebates and rates applied per share for orders that provide 
and remove liquidity, respectively. Currently, for orders in securities 
priced at or above $1.00, the Exchange provides a standard rebate of 
$0.00160 per share for orders that add liquidity and assesses a fee of 
$0.0030 per share for orders that remove liquidity.\4\ For orders in 
securities priced below $1.00, the Exchange does not provide a rebate 
for orders that add liquidity and assesses a fee of 0.30% of the total 
dollar value for orders that remove liquidity.\5\ Additionally, in 
response to the competitive environment, the Exchange also offers 
tiered pricing which provides Members opportunities to qualify for 
higher rebates or reduced fees where certain volume criteria and 
thresholds are met. Tiered pricing provides an incremental incentive 
for Members to strive for higher tier levels, which provides 
increasingly higher benefits or discounts for satisfying increasingly 
more stringent criteria.
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    \4\ See BZX Equities Fee Schedule, Standard Rates.
    \5\ Id.
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Step-Up Tiers
    Footnote 2 of the Fee Schedule is currently designated as 
``Reserved.'' The Exchange now proposes to designate footnote 2 of the 
Fee Schedule as ``Step-Up Tiers,'' where the Exchange would offer 
various Step-Up Tiers that provide enhanced rebates for orders yielding 
fee codes B,\6\ V,\7\ and Y \8\ where a Member reaches certain add 
volume-based criteria, including ``growing'' its volume over a certain 
baseline month. The Exchange also proposes to introduce Step-Up Tier 1. 
The proposed criteria of proposed Step-Up Tier 1 is as follows:
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    \6\ Fee code B is appended to displayed orders that add 
liquidity to BZX in Tape B securities.
    \7\ Fee code V is appended to displayed orders that add 
liquidity to BZX in Tape A securities.
    \8\ Fee code Y is appended to displayed orders that add 
liquidity to BZX in Tape C securities.
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    <bullet> Proposed Step-Up Tier 1 will provide a rebate of $0.0028 
per share to qualifying orders where: (1) Member has a Step-Up Add TCV 
\9\ from September 2026 >= 0.08% or Member has an Ex-Subdollar Step-Up 
Add Ex-Subdollar TCV \10\ from September 2026 >= 0.08%; and (2) Member 
has a CMC ADV of 300,000 that yield fee code MC.\11\
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    \9\ As proposed, ``Step-Up Add TCV'' means ADAV as a percentage 
of TCV in the relevant baseline month subtracted from the prior 
month's ADAV as a percentage of TCV.
    \10\ As proposed, ``Ex-Subdollar Step-Up Add Ex-Subdollar TCV'' 
means Ex-Subdollar ADAV as a percentage of Ex-Subdollar TCV in the 
relevant baseline month subtracted from the prior month's Ex-
Subdollar ADAV as a percentage of Ex-Subdollar TCV.
    \11\ Fee code MC is appended to Cboe Market Close orders.
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    For purposes of the proposed Step-Up Tier 1, ``CMC ADV'' means ADV 
in Cboe Market Close (``CMC'') orders.\12\ In addition, the Exchange 
proposes to add the definition of ``Step-Up Add TCV'' \13\ and ``Ex-
Subdollar Step-Up Add Ex-Subdollar TCV'' \14\ to the Definitions 
section of the Fee Schedule. The Exchange also proposes to revise the 
Fee Codes and Associated Fees table on the Fee Schedule to include 
footnote 2 on fee codes B, V, and Y. The Exchange also notes that 
proposed Step-Up Tier 1 will expire no later than February 28, 2027, 
which the Exchange will indicate on the Exchange's Fee Schedule.
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    \12\ Cboe Market Close is a closing match process for non-BZX-
listed securities that allows a Member to submit Market-on-Close 
(``MOC'') orders to BZX ahead of certain CMC matching sessions where 
these orders will be matched with other MOC orders participating in 
CMC and eligible to execute at the official closing price as 
published by the primary listing market. See Rule 11.28.
    \13\ Supra note 9.
    \14\ Supra note 10.
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    The proposed Step-Up Tier 1, like other Add Volume Tiers,\15\ is 
intended to provide an additional opportunity to incentivize Members to 
earn an enhanced rebate by increasing their order flow to the Exchange, 
which further contributes to a deeper, more liquid market and provides 
even more execution opportunities for active market participants. 
Incentivizing an increase in liquidity adding volume through enhanced 
rebate opportunities encourages liquidity-adding Members on the 
Exchange to increase transactions and take execution opportunities 
provided by such increased liquidity, together providing for overall 
enhanced price discovery and price improvement opportunities on the 
Exchange. As such, increased overall order flow benefits all Members by 
contributing towards a

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robust and well-balanced market ecosystem.
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    \15\ See BZX Equities Fee Schedule, Footnote 1, Add/Remove 
Volume Tiers.
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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.\5\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \6\ 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) \7\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \8\ 
as it is designed to provide for the equitable allocation of reasonable 
dues, fees and other charges among its Members and other persons using 
its facilities.
    As described above, the Exchange operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. The Exchange believes that 
its proposal to create Step-Up Tier 1 reflects a competitive pricing 
structure designed to incentivize market participants to direct their 
order flow to the Exchange, which the Exchange believes would enhance 
market quality to the benefit of all Members. Specifically, the 
Exchange's proposal to introduce Step-Up Tier 1 is not a significant 
departure from existing criteria, is reasonably correlated to the 
enhanced rebate offered by the Exchange and other competing 
exchanges,\16\ and will continue to incentivize Members to submit order 
flow to the Exchange. Additionally, the Exchange notes that relative 
volume-based incentives and discounts have been widely adopted by 
exchanges,\17\ including the Exchange,\18\ and are reasonable, 
equitable and non-discriminatory because they are open to all Members 
on an equal basis and provide additional benefits or discounts that are 
reasonably related to (i) the value to an exchange's market quality and 
(ii) associated higher levels of market activity, such as higher levels 
of liquidity provision and/or growth patterns.
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    \16\ See NYSE Arca Marketplace Fees, Tier Rates--Round Lots and 
Odd Lots (Per Share Price $1.00 or Above), Step-Up Tiers, available 
at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf</a>;
    \17\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
    \18\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove 
Volume Tiers.
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    In particular, the Exchange believes its proposed Step-Up Tier 1 is 
reasonable because the proposed tier will be available to all Members 
and provides all Members with an opportunity to receive an enhanced 
rebate. The Exchange further believes its proposed Step-Up Tier 1 will 
provide a reasonable means to encourage liquidity adding displayed 
orders in Members' order flow to the Exchange and to incentivize 
Members to continue to provide liquidity adding volume to the Exchange 
as well as encourage Members to participate in CMC by offering them an 
opportunity to receive an enhanced rebate on qualifying orders. An 
overall increase in activity would deepen the Exchange's liquidity 
pool, offer additional cost savings, support the quality of price 
discovery, promote market transparency and improve market quality, for 
all investors.
    The Exchange believes that its proposed Step-Up Tier 1 is 
reasonable as the proposed criteria does not represent a significant 
departure from the criteria currently offered in the Fee Schedule. The 
Exchange also believes that the proposal represents an equitable 
allocation of fees and rebates and is not unfairly discriminatory 
because all Members will be eligible for the proposed Step-Up Tier 1 
and have the opportunity to meet the tier's criteria and receive the 
corresponding enhanced rebate if such criteria is met. While the 
Exchange has no way of predicting with certainty how the proposed 
changes will impact Member activity, based on the prior month's volume, 
the Exchange does not anticipate that any Member will be able to 
satisfy the proposed Step-Up Tier 1. The Exchange also notes that 
proposed changes will not adversely impact any Member's ability to 
qualify for enhanced rebates offered under other tiers. Should a Member 
not meet the proposed new criteria, the Member will merely not receive 
that corresponding enhanced rebate.

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. Rather, as discussed above, 
the Exchange believes that the proposed change would encourage the 
submission of additional order flow to a public exchange, thereby 
promoting market depth, execution incentives and enhanced execution 
opportunities, as well as price discovery and transparency for all 
Members. As a result, the Exchange believes that the proposed changes 
further the Commission's goal in adopting Regulation NMS of fostering 
competition among orders, which promotes ``more efficient pricing of 
individual stocks for all types of orders, large and small.''
    The Exchange believes the proposed rule changes do not impose any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Particularly, the proposed 
creation of Step-Up Tier 1 does not impose an unnecessary burden as all 
Members are eligible to receive the enhanced rebate under the proposed 
tier. The Exchange does not believe the proposed changes burden 
competition, but rather, enhances competition as it is intended to 
increase the competitiveness of BZX by introducing a new pricing 
incentive in order to attract order flow and incentivize participants 
to increase their participation on the Exchange, providing for 
additional execution opportunities for market participants and improved 
price transparency. Greater overall order flow, trading opportunities, 
and pricing transparency benefits all market participants on the 
Exchange by enhancing market quality and continuing to encourage 
Members to send orders, thereby contributing towards a robust and well-
balanced market ecosystem.
    Next, the Exchange believes the proposed rule changes do not impose 
any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
operates in a highly competitive market. Members have numerous 
alternative venues that they may participate on and direct their order 
flow, including other equities exchanges, off-exchange venues, and 
alternative trading systems. Additionally, the Exchange represents a 
small percentage of the overall market. Based on publicly available 
information, no single equities exchange has more

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than 14% of the market share.\19\ Therefore, no exchange possesses 
significant pricing power in the execution of order flow. Indeed, 
participants can readily choose to send their orders to other exchange 
and off-exchange venues if they deem fee levels at those other venues 
to be more favorable. Moreover, the Commission has repeatedly expressed 
its preference for competition over regulatory intervention in 
determining prices, products, and services in the securities markets. 
Specifically, in Regulation NMS, the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and, 
also, recognized that current regulation of the market system ``has 
been remarkably successful in promoting market competition in its 
broader forms that are most important to investors and listed 
companies.'' \20\ The fact that this market is competitive has also 
long been recognized by the courts. In NetCoalition v. Securities and 
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one 
disputes that competition for order flow is `fierce.' . . . As the SEC 
explained, `[i]n the U.S. national market system, buyers and sellers of 
securities, and the broker-dealers that act as their order-routing 
agents, have a wide range of choices of where to route orders for 
execution'; [and] `no exchange can afford to take its market share 
percentages for granted' because `no exchange possesses a monopoly, 
regulatory or otherwise, in the execution of order flow from broker 
dealers'. . . .''.\21\ Accordingly, the Exchange does not believe its 
proposed fee change imposes any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.
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    \19\ Supra note 3.
    \20\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \21\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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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 \22\ and paragraph (f) of Rule 19b-4 \23\ 
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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    \22\ 15 U.S.C. 78s(b)(3)(A).
    \23\ 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#7604031a135b15191b1b131802053605131558111900"><span class="__cf_email__" data-cfemail="a0d2d5ccc58dc3cfcdcdc5ced4d3e0d3c5c38ec7cfd6">[email&#160;protected]</span></a>. Please include 
file number
    SR-CboeBZX-2026-084 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-2026-084. 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-2026-084 and should be submitted 
on or before November 4, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-20924 Filed 10-13-26; 8:45 am]
BILLING CODE 8011-01-P


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