Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a New Methodology for Assessment and Collection of the Options Regulatory Fee (ORF)

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-104417; File No. SR-CBOE-2025-086]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a New Methodology for Assessment and Collection of the Options Regulatory Fee (ORF)</SUBJECT> <DATE>December 17, 2025.</DATE> Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), <SU>1</SU> <FTREF/> and Rule 19b-4 thereunder, <SU>2</SU> <FTREF/> notice is hereby given that on December 12, 2025, Cboe Exchange, Inc. (the “Exchange” or “Cboe Options”) filed with the Securities and Exchange Commission (the “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. <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  17 CFR 240.19b-4. </FTNT> <HD SOURCE="HD1">I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change</HD> Cboe Exchange, Inc. (the “Exchange” or “Cboe Options”) proposes to amend its Fees Schedule relating to the Options Regulatory Fee (“ORF”) to adopt a new methodology for assessment and collection of ORF for transactions that occur on the Exchange (“On-Exchange ORF”). 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 ( <E T="03">https://www.sec.gov/rules/sro.shtml</E> ), the Exchange's website ( <E T="03">https://www.cboe.com/us/options/regulation/rule_filings/bzx/</E> ), and at the principal office of the Exchange. <HD SOURCE="HD1">II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> 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. <HD SOURCE="HD2">A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> <HD SOURCE="HD3">1. Purpose</HD> The Exchange proposes to amend its current methodology for assessment and collection of a regulatory fee to assess On-Exchange ORF only for options transactions that occur on the Exchange that would clear in the customer  <SU>3</SU> <FTREF/> range at The Options Clearing Corporation (“OCC”). The Exchange would no longer assess a regulatory fee for options transactions that occur on other exchanges. This proposal only proposes to amend the method of assessment and collection of the fee. A future rule filing would be filed to set the applicable On-Exchange ORF rate. If the On-Exchange ORF model were to go into effect today, the current ORF rate would increase from $0.0023 per contract to an estimated On-Exchange ORF rate of $0.01331 per contract based on 2026 estimates of regulatory revenue, regulatory costs, and customer volume. The following provides more detail regarding the proposal. <SU>4</SU> <FTREF/> <FTNT> <SU>3</SU>  Currently, the ORF is assessed by Cboe Options and collected via OCC on executions for the account of Public Customers, including Professionals, and Broker-Dealers including Foreign Broker-Dealers. These market participants clear in the “C” range at OCC. ORF will continue to be assessed to executions for the account of these market participants under the proposed methodology. On the Exchange, a “Public Customer” means a person that is not a broker or dealer in securities and includes both Priority Customers and Professionals. A “Priority Customer” means a person or entity that is a Public Customer and is not a Professional. A “Professional” is any person or entity that (a) is not a broker or dealer in securities, and (b) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). Executions for the account of an OCC clearing member firm proprietary account, joint back office account clearing in the Firm range, or account of a market maker clearing in the Market Maker range are not charged an ORF, nor would they be charged an ORF under the current proposal. </FTNT> <FTNT> <SU>4</SU>  Pursuant to a separately filed rule change, the current ORF rate of $0.0023 will sunset the earlier of June 30, 2026 and revert to $0.0017 as of July 1, 2026. </FTNT> <HD SOURCE="HD3">Background</HD> Today, ORF is assessed by Cboe Options to each Clearing Trading Permit Holder (“CTPH”) for options transactions that are cleared by the CTPH at OCC in the Customer range, regardless of the exchange on which the transaction occurs. <SU>5</SU> <FTREF/> In other words, the Exchange imposes the ORF on all Customer-range transactions cleared by a CTPH, even if the transactions do not take place on the Exchange. The ORF is collected by OCC on behalf of the Exchange from the CTPH or non-Trading Permit Holder (“TPH”) OCC Clearing Member that ultimately clears the transaction as further described below. With respect to linkage transactions, Cboe Options reimburses its routing broker providing Routing Services pursuant to Cboe Options Rule 5.36 for options regulatory fees it incurs in connection with the Routing Services it provides. The current Cboe Options ORF is $0.0023 per contract side. <FTNT> <SU>5</SU>  The Exchange notes ORF also applies to Customer-range transactions executed during Global Trading Hours. </FTNT> The following scenarios reflect how the ORF is currently assessed and collected (these apply regardless of whether the transaction is executed on the Exchange or on an away exchange): 1. If a TPH is the executing clearing firm on a transaction (“Executing Clearing Firm”), the ORF is assessed to and collected from that TPH by OCC on behalf of the Exchange. 2. If a TPH is the Executing Clearing Firm and the transaction is “given up” to a different TPH that clears the transaction (“Clearing Give-Up”), the ORF is assessed to the Executing Clearing Firm (the ORF is the obligation of the Executing Clearing Firm). The ORF is collected from the Clearing Give-Up. 3. If the Executing Clearing Firm is a non-TPH and the Clearing Give-up is a TPH, the ORF is assessed to and collected from the Clearing Give-up. 4. If a TPH is the Executing Clearing Firm and a non-TPH is the Clearing Give-up, the ORF is assessed to the Executing Clearing Firm. The ORF is the obligation of the Executing Clearing Firm but is collected from the non-TPH Clearing Give-up (for the reasons described below). 5. No ORF is assessed if a TPH is neither the Executing Clearing Firm nor the Clearing Give-up. The Exchange uses an OCC cleared trades file to determine the Executing Clearing Firm and the Clearing Give-up. <SU>6</SU> <FTREF/> <FTNT> <SU>6</SU>  The Exchange notes that in the case where a non-self clearing TPH executes a transaction on the Exchange, the TPH's guaranteeing CTPH is reflected as the Executing Clearing Firm in the OCC cleared trades file and the ORF is assessed to and collected from the Executing Clearing Firm. </FTNT> In each of scenarios 1 through 4 above, if the transaction is transferred pursuant to a Clearing Member Trade Assignment (“CMTA”) agreement to another clearing firm who ultimately clears the transaction, the ORF is collected from the clearing firm that ultimately clears the transaction (which firm may be a non-TPH) by OCC on behalf of the Exchange. Using CMTA transfer information provided by the OCC, the Exchange subtracts the ORF charge from the monthly ORF bill of the clearing firm that transfers the position and adds the charge to the monthly ORF bill of the clearing firm that receives the CMTA transfer ( <E T="03">i.e.,</E> the ultimate clearing firm). <SU>7</SU> <FTREF/> This process is performed at the end of each month on each transfer in the OCC CMTA transfer file for that month. <SU>8</SU> <FTREF/> <FTNT> <SU>7</SU>   <E T="03">See</E> Securities Exchange Act Release No. 82164 (November 28, 2017), 82 FR 57313 (December 4, 2017) (SR-CBOE-2017-074). </FTNT> <FTNT> <SU>8</SU>  The Exchange notes that OCC provides the Exchange and other exchanges with information to assist in excluding CMTA transfers done to correct bona fide errors from the ORF calculation. Specifically, if a clearing firm gives up or CMTA transfers a position to the wrong clearing firm, the firm that caused the error will send an offsetting CMTA transfer to that firm and send a new CMTA transfer to the correct firm. The offsetting CMTA transfer is marked with a CMTA Transfer ORF Indicator which results in the original erroneous transfer being excluded from the ORF calculation. </FTNT> ORF is collected by OCC on behalf of the Exchange from the CTPH or non-TPH OCC Clearing Member that ultimately clears the transaction. While the ORF is an obligation of the Executing Clearing Firm, the ORF is collected from the clearing firm that ultimately clears the eligible trade, even if such firm is not a TPH. The Exchange and OCC adopted this collection method in response to industry feedback that it would allow TPHs and non-TPHs to more easily pass-through the ORF to their customers. In its original ORF filing, <SU>9</SU> <FTREF/> the Exchange stated that it expected TPHs to pass-through the ORF to their customers in the same manner that firms pass-through to their customers the fees charged by self-regulatory organizations (“SROs”) to help the SROs meet their obligations under Section 31 of the Ex ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 34k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━