Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 5.33(g) and Rule 5.34

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<title>Federal Register, Volume 91 Issue 203 (Thursday, October 22, 2026)</title>
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[Federal Register Volume 91, Number 203 (Thursday, October 22, 2026)]
[Notices]
[Pages 66744-66747]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-21576]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106696; File No. SR-CBOE-2026-081]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 5.33(g) and Rule 5.34

October 19, 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 9, 2026, Cboe Exchange, Inc. (``Exchange'' or ``Cboe 
Options'') filed with the Securities and Exchange Commission 
(``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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend (i) Rule 5.33(g) to allow a complex order consisting of legs 
in different groups of series in the class to Leg into the Simple Book, 
in addition to being posted to the

[[Page 66745]]

Complex Order Book (``COB''), where the Exchange has designated those 
groups as a related group and (ii) Rule 5.34 to allow for the Exchange 
(and Users, when applicable) to set risk control parameters on a 
related group basis when the Exchange is permitted to set parameters on 
a group basis. 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/cone/">https://www.cboe.com/us/options/regulation/rule_filings/cone/</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 5.33, which governs the trading 
of complex orders. The proposed additions to Rule 5.33(g)(6) would 
establish a related group framework under which a complex order 
consisting of legs in different groups of series in the class may Leg 
into the Simple Book, in addition to being posted to the COB, if the 
Exchange has designated those groups as a related group and the other 
applicable legging restrictions that are currently enumerated under 
Rule 5.33 are satisfied.
    Additionally, the Exchange also proposes to add interpretative 
guidance under Rule 5.34 to establish that, when the Exchange sets 
parameters for risk controls on a group basis, that the Exchange (or 
Users, when applicable) may also set parameters for a related group.
Background
    Currently, the Exchange has authority under Rule 4.13(f) to list 
SPX or VIX on a group basis.\3\ The Exchange currently lists SPX on a 
group basis; specifically, the Exchange lists A.M.-settled SPX options 
under the symbol SPX and lists P.M.-settled SPX options under the 
symbol SPXW. While SPX and SPXW options are part of the same S&P 500 
Index options class, the Exchange may apply different trading 
parameters to SPXW options than those it applies to SPX options 
(pursuant to Rule 1.5).\4\ SPX options reside on one matching engine 
while SPXW is on a separate matching engine. The Exchange intends to 
launch Weekly A.M.-settled SPX options (``SPXO'') \5\ and list SPXO 
options as a separate group from both SPX and SPXW. However, SPXO and 
SPX options will both be on the same matching engine.
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    \3\ When the Exchange lists SPX on a group basis, it may 
establish different trading parameters for each individual group 
(i.e., SPX and SPXW) in lieu of the class (i.e., SPX).
    \4\ For example, under Rule 5.34(c)(1), the Exchange sets a 
default buffer at or below the NBO (as applicable for buy and sell 
orders) on a class-by-class basis; thus, permitting the Exchange to 
set this on a group basis and may then apply different buffers (if 
it deems necessary) for SPX and SPXW.
    \5\ See Securities Exchange Act Release No. 105678 (June 12, 
2026), 91 FR 36641 (June 17, 2026) (SR-CBOE-2026-044)
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Legging
    Under Rule 5.33(g) (``Legging''), a complex order may execute 
against orders and quotes resting in the Simple Book (pursuant to 
subparagraphs (d)(5)(A) and (e)) if it can execute in full or in a 
permissible ratio and has no more than the maximum number of legs, as 
the Exchange determines on a class-by-class basis, and is subject to a 
list of restrictions. Specifically, one such restriction under Rule 
5.33(g)(6) states that ``[i]f the Exchange determines to list SPX or 
VIX on a group basis pursuant to Rule 4.13, a complex order consisting 
of legs in different groups of series in the class may not Leg into the 
Simple Book. A complex order consisting of legs in the same group of 
series may Leg, subject to the other restrictions in this paragraph 
(g).'' Pursuant to this provision, a complex order that consists of SPX 
and SPXW option legs is currently unable to leg into each underlying 
leg's Simple Book. The primary reason for this provision is because the 
Simple Books for SPX and SPXW are on different matching engines, as 
noted above.
    However, SPXO options will be on the same matching engine as SPX 
options. As a result, Exchange technology will allow complex orders 
comprised of legs from these two different groups (SPXO and SPX) to leg 
into their respective Simple Books.\6\ Complex orders that include an 
SPX or SPXO leg and an SPXW leg will continue to not be able to leg 
into their respective Simple Books.
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    \6\ Legging will occur subject to the restrictions set forth in 
Rule 5.33(g).
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    In order to account for this, the Exchange proposes to add the 
related group framework to Rule 5.33(g)(6) so that a complex order 
consisting of legs in different groups of series in the class that Cboe 
has designated as related groups may Leg into the Simple Book, in 
addition to being posted to the COB. The proposed related group 
framework reflects the current technological limitations of the 
Exchange's system. The Exchange will announce groups designated as 
related groups via Exchange Notice. The proposed change does not alter 
the existing Legging restrictions in Rule 5.33(g); rather, it adds a 
framework under proposed paragraph (g)(6) for the Exchange to designate 
groups as related, and thus permit complex orders comprised of legs 
from different groups to leg into their respective Simple Books, if 
Exchange technology can accommodate legging of complex orders comprised 
of legs for different groups. Because the Exchange remains unable to 
leg complex orders comprised of legs for groups that reside on 
different matching engines, only groups whose relevant series are 
processed by the same matching engine may be eligible for designation 
as a related group.
Risk Controls
    Currently, Rule 1.5(c) grants the Exchange authority to set trading 
parameters on a group basis if parameters are set on a class-by-class 
basis and the Exchange determines to list SPX or VIX on a group basis 
pursuant to Rule 4.13. Rule 5.34 allows the Exchange to set several 
limits on a class by class basis.\7\ Under current Rule 1.5, the 
Exchange has authority to set those parameters on a group basis when 
SPX or VIX is listed on a group basis.
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    \7\ See, e.g., Rule 5.34(c)(4)(A) which sets various limits, 
such as notional value of executions and number of executions, on a 
given class on a particular Executing Firm ID (``EFID'').
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    The Exchange proposes to add interpretive guidance to allow for the 
Exchange (or Users, when applicable) to determine trading parameters 
under Rule 5.34 on a related group basis or on a group basis. The 
Exchange may designate groups as related for technological reasons, 
such as if they reside on the same matching engine. The Exchange will 
announce groups designated as related groups via Exchange Notice. Using 
SPX and SPXW

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as an example, the Exchange looks at these as independent groups as 
they are on different matching engines (as described above) and because 
they are on different matching engines, the different risk checks 
enumerated under Rule 5.34 are applied to each group independently of 
each other.\8\ However, currently, if groups reside on the same 
matching engine, such as SPX and SPXO will, the Exchange will designate 
them as a related group because the Exchange technology does not permit 
separate settings for different groups on the same matching engine. If 
the Exchange or User determines parameters on a related group basis, 
the products designated within a related group will be aggregated for 
the purpose of Rule 5.34.
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    \8\ For example, 5.34(c)(4)(A)(i) sets out a limit for number of 
contracts executed that is set on a class limit for an EFID. In this 
event, SPX and SPXW would be on a group-by-group basis, and as such, 
would have independent values (i.e., SPX may have a limit of 100 
contracts and SPXW may have a separate, independent limit of 100 
contracts). In line with the proposed change, this limit may be set 
on a related group basis, meaning that SPX and SPXW would have a 
single related group limit (i.e., a limit of 100 contracts across 
both SPX and SPXW).
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    For example, under Rule 5.34(c)(4)(A), the Exchange allows for 
class limits to be set on EFIDs for the notional contract volume. Under 
the proposed interpretation (and existing Rule 1.5), the Exchange may 
set these on a group-by-group basis. This would mean that SPX and SPXO 
would have their own independent limits (similar to the current 
practice for SPX and SPXW). However, under the proposed language, the 
Exchange also would have the ability to designate SPX and SPXO as a 
related group and then aggregate the volumes for SPX and SPXO together 
for the purpose of reviewing a specific risk check. Consider the 
following: a limit of $1,000,000 of notional contract volume for SPX is 
set for User A, this means, that User A's notional contract volume for 
both SPX and SPXO cannot exceed $1,000,000.
    Lastly, when the Rules under 5.34 allow Users to set limits, they 
may also do so on a related group basis when applicable. For example, 
Rule 5.34(b)(6) permits Users to establish a higher or lower amount 
than the Exchange default buffer amount for a complex order to buy 
(sell) that is above (below) the SNBO (SNBB). Users may set this on a 
group basis, or under the proposed interpretative guidance, may also do 
so on a related group basis. When the Exchange sets limits on a related 
group basis, Users may also adjust these same related group limits.
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.\9\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ 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) \11\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Id.
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    In particular, the Exchange believes the proposed rule change will 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, protect investors 
and the public interest, because allowing a complex order consisting of 
legs in different groups of series to Leg into the Simple Book when the 
Exchange has designated those groups as a related group will provide 
complex orders comprised of legs in groups that are related with 
greater opportunity to execute and contributes additional liquidity to 
the Simple Books, to the benefit of all market participants that 
interact with those books. While the Exchange may determine to list 
series of a class as groups to accommodate the different 
characteristics of those series, the Exchange believes it will benefit 
investors if it can technologically accommodate the legging of complex 
orders comprised of legs of those different groups to improve the 
likelihood of execution.
    Additionally, by permitting the Exchange (and Users, when 
applicable) to determine parameters for a related group (and to 
aggregate volumes across a related group for the purpose of applicable 
risk checks) the proposed rule change protects investors by clarifying 
that the Exchange will link related groups for the purpose of risk 
checks due to technology reasons. Users, as needed, may adjust their 
risk settings accordingly to account for the aggregation of groups 
designated as a related group (e.g., a firm may increase their limit if 
they plan to trade both products).
    The Exchange believes the proposed rule change is not designed to 
permit unfair discrimination because the enhanced Legging opportunity 
will be available to all complex orders consisting of legs in groups 
that the Exchange designates as a related group. Similarly, the 
interpretive guidance that the Exchange (and Users, when applicable) 
may determine parameters for a related group, applies uniformly to all 
market participants. The proposed rule change does not otherwise alter 
the restrictions applicable to Legging under Rule 5.33(g) or the risk 
controls under Rule 5.34.

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 
proposed rule change will apply to market participants in the same 
manner.
    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 rule change concerns the operation of the Exchange's own 
legging functionality and risk controls. To the extent the proposed 
rule change makes the Exchange a more attractive marketplace, market 
participants on other exchanges are welcome to become Trading Permit 
Holders.

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

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interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 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 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 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 shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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#5624233a337b35393b3b333822251625333578313920"><span class="__cf_email__" data-cfemail="2b595e474e06484446464e455f586b584e48054c445d">[email&#160;protected]</span></a>. Please include 
file number SR-CBOE-2026-081 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-CBOE-2026-081. 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-CBOE-2026-081 and should be submitted on 
or before November 12, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-21576 Filed 10-21-26; 8:45 am]
BILLING CODE 8011-01-P


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